Bottom Line, Inc.
Individual Contributor - Participant’s Workbook
PRODUCTION DEPARTMENT BRIEF
All Sludge Brothers oil well pumps are manufactured by your department. This year’s budget was $2.28 million
which represents a 30 percent increase on last year and anticipated the extra activity resulting from increased
sales of pumps. You have a number of ideas in mind for the extra cash:
Pumps are tested in tanks and you would like a deep well facility to give you more realistic
conditions. The cost would be $148,200 and would pay for itself in two years by saving
travel/hotel costs for four site test engineers halving the foreign trips they make.
With demand increasing as it is, you would like to recruit three extra lathe operators at a salary
cost of $66,500. The lathe section represents the bottleneck and is working astronomic
overtime (which is not too popular with the workforce). Extra staff would cut down the level of
overtime to three hours per man per week and consequently pay for the extra staff in six
months.
Some pump casings are rejected because they have faults (cracks/holes) that only show up
after machining. You would like to purchase a metal X-ray type machine that would show up
these faults before time is spent machining the castings. With production increasing, the cost of
$53,200 should be recouped within five months.
Although production/inspection staff are paid overtime, you feel the additional efforts put in by
the department of 80 staff has had a big impact on home life and you would like to organize a
social weekend to include spouses at a New York hotel at a cost of $34,200 because you feel
the staff deserves it.
You are aware that Production workers and Freight drivers are the only staff members that are paid overtime
for the extra hours necessary. However, without cooperation from the staff, there would be no pumps to sell.
The total cost of these ideas is $302,100 which represents 13 percent of your current budget.
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