Section 2 (5 marks)

Theory of Constraints

For this case study please read carefully the information provided about the company in the paragraph about a business expansion project. Identify all the possible constraints the company is facing in this particular case and classify them according to their type. Any cost that the company needs to pay to remove the constraint will be an additional cost. They will need to plan with the budget so that they can achieve their target. For example, if a constraint involves problems with raw material/inventory it will be a physical constraint, if a constraint involves policy from the government, it will be a policy constraint and vice versa. In the given table write each constraint and put an X under the correct type of constraint.

Salad Express is a healthy eating business and is very popular in Italy. Salad Express is looking forward to expanding its business in Tunisia and opening a manufacturing plant there. There will be some issues in business expansion in a new country. They are looking forward to some challenges, for example, cultural are religious challenges, given Tunisia has both Muslim and non-Muslim customers. The company will need to make some amendments to its inventory, especially around non-halal raw materials or additives. Also, the company is looking for information on halal certification as it will be an additional cost. It appears the company might find some challenges in the market when it will start its business. Another issue is the policy of the government which enforces all international firms operating in the county to get compulsory halal certification.

During the planning meeting, the CEO was provided with some early information on the kind of equipment that is available for processing. It was learned that a new processing plant will also need to be installed due to the absence of a similar facility available there. The new plant will need more manpower and there will be an additional cost to train labour. The CEO suggested employing Mr Smith, the HD Director to train the staff ahead before the commencement of the plant. Mr Smith has enjoyed special treatment from the boss even though he is not punctual and has missed some deadlines in the last year. The company also sees problems ahead with staff training. Mr Smith does not have previous experience in teaching/training staff from different cultural backgrounds. The Project Manager has suggested hiring a local trainer who is familiar with the local language and culture of labour but the CFO has not considered this suggestion. Also, it is expected in the Tunisian market a typical market issue is the availability of affordable transport and storage facility. There have been some protests from the local labour over the petrol prices and every day the market needs to adjust to the new conditions.

Your job is to identify all the constraints from the given paragraph. Make a list of these in the first column of the table below, and add X to the kind of constraint.

For example, the first constraint, new equipment needed has been done for you. Also, in the last column add any suggestions that you might have to help with the constraint or to remove it completely.

Identify Constraints	Physical constraint	Policy Constraint		Paradigm constraint	Market constraint	Suggestion for solution
New equipment needed	X					Market research Industry analysis Cost-benefit analysis Capital budgeting decision to buy new equipment.