Lawn King Case Study

Case Assignment

Lawn King Inc.

Tyler Merriweather

MGT 4352 09/25/2017

Executive Summary

Lawn King Company is a manufacturer of Lawn Mowers. Lawn mowers are machines with one or more blades that are used to cut lawns at an even level. The Lawn King Company has several versions of their lawn mowers that range from 18’ to 22’ decks. Due to increased demand for lawn mowers the Lawn King Company has seen an increase in sales. The current shift in demand threw the company off because they were not prepared for the surge of the market shift. This surge caused the Lawn King Company to have product shortages which lost them money in the long run. In order to keep up with this new booming demand, the Lawn Kings needs to develop a more efficient model that allows them to address the issue with product shortages.

From looking at Lawn King’s current strategy, and from comparing it to the level, chase, and linear programming strategies, I suggest that the Lawn King Company looks into using a level workforce strategy. If they choose to use this strategy it would give the Lawn Kings the ability to employ a consistent number of workers throughout the entire year without having to hire or fire a significant amount of people. This plays a huge role in hiring and firing costs which make a big difference in how the company views its overall total costs. This consistent number of employees also helps to reduce the number of people who need to work overtime. When it comes to total costs, cutting back on hiring, firing, and overtime costs make a huge difference in total cost. This drastic change in total cost will allow the Lawn King Company to operate efficiently while elevating their level of production.

Assume you are the young engineer/analyst who is very familiar with the management science and operations management techniques and is responsible for developing the planning model for Lawn King.  Before writing your final report and recommendations, you are thinking about the answers for the following questions:

  1. Based on the information for the current year described in the case, compute the cost elements for the current year’s production plan (Table 5) including the hiring cost, the firing cost, the regular-time cost, the overtime cost, the inventory carrying cost, and the total annual cost. (5 points)[pic 1]
  1. Based on the information for the current year described in the case, develop the complete LP model and use Excel Solver to solve for the optimal solution.  Show the optimal plan.  Comparing to the current plan, list the three major differences of the optimal plan. Make constraints to make sure the minimum end inventory of 2,000 units for all four products together for each month.        (15 points)
  • The first obvious difference in the optimal plan is the fact that cost is reduced by $107,129. That is a significant difference in cost.
  • A second difference between the two comes in the number of people being hired and fired. There are only 9 employees being hired and 21 being fired in the optimal solution compared to there being 41 hired and 53 fired in the current plan that’s in place.[pic 2]
  • Finally we see that overtime production decreases significantly during the LP optimal solution.
  1. The current plan shown in Table 5 has the chase strategy flavor.  However, if you are going to develop a chase plan, what will it be?  How much is the total planning cost?  What is the % difference as compared to that of the current plan?  For comparison purpose, assume that the end inventory of August is 19360 and the end workforce is 72 in August.         (15 points)
  • For the chase plan, fire or hire an integer number of workers if necessary. Fire when you do not need production capacity.  Hire when you need production capacity.
  • A current worker or new hired worker will work the complete capacity to produce 83 in regular-time. No overtime is allowed.
  • Use an integer number of workers to produce enough or not to produce at all to keep the inventory no less than 2000 every month. However, you have to cumulate inventory up to 19360 at the end of August.  That is, you have to slow down the firing in the last few [pic 3]
  • The total cost equals $2,579,269.
  • % difference to current plan equals (2,562,925-2,579,269)/2,562,925=6.3%
  1. To make another comparison, you also develop a level plan.  Show your level plan.  How much is the total planning cost?  What is the % difference as compared to that of the current plan? For comparison purpose, assume that the end inventory of August is 19360 and the end workforce is 72 in August.         (15 points)

[pic 4]

  • Total Cost for level plan equals $2,357,734
  • Comparison to current plan equals (2,562,925-2,357,734)/2,562,925=8%
  1. Complete the comparison of the following cost analyses.         (10 points)

Cost Item

Current Actual Plan

Chase Plan

Level Plan

LP Plan

LP % difference from current

Regular-time

1793268

1860904

1840796

1923805

3.27%

Overtime

177094

0

28712

0

-86.63%

Inventory carrying

480263

173665

467926

492367.98

-3.2%

Hiring

32800

183200

800

7521

-95.67%

Firing

79500

361500

19500

32102

-73.86%

Total

2562925

2579269

2357734

2455796

-9.7%

...

Solar power case study: King Orchards Fruit Co. LLC

Farm powers bakery and retail store with solar energy.

Posted on January 2, 2018 by M. Charles Gould and Aluel (Al) S. Go, Michigan State University Extension, Michigan State University Extension
For more information contact Figure 1 - Photograph of the solar arrays positioned between the main road and cherry orchards. Photo courtesy of Aluel S. Go.

King Orchards Fruit Co. LLC is a large fruit producer and processor located in Antrim County, Michigan. Across 400 acres, the farm grows cherries, apples, peaches, pears, apricots, raspberries, plums and nectarines. Two retail stores, a cherry juice concentrate processing facility, as well as a farmers’ market and u-pick operations provide markets for the fruit they grow. The farm uses a lot of electricity and the owners felt a solar power system would help them save on energy costs.

Over the period of several years they examined their options. In 2015 a fixed, ground-mounted solar array with a vibrated I-beam structure was installed. 208 250 W modules were attached to the structure, generating a total of 52 kW of electricity. The system was installed by Harvest Energy Solutions using SolarWorld solar panels and Fronius inverters. Harvest Energy Solutions completed all the paperwork and contract labor requirements. Little involvement was required of the owners during the installation process, which began September 14, 2015 and was completed September 25, 2015. King Orchards worked on the interconnectivity of their solar energy system to the electrical grid with Great Lakes Energy and reported they were easy to work with.

The solar array powered Creswell Market, King Orchards’ bakery and retail store. Though this retail outlet was not the largest energy draw within their operation, the owners agreed that the seasonal operation of the store (May through November) would be best complemented by electricity generated by the solar array. The solar energy system has been in operation since September 25, 2015 and there have been no issues or adjustments made to the system by either the owners or Harvest Energy Solutions.

King Orchards pays an effective rate of $0.105/kWh for electricity, which is the value of electricity produced when used directly by the farm. Excess daily production can be sold to Great Lakes Energy at $0.035/kWh; however, this option is not expected to occur since the farm uses more electricity than the capacity of the solar system. Great Lakes Energy allows the farm to bank excess electricity produced during the day back onto the grid for use on days when the system doesn’t produce enough to meet the electrical needs of the farm and credits their account at $0.06/kWh. Thus, the system generates a greater energy dollar savings from decreased energy consumption from the grid as compared to excess energy production being banked to the utility for future credit.

The total cost of the solar project, including permits and utilities, was $195,404. Funding for the project was received from a USDA Rural Development REAP grant and the Michigan Farm Energy Program, plus a 30 percent tax credit. The project has a 5.2 year payback period. No major additional costs or financial constraints have emerged during or since the system was commissioned to cause the project to deviate from the initial predicted payback period.

The owners at King Orchards have received positive feedback from neighbors and customers alike regarding their pursuit of renewable energy. The owners plan to publicize their solar energy system on their website and other outlets to promote and increase awareness of renewable energy and its benefits, especially during special events and holidays such as Earth Day.

A full specification sheet of the solar energy system as well as an aerial view of the system and surrounding property, monthly data of actual and predicted electricity production, and the solar energy system cost breakdown can be accessed in the King Orchards Case Study. Monthly production data for 2017 will be included in the updated version of this case study by the end of the year.

This information is for educational purposes only. Reference to commercial products or trade names does not imply endorsement by MSU Extension or bias against those not mentioned.

Source: Thelen, Jackie and Go, Al (2016). Solar Energy Implementation Case Study - Black Star Farms. Michigan Farm Energy Program. Michigan State University, East Lansing, MI 48824.

Additional articles in this series:
Solar power case study: Black Star Farms

This article was published by Michigan State University Extension. For more information, visit http://www.msue.msu.edu. To have a digest of information delivered straight to your email inbox, visit http://www.msue.msu.edu/newsletters. To contact an expert in your area, visit http://expert.msue.msu.edu, or call 888-MSUE4MI (888-678-3464).

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