Case Notes/Answers
Bayonne Packaging, Inc. By Roy Shapiro, Paul Morrison
Discussion Questions:
1. What is Bayonne's industry, type of operation, and therefore its key competitive priorities?
What are its main problems?
2. What is current capacity utilization in the work centers (excluding Finishing where capacity is
variable)?
3. What is the capacity in pieces per day for the Die-cut work center, if it were running orders of
30,000 pieces in the following three cases: (a) None of the orders can be ganged; (b) pairs of orders can
be ganged; (c) all of the orders can be ganged. Assume there are 15 available work hours per day and
that the average setup takes 2.5 hours.
4. Assume that 40 of the orders partialed in October each broke into a production run in the
Royal/Queen work center, resulting in two setups for these orders instead of one. (a) What would
capacity have been in October without these additional setups? and (b) What was capacity with these
additional setups?
5. What size of orders would you route to the Royal/Queen work center, and what to the Staude work
center?
6. What is the yield at each of the work centers Sheet, Print, Die-cut, and Royal/Queen? What is the
cumulative yield for an order which the sheeter starts with 40,000 sheets?
7. How do you explain Bayonne's performance problems?
8. What should John Milliken recommend to Dave Rand?
, 4422
APRIL 13, 2012
TEACHING NOTE
ROY D. SHAPIRO
PAUL E. MORRISON
Bayonne Packaging, Inc.
Note: The “Bayonne Packaging” case has two additional supplements in Excel format, both
available free of charge from HBP.
Product 4423 is a Student Spreadsheet that Harvard Business Publishing makes widely available. It
contains the data-based exhibits in the case.
Product 4424 is restricted to Instructors Only. It contains data from the case and from this
Teaching Note, including the “model solution” to the basic quantitative assignment that students
are expected to complete as part of case analysis.
Synopsis
Bayonne Packaging, Inc., is a $43 million printer and paper converter that produces customized
paper-based packaging for industrial customers for promotional materials, software, luxury
beverages, gift food, and gift candy. The company's performance has been slipping in recent years
and it has just finished fiscal 2011 with a loss. The case provides a cursory description of the
manufacturing process; more details are provided that are about financial performance, order
volume, capacity, utilization, yield, quality and delivery problems, the scheduling and expediting
systems, and shop floor reporting problems.
Use of the Case
The Bayonne case was designed for use in a first-year MBA-level course in Operations
Management. It can also be used in more advanced courses in Operations. The case offers students
examples of break-even, capacity, utilization, and yield analysis in a manufacturing job shop setting.
It would be best if the students have already been exposed to process flow charting, process flow
analysis, process strategy, and capacity planning, since the case is somewhat complex and should
probably not be sequenced at the start of an introductory Operations Management class.
, 4422 | Teaching Note—Bayonne Packaging, Inc.
For many students not all of the possible topics can be covered adequately in a standard 90-
minute classroom session. The instructor should consider which uses of the case are needed and use
assignment questions to focus the students there. The Assignment Questions provided in this
Teaching Note are not printed in the case so as to allow the instructor as much flexibility as possible
in assigning just some of them or all, though the case protagonist does list for himself some key
questions to answer at the end of the case, which the instructor may choose to use as assignment
questions.
Learning Objectives
1. Practice analyzing a production process through process analysis—specifically, utilization,
yield, and break-even analysis in a job shop setting where capacity varies with order size and
product process requirements. Not all orders follow the same final stages, so students need to
indicate how many orders follow the different possible paths.
2. Understand how information flow and production control rules affect operations. In this case,
the company is caught in a cycle of breaking into production runs in order to expedite a
"partial" shipment on late orders, but with long set-ups on old, poorly maintained machines,
overall capacity and capacity utilization are sharply reduced by this disruption, leading to yet
more late orders. Quantifying capacity utilization raises the question of why it is so low when
manufacturing is incurring high overtime and poor delivery performance. The students can
answer this by understanding the effect on performance of the scheduling and expediting
rules in use.
3. Understand that the decision to pursue a more diverse set of customer requirements can make
operations more challenging than a relatively simple, informal system of control and a narrow
range of manufacturing capabilities can support. Revenue has grown 16% in the last year (a
recession) by deeply discounting orders sold to a range of novel customers. The usual trade-
offs among performance dimensions in a job shop (cost v. quality v. delivery) are made more
difficult in this case when new customers are placing much larger unit orders than in the past;
the product design function faces novel challenges; and finally the Fold & Glue operations
faces more difficult problems folding up and finishing these complex designs. The increased
complexity arises also from novel (for this firm) requirements from FDA regulations (some of
the new sales are for food packaging) which require new glues, new container linings, and
possibly new inks. If Bayonne could sacrifice delivery, it would have more time to work out the
bugs without high waste, scrap from high defect levels, and cost. If customers were price
insensitive and Bayonne could spend much higher costs per unit, it could rush orders through
with high waste, low yield, and still deliver enough units on time. If the customers were more
forgiving of defects, Bayonne could learn about the new production requirements "on the job"
by shipping out more nonconforming product without suffering much penalty in the
marketplace from dissatisfied customers. Bayonne does not have the luxury to handle these
trade-offs this way. As a result, manufacturing performance has dropped sharply.
Assignment Questions
1. What is Bayonne's industry, type of operation, and therefore its key competitive priorities?
What are its main problems?
2. What is current capacity utilization in the work centers (excluding Finishing where capacity is
variable)?
2 BRIEFCASES
Bayonne Packaging, Inc. By Roy Shapiro, Paul Morrison
Discussion Questions:
1. What is Bayonne's industry, type of operation, and therefore its key competitive priorities?
What are its main problems?
2. What is current capacity utilization in the work centers (excluding Finishing where capacity is
variable)?
3. What is the capacity in pieces per day for the Die-cut work center, if it were running orders of
30,000 pieces in the following three cases: (a) None of the orders can be ganged; (b) pairs of orders can
be ganged; (c) all of the orders can be ganged. Assume there are 15 available work hours per day and
that the average setup takes 2.5 hours.
4. Assume that 40 of the orders partialed in October each broke into a production run in the
Royal/Queen work center, resulting in two setups for these orders instead of one. (a) What would
capacity have been in October without these additional setups? and (b) What was capacity with these
additional setups?
5. What size of orders would you route to the Royal/Queen work center, and what to the Staude work
center?
6. What is the yield at each of the work centers Sheet, Print, Die-cut, and Royal/Queen? What is the
cumulative yield for an order which the sheeter starts with 40,000 sheets?
7. How do you explain Bayonne's performance problems?
8. What should John Milliken recommend to Dave Rand?
, 4422
APRIL 13, 2012
TEACHING NOTE
ROY D. SHAPIRO
PAUL E. MORRISON
Bayonne Packaging, Inc.
Note: The “Bayonne Packaging” case has two additional supplements in Excel format, both
available free of charge from HBP.
Product 4423 is a Student Spreadsheet that Harvard Business Publishing makes widely available. It
contains the data-based exhibits in the case.
Product 4424 is restricted to Instructors Only. It contains data from the case and from this
Teaching Note, including the “model solution” to the basic quantitative assignment that students
are expected to complete as part of case analysis.
Synopsis
Bayonne Packaging, Inc., is a $43 million printer and paper converter that produces customized
paper-based packaging for industrial customers for promotional materials, software, luxury
beverages, gift food, and gift candy. The company's performance has been slipping in recent years
and it has just finished fiscal 2011 with a loss. The case provides a cursory description of the
manufacturing process; more details are provided that are about financial performance, order
volume, capacity, utilization, yield, quality and delivery problems, the scheduling and expediting
systems, and shop floor reporting problems.
Use of the Case
The Bayonne case was designed for use in a first-year MBA-level course in Operations
Management. It can also be used in more advanced courses in Operations. The case offers students
examples of break-even, capacity, utilization, and yield analysis in a manufacturing job shop setting.
It would be best if the students have already been exposed to process flow charting, process flow
analysis, process strategy, and capacity planning, since the case is somewhat complex and should
probably not be sequenced at the start of an introductory Operations Management class.
, 4422 | Teaching Note—Bayonne Packaging, Inc.
For many students not all of the possible topics can be covered adequately in a standard 90-
minute classroom session. The instructor should consider which uses of the case are needed and use
assignment questions to focus the students there. The Assignment Questions provided in this
Teaching Note are not printed in the case so as to allow the instructor as much flexibility as possible
in assigning just some of them or all, though the case protagonist does list for himself some key
questions to answer at the end of the case, which the instructor may choose to use as assignment
questions.
Learning Objectives
1. Practice analyzing a production process through process analysis—specifically, utilization,
yield, and break-even analysis in a job shop setting where capacity varies with order size and
product process requirements. Not all orders follow the same final stages, so students need to
indicate how many orders follow the different possible paths.
2. Understand how information flow and production control rules affect operations. In this case,
the company is caught in a cycle of breaking into production runs in order to expedite a
"partial" shipment on late orders, but with long set-ups on old, poorly maintained machines,
overall capacity and capacity utilization are sharply reduced by this disruption, leading to yet
more late orders. Quantifying capacity utilization raises the question of why it is so low when
manufacturing is incurring high overtime and poor delivery performance. The students can
answer this by understanding the effect on performance of the scheduling and expediting
rules in use.
3. Understand that the decision to pursue a more diverse set of customer requirements can make
operations more challenging than a relatively simple, informal system of control and a narrow
range of manufacturing capabilities can support. Revenue has grown 16% in the last year (a
recession) by deeply discounting orders sold to a range of novel customers. The usual trade-
offs among performance dimensions in a job shop (cost v. quality v. delivery) are made more
difficult in this case when new customers are placing much larger unit orders than in the past;
the product design function faces novel challenges; and finally the Fold & Glue operations
faces more difficult problems folding up and finishing these complex designs. The increased
complexity arises also from novel (for this firm) requirements from FDA regulations (some of
the new sales are for food packaging) which require new glues, new container linings, and
possibly new inks. If Bayonne could sacrifice delivery, it would have more time to work out the
bugs without high waste, scrap from high defect levels, and cost. If customers were price
insensitive and Bayonne could spend much higher costs per unit, it could rush orders through
with high waste, low yield, and still deliver enough units on time. If the customers were more
forgiving of defects, Bayonne could learn about the new production requirements "on the job"
by shipping out more nonconforming product without suffering much penalty in the
marketplace from dissatisfied customers. Bayonne does not have the luxury to handle these
trade-offs this way. As a result, manufacturing performance has dropped sharply.
Assignment Questions
1. What is Bayonne's industry, type of operation, and therefore its key competitive priorities?
What are its main problems?
2. What is current capacity utilization in the work centers (excluding Finishing where capacity is
variable)?
2 BRIEFCASES
