Macpherson Refrigeration

MacDonald Refrigeration Limited

(adapted from Haywood-Farmer, J. “McPherson Refrigeration,” University of Western Ontario, 1983)

In early September Janet Huntley, the newly-appointed planner for MacDonald Refrigeration Ltd (MRL) of Sarnia, Ontario began working on MRLs production plan for the upcoming calendar year. The plan will be presented at MRLs regular management committee at the end of the month.

BACKGROUND

The company began operations near the Sarnia, Ontario airport in 1954 as manufacturer of commercial refrigeration systems. By 1987, MRL had diversified into consumer refrigeration and moved to a new 300,000 square foot manufacturing facility. Its current product line, consisting of commercial and residential air conditioning systems, refrigerators, and freezers, produced sales of $28.5 million last year.

Through a combination of careful product design and investments in new process technology, MRL has seen the annual output per manufacturing employee increase from about 240 appliances in 1987 to an estimated 480 appliances next year. Their plant in Sarnia is equipped to produce up to 13,000 appliances per month. Although it varies by product type, typical throughput time is 3 days.

THE PLANNING PROCESS

Once each month, Ms. Huntley receives monthly sales forecasts updates for all of MRL appliances for 15 months into the future. Although the monthly forecasts are refined each month, MRL must order critical components about 3 months in advance of need. In effect, MRL commits its resources to the forecast no later than 3 months prior to the period when the sales are to take place.

Due to the pronounced seasonality of refrigeration products, MRL develops production plans for 15 months into the future. However, with 90-day material lead times the first three months of the plan are effectively frozen; no longer subject to change. Therefore, the key portion of Ms. Huntley's plan will be the 12 month period that begins next...