ROJA SILKS

Rajat Aggarwal Shivangi Agarwal

Abhilasha KittyKanchan

JethwaniKomal MakhijaniRahul Verma

Kanchan Gupta

Operations started in1996 Madras. Casual formals and Western wear for

children, men and women. Two manufacturing units in Trichy and

Salem. Big boom in 2002. Big competitor-Nandhini Silks, Aruna Silks.

Introduction

Two options:-• Construction of a large plant to meet the

possible demand in future.• Construction of a small plant to meet a low

demand and expanding it when the demand increased.

Probabilities for low, medium, and high 0.3, 0.4, and 0.3 respectively.

Problems:

If large plant:◦ Cost=12L◦ With low demand,0.3,10◦ With medium demand,0.4,16◦ With high demand,0.3,24

If small plant:◦ Only meet low demand,

cost=6,prob.=0.3,operating return=10◦ If expanded to medium demand,

cost=3,prob=0.4,operating return=14◦ If expanded to large demand, cost=5,prob.=0.3,

0.3,operating return=22

Market Research

GM was wondering, which of the options he must

pursue???????

1

SMALL2

3

LARGE

4 5

6

.3*10=3;=>3-6=-3

YES;22-5=17

NO;.3*10=3; =>3-6=-3

NO;.3*10=3; =>3-6=-3

YES;14-3=11

High=.3

Medium=.4

9.5

9.5-3

=6.5

High=>.3*24=7.2

Medium=>.4*16=6.4

LOW=>.3*10=3

16.6-1

2=4.6

Total=16.6

17

11

Construction of a large plant is good. The large plant shows profit.(166000-

120000) =460000 The small plant when expanded to meet the

future demand gives a net profit of (95000-300000) =650000

Hence we conclude that the general manager should opt for setting of a small plant and then expand it when demand increases in the future.

Conclusion