Case BackgroundJignesh Springs Ltd. is a family-owned spring manufacturer. The factory is located in the heart of Surat city. They have been manufacturing in-house for three years. Now, after establishing themselves in the market, they are planning to expand. Mr. Manmohan, Production Manager of Jignesh Springs Ltd., has been tasked with overseeing the proposed expansion. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get the original essay Recently, Mr. Manmohan had started receiving complaints from workers, most of which were related to their long working hours and insufficient pay. However, upon investigation, Mr. Manmohan found that the workers used to take extended breaks for lunch, smoking and tea. Additionally, they indulged in unnecessary chatter when the production line was running. This required workers to work overtime almost every week to complete their daily tasks, which, in turn, unnecessarily increased production expenses. So far there have been only minor problems with delivery times and customer complaints regarding quality have been within permissible limits. As there was a shortage of semi-skilled workers needed for this type of production, regulations were not as strict as they could have been. It would be impossible to undertake an expansion straight away without improving the current plant configuration. With expansion, additional stress on the production line could cause this delicate balance to be lost. Mr. Manmohan called a meeting of various department heads. Marketing Director Mr. Kamlesh expressed bright and confident outlook for the growth of the company. He explained that the company's brand image, the goodwill it has gained, combined with the growth of this sector, indicated that it was a favorable time to expand. Mr. Naveen, the CFO agrees commenting that the expansion will provide economies of scale for the company's product. In the long run, they can expect a significant increase in product profitability. Mr. Manmohan shared his findings regarding the shortage of semi-skilled labor for existing employment as well as the current state of production and possible effects on quality and productivity if expansion continues. Mr. Kamlesh explored the possibility of outsourcing production. Mr. Manmohan expressed skepticism about the outsourcing option as he believes that any outside agency will try to maintain its own profit margins, thereby reducing the profits made by Jignesh Springs Ltd. Additionally, the issues of on-time deliveries and quality assurance will be present in this option. so.Mr. Naveen suggests comparing the costs of purchasing from an external agency versus manufacturing in-house. Mr. Manmohan accepted this solution. He started planning the cost of in-house production of springs based on the sales forecast provided by the marketing department and the estimated cost if the same production was outsourced. Constraints to consider Mr. Kamlesh presents the forecasts generated by his ministry (as presented in the table on the next page).Mr. Manmohan examined and arrived at the following figures in his report for in-house manufacturing: An additional floor in charge with a monthly salary of INR 5,500 and an annual increase of 12% • Labor wages would amount to 3.5 INR per unit. When optimizing, they expect an 8% reduction in year two, no change for year three, and an increase.