1. How does seasonal demand affect the firm’s capacity planning and constraint management?

2. Identify the most critical issues in the case, and develop a strategic capacity plan for Kirwain.

3. What long-term issues should be considered? Medium term? Short term? Make sure that your analysis considers the implications for each of these planning horizons.

Kirwain Sound Systems, a fictional company, specializes in manufacturing stereo loudspeakers for outdoor locations, usually around patio and pool areas. Because the company’s speakers are expected to hold up to extreme weather conditions, they must be rugged and well made. One critical component in the speaker is the rubberized gasket that protects the delicate speaker assembly in each unit. These gaskets create an airtight seal around the speaker box that protects the electronics from dust and moisture. The assembly process used to attach the gaskets to the speaker boxes is manual. The gaskets are made from a special rubber that is resistant to extreme temperatures and weather conditions. The gasket is cut to the required length and pasted to the speaker box with a special adhesive and held in place by clamps. The operation requires 3.5 minutes per assembly with the help of three factory workers. Kirwain has contracted with a vendor in India that produces the sealed speaker boxes for US$18 per unit. Using standard freight shipping, Kirwain typically receives regular monthly supplies of completed speaker boxes.

Kirwain is about to sign a contract with Assumption Audio (Abbotsford, Victoria, Australia), the largest vendor of stereo equipment in the world. The orders Kirwain receives from Assumption are expected to increase its business substantially within six months. Although the current factory is expected to handle this higher workload, Kirwain is concerned that the gasketing operation that is currently outsourced could become a serious bottleneck. Assumption demands high quality, and products must be available when they are ordered.

As a result, Kirwain is considering alternatives for dealing with this potentially serious capacity problem. Assume you are part of a consulting team that has been asked to assess Kirwain’s systems. How would you advise Kirwain to adjust its capacity planning?