Jaikumar Textiles, Ltd. (A): The Nylon Division

This case is a good introductory linear-programming case; it introduces the notion of constraint exploitation and provides practice in deciding between alternative forecasting techniques (including exponential smoothing). The case contains a decision-uncertainty structure. A production planner must determine whether or not to take a contract for future delivery of a specified product at a stated price. The decision will affect the production mix in future periods. Uncertainty surrounding the future market price of the product is crucial. In the B case (UVA-QA-0391) a second constraining resource is introduced to the decision environment. Excerpt UVA-QA-0364 JAIKUMAR TEXTILES, LTD. (A): THE NYLON DIVISION In early April, N. S. Kadiyala, deputy general manager of the Nylon division of Jaikumar Textiles, Ltd. (JTL), had two days in which to make a decision that would have a major impact on May's production schedule. A proposal from one of JTL's major customers for the purchase of 5,000 kilograms (kg) of denier 15/1g nylon (see Production section) had just crossed Kadiyala's desk. The offering price was (Indian rupees) INR182 per kg. Kadiyala knew that, if he accepted the order, it would have to be filled entirely from May's production of that denier, which would require a major commitment of production resources. Prior to the mid-1980s, considerations such as future business potential and goodwill had dwarfed the immediate economic impact of decisions of that type, but intense competition, much of it stemming from the introduction of new fiber technology by competitors, had changed all that. Kadiyala was sure that JTL now needed to squeeze every potential rupee of contribution from its production facilities. Nylon Production at JTL The production of nylon yarn in JTL's main nylon-production facility took place in four basic areas: polymerization, spinning, drawtwisting, and packing and testing. In the polymerization area, the raw material caprolactum powder was first washed in large vats and reshaped into small pellets. The pellets were then channeled into heating tanks, where they were transformed, through the addition of various acids and chemicals, into three basic types of nylon—glittering, semidull, and full dull. The resulting chips were melted down and sent to the spinning area. In spinning, nylon yarn was formed by forcing the melted caprolactum chips (now about the consistency of honey) through the tiny holes of a device called a spinneret. Unlike natural fibers, nylon yarn could be extruded into different thicknesses. The spinneret, used in the production of all man-made fibers, was similar in design to a shower head, with anywhere from one to literally thousands of tiny holes. Melted chips were forced through those holes, the size and number of which determined the weight and thickness of the resulting nylon. The thickness and weight of a particular yarn was called its denier. The 15/1g denier was a monofilament (single strand) of glittering nylon weighing 15 kg per 9,000 meters, for example, while a 84/21fd denier was a multifilament (in this case, 21 strands) of full dull nylon weighing 84 kg per 9,000 meters. . . .