個案資料

On March 23, 2021, Vineet Sharma, the sole owner of MedStar Polymers, India, a medical-grade latex glove manufacturing company, was considering the dilemma of how to scale up production to fulfill an unprecedented order during COVID-19. With demand for protective equipment outstripping global supply during the pandemic, an exceptional business growth and expansion opportunity for glove manufacturers had emerged. Several manufacturers had expanded production by adding new production lines. On the surface, a production ramp-up looked as simple as increasing inputs: raw material, labour, machinery, equipment, and cash. However, a decision to rapidly increase production could create risk and almost destroy a business—especially when constraints such as raw material unavailability, transport and travel restrictions, logistical problems, and state- and area-wide lockdowns started impacting the production process. Sharma had to decide how to increase output while also dealing with disruptions such as a shortage of labour and concerns about the use of natural latex rubber. Was now the right time to add a new production line? Should he switch to making nitrile gloves? He needed to make decisions quickly, as the current high demand would likely not last.

This case was written for use in managerial economics and microeconomics classes at post-graduate and MBA levels. It aligns well with discussions of production function, resource allocation efficiency, and the optimal mix of inputs in the short run and long run, and it helps students understand cost analysis in production processes. It can also be applied in discussions regarding productivity and production capacity in operations and production management courses. The case highlights the importance of production theory and its application, especially during a black-swan event when resource scarcity makes efficient utilization of resources inevitable. Production process analysis is the bedrock of cost analysis, on which many managerial decisions are grounded. By analyzing and discussing this case, students would be able to do the following:<ul><li>Explain the commonly used Cobb-Douglas production function.</li><li>Derive the optimal mix of inputs and the efficient input allocation for a company.</li><li>Explain when it is possible to substitute one input for another in manufacturing, and identify the appropriate extent of such a substitution.</li><li>Analyze the concept of output elasticity, and estimate the returns to a scale.</li><li>Explain the challenges and opportunities for increasing the scale of production in a small-scale business, and explain the role of productivity in this process.</li></ul>

• production, production function, resource allocation, optimal input mix, small business, returns to scale, least-cost production