Case BackgroundJignesh Springs Ltd. is a family run spring manufacturer. The factory is located in the heart of Surat city. They have been producing internally for three years. Now that they have established themselves in the market, they are planning to expand. Mr. Manmohan, head of production at 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 Shouldn't Be Banned"? Get Original Essay In recent times, Mr Manmohan had started receiving complaints from workers, most of which were related to their long working hours and insufficient pay. However, after investigating, Mr Manmohan found that workers were in the habit of taking long breaks to have lunch, smoke and take tea. Furthermore, they engaged in idle chatter while the production line was running. This caused workers to require overtime almost every week to complete their daily tasks, which, in turn, unnecessarily added to production expenses. So far there have been only minor problems with delivery times and customer complaints about quality were within permissible limits. Because there was a shortage of semi-skilled workers needed for this type of production, regulations were not set as strict as they could have been. It would be impossible to proceed with an expansion immediately without improving the current layout of the factory. With expansion, additional stress on the production line could throw this delicate balance out the window. Mr Manmohan called a meeting of various department heads. Marketing Manager Mr. Kamlesh expressed a bright and confident outlook regarding the growth of the company. He explained that the company's brand image, the goodwill it has earned, combined with the growth in this sector meant it was a good time to expand. Mr Naveen, the CFO, agrees commenting that the expansion will enable economies of scale for the company's product. In the long term, they can expect a significant increase in product profitability. Mr. Manmohan shared his findings regarding the shortage of semi-skilled labor for existing work, as well as the current state of manufacturing and the possible effects on quality and productivity if expansion is pursued. Mr Kamlesh probed the possibility of outsourcing production. Mr. Manmohan expressed skepticism regarding the outsourcing option as he believes that any external agency will try to maintain its own profit margins, thus reducing the profits earned by Jignesh Springs Ltd. Furthermore, problems with timely delivery and quality assurance will be present in this option so.Mr. Naveen suggested comparing the costs of purchasing from an external agency with those of producing in-house. Mr. Manmohan accepted this solution. Start planning to calculate the cost of internal production of the springs according to the sales forecasts provided by the marketing department and the estimated cost if the same production is outsourced. Constraints to Consider Mr. Kamlesh presented the forecast generated by his department (as shown in the table on the next page). Manmohan examined and provided the following numbers in his domestic production report: An extra worker floor with a monthly salary of INR 5500 and an annual increment of 12% • Workers' wages would amount to INR 3.50 per unit. After optimization, an 8% reduction is expected in the second year, no change for the third year, and a 10% increase on a base-to-base basis..