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Applichem Case 2

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Executive Summary
Applichem was a Chicago based manufacturer of the specialty chemicals mainly devised as solutions to specific customer’s problems. Applichem has developed a chemical called Release-ease in 1952 as a solution to the problem faced by plastic molding industry in cleaning the stainless steel molds. This specialty chemical when added in low concentration to the plastic molding compound during the manufacturing process will ease the separation of molded parts from the mold and leave the mold cleaner. Hence Release-ease was widely used in molding plastic parts.
Release-ease was a patented product of Applichem and it used to bring steady revenues to the company through 1982. There was not much R&D done on Release-ease later to …show more content…

• Output yields, capacity utilization and shipping costs for different plants are also different.
• Allocating indirect labour over products was a major problem.
• The maintenance costs are increasing due to the old production technologies.
• There is a lack of coordination between the financial and technical teams.
• There are differences in labour capability and technical knowledge across the plants e.g. the plants Venezuela and Mexico are very low in technical depth while the plant Japan has high technical expertise.
• The cost structures in the plants also differ due to the difference in the energy sources used for production.
• Labour regulations also differ across different regions. For example, in Japan, it is required to provide sleep time to the people working in the night shifts.

A. Comparison of the performance of Applichem’s 6 Release-ease plants

The six Release-ease plants performance can be analyzed and compared on the basis of the following main parameters:
1. Capacity Utilization
2. Labor Utilization
3. Yield on raw material
4. Financial Analysis
1. Capacity Utilization
Capacity utilization is defined as the ratio between the actual output produced and the potential output that can be produced in the plant. The comparison between the 6 plants is as follows:
Manufacturing Plant Actual Production
(in million pounds) Maximum Capacity
(in million pounds) Capacity Utilization=Actual Production/Maximum

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