MGMT530 Course Project

MGMT 530

Lynn M. PeirceLMP91357@aol.com

Course ProjectFebruary 8, 2015

Workforce Reduction at Thermal Chek

Table of Contents.1. Title2. Table of Contents3. Executive Summary4. Decision Problem Overview5. Objectives Summary6. Alternatives Description7. Selection8. Consequence Table: Workforce Reduction9. Ranking Alternatives.10. Ranking Alternatives: Workforce Reduction11. Scoring12. Scoring Model: Workforce Reduction13. Weighted Scoring Model14. Weighted Scoring Model: Workforce Reduction15. Weighted Scoring Model Results16. Calculations for Weighted Scoring Model17. Note: Factory Manager’s Calculations18. Risk Profile19. Risk Profile: Workforce Reduction 20. Risk Profile Explanation21. Implementation, Monitoring, & Control22. Timeline: Materials Implementation Plan23. Summary24. Cited Works

Executive Summary. This report details the decision facing the owner ofa small window factory called Thermal Chek, locatedin Westville, N. J. The owner must cut costs in order to remain in operation. The owner has to decide whether ornot to reduce the workforce in order to save money. Keypoints are addressed regarding the decision process, whichultimately lead to a viable alternative for cost-cutting.

Decision Problem Overview.• Company currently has about 100 employees• Most work in production• Need to keep up with local competitors• Question of losing customers• Question of losing other employees• Owner must cut costs

Objectives Summary.• Owner developed objective statement• Separated fundamental objectives from means objectives• Addressed three main stakeholders: company, employees, customers• Fundamental objectives: reduce costs, maintain production, keep

customers• Means objectives: correlate to fundamental objectives 1. lay off employees, cut back immediate hiring, terminate employees 2. adjust work schedules, increase workload, employ only part-time workers 3. keep production levels constant, scale back hours of non-production employees, lower window prices

 Alternatives Description.“Making a decision implies that there are alternative choices to be considered” (Harris, 2012). Owner defined alternatives in best interests of stakeholders Narrowed alternatives down to three

1. Hire temporary workers: allows owner to maintain production levels on as-needed basis2. Close factory during off-peak periods: company can maintain employee status-quo while cutting costs during such months as August, January, & February3. Trim budget in other areas: allows owner to cut costs while maintaining production

Alternatives give owner more flexibility

Selection.In selection, owner must “integrate all of the valuable information…collected from different sources” (Make a Future, 2014).• Owner must consider best options for his decision• Consequence table was developed to aid owner with decision• Consequences of closing during off-peak periods may mean losing

customers• Trimming budget in other areas may enable company to keep

employees and customers• Hiring temporary workers could be beneficial to company in

reducing costs, but it might have negative impact of losing customers

Consequence Table: Workforce ReductionObjectives Alternative A Alternative B Alternative CObjective 1 Hire Temp Close During Trim Budget Reduce Costs Workers 1 Off- Peak 1 Other Areas 2 Objective 2 Hire Temp Close During Trim BudgetMaintain Workers 2 Off-Peak 4 Other Areas 1Production Objective 3 Hire Temp Close During Trim BudgetKeep Workers 3 Off-Peak 4 Other Areas 1Customers Legend: 1=Best, 5+Worst

  Ranking Alternatives. Author found simple way to rank owner’s alternatives Suggested alternatives were ranked by number to best suit company

needs Best “ranked” alternative with regard company’s objectives: trim budget in other areas Alternatives ranked in table format

Ranking Alternatives: Workforce ReductionObjectives Alternative A Alternative B Alternative CObjective 1 Hire Temp Close During Trim Budget Reduce Costs Workers 2 Off- Peak 3 Other Areas 2 Objective 2 Hire Temp Close During Trim BudgetMaintain Workers 2 Off-Peak 5 Other Areas 1Production Objective 3 Hire Temp Close During Trim BudgetKeep Workers 5 Off-Peak 5 Other Areas 1Customers Legend: 1=Best, 5+Worst

Scoring. Simple scoring model developed Aids owner with decision Scores were assigned based on owner’s input Table reflects these “scores”

 Scoring Model: Workforce ReductionObjectives Alternative A Alternative B Alternative CObjective 1 Hire Temp Close During Trim Budget Reduce Costs Workers 1 Off- Peak 2 Other Areas 1 Objective 2 Hire Temp Close During Trim BudgetMaintain Workers 2 Off-Peak 5 Other Areas 4Production Objective 3 Hire Temp Close During Trim BudgetKeep Workers 5 Off-Peak 5 Other Areas 1CustomersTOTALS 8 12 6  Legend: 1=Best, 5+Worst

Weighted Scoring Model.Weighted scoring is a “method of scoring options against a prioritized requirements’ list to determine which option best fits the selected criteria” (Zimmer, 2014). Provides way for Thermal Chek to put semblance of activity into

subjective process Included by author to aid owner in further evaluation Question: Which alternative most closely suits company’s needs?

Weighted Scoring Model: Workforce ReductionObjectives Weight Alternative A Alternative B Alternative CObjective 1 30% Hire Temp Close During Trim Budget Reduce Costs Workers 1 Off- Peak 2 Other Areas 1 Objective 2 30% Hire Temp Close During Trim BudgetMaintain Workers 2 Off-Peak 5 Other Areas 4Production Objective 3 40% Hire Temp Close During Trim BudgetKeep Workers 5 Off-Peak 5 Other Areas 1CustomersTOTALS 8 12 6  Legend 0-100% importance; 1=Highest, 5=Lowest (Alternatives Total from Scoring Model Table)

Weighted Scoring Model Results. Alternative C has lowest weighted score = Best Alternative Eliminate Alternative B

1. dominated alternative2. might cause customer loss3. could also be an “even swap”?4. could cut costs, maintain production levels, keep customers5. could also do the opposite, so may be considered as “trade-off”

Calculations for Weighted Scoring Model.(Owner determined keeping customers was most important) 

.30 x 8 = 2.4            .30 x 12 = 3.6        .30 x 6 = 1.8

.30 x 8 = 2.4            .30 x 12 = 3.6        .30 x 6 = 1.8

.40 x 8 = 3.2            .40 x 12 = 4.8       . 40 x 6 = 2.4

*Note: Author consulted with factory manager on weighted scoring model as to calculations:• Heated debate ensued• Factory manager came up with own figures (see below)• Outcome was same: Alternative C 

Alternative A= 0.30 x 1 +0.3 x 2 + 0.4 x 5 = 0.3 +0.6 + 2 = 2.9

Alternative B = 0.30 x 2 +0.3 x 5 + 0.4 x 5 = 0.6 +1.5 + 2 = 4.1

Alternative C= 0.30 x 1 +0.3 x 4 + 0.4 x 1 = 0.3 +1.2 + 0.4 = 1.9

Risk Profile. Identifies acceptable level of risk company is prepared to accept Determines effects on overall decision-making strategy Risk & uncertainty: not the same Causes of uncertainty: factors in close proximity easier to estimate

than factors that might occur down the line Owner considers using different materials in production (i.e., trim

budget in other areas) Owner faces two Uncertainties 1. Would production quality suffer if different materials were used? 2. Would company lose business to competitors?

Risk Profile: Workforce Reduction Uncertainty 1Outcome Chance ConsequencesProduction 20% Inferior ProductsQuality  ProductionReduction 35% Lower Prices Uncertainty 2Outcome Chance ConsequencesEffects on 20% Longtime Loyal Customer LossCustomers  Effects on 25% Gain New Potential CustomersCustomers Legend 0-100%

Risk Profile Explanation.Percentages based on conversations with factory manager Possible consequences (bad and good) 1. Uncertainty 1: inferior products vs. lower prices 2. Uncertainty 2: customer loss vs. customer gain Trim budget in other areas – appears to be correct decision Owner can offset use of cheaper production materials, lower costs

can be passed onto consumers

 Implementation, Monitoring, & Control. Owner targets March 15, 2015 to begin use of new production

materials Allows 30 days for phase-out of current production materials Owner designates factory manager to oversee implementation &

control Factory manager uses pre-designated employees to inspect new

products Sales manager reports on sales of new products 180 Day period for implementation plan & review Owner meets with factory manager & sales manager Determination will be made as to usage of new production materials

Timeline: Materials Implementation Plan

Month/Timeframe Implementation Plan30 Days Current Materials Phased Out  March 15, 2015 New Materials Phased In

180 Days Factory & Sales Managers Meet With Owner for Review

Summary. Thermal Chek must cut costs. At the onset of this report, the owner was leaning towards one decision, that of workforce reduction. From the information presented, the owner was able to see and consider a viable cost-cutting alternative by using new production materials. The main objective in this situation is keeping customers. Using new production materials facilitates the right decision. This enables the owner to keep the workforce intact while lowering costs. The company can then pass lower prices on to customers. This can create a “win-win” situation for all.

Cited Works.

 Harris, Robert. (June 9, 2012). Virtual Salt. Introduction to Decision Making. Retrieved on January 14, 2015 from http://www.virtualsalt.com/crebook5.htm. Make a Future, (2014). Making the Selection Decision. Retrieved on January 20, 2015 from http://www.makeafuture.ca/for-employers/employees the-hiring-process/making-the-selection-decision.

Zimmer, David A., PMP. (2011) Project Management Terms & Definitions. What is the Weighted Scoring Method? Retrieved on January 21, 2015 from http://terms.ameagle.com/2011/01/david.html.