Rougir Cosmetics International: Production Optimization

Description

Rougir Cosmetics International (RCI), founded in 2010 and with headquarters in California, experienced double-digit growth for several years. At a board meeting in June 2016, RCI’s chief executive officer (CEO) announced a large new order that represented a major opportunity to further expand into the ever-growing home shopping cosmetic business sector. However, the firm did not have the capacity to meet this transaction along with its normal business production schedule. Therefore, the only short-term possibility was to outsource some work to a third-party supplier. RCI had tried to avoid this in the past because of the proprietary nature of the company’s product line. The board cautioned the CEO and asked how much of the pending order might have to be subcontracted out. The CEO had one week to complete an analysis using RCI’s new analytics-based resource management system, and provide a recommendation.

Learning Objective

This case can be used in a core analytics or operations management course at the undergraduate or graduate levels. It focuses on the use of linear programming in determining the level of production outsourcing. After completion of the case, students will be able to ·examine the growing role of outsourcing in cosmetic manufacturing; ·identify key constraints in the production process; ·understand how linear programming can be used to develop a production schedule; ·perform sensitivity analysis on key model constants; and ·assess the challenges associated with outsourcing, especially with respect to divulging proprietary company information.

Keywords

Cosmetics global optimization Production