A CASE STUDY ON

HAWTHORNE PLASTICS,Inc.
BY:GROUP-6
SHILPA(120101)
SHREYA(120105)
SHRUTI(120108)
TANU AKASH(120114)
NISHANT(120084)
DEEPANKAR(120077)
• President & founder-william campanella
• Marketing manager- john D.stein
 CASE FACTS
▪ Hawthorne Plastics ,Inc. was located in California.
▪ Specialized in the fabrication of plastic as a subcontractor to
companies such as manufacturers of toys, kitchenware,
fishing tackle, etc.
▪ The company was known for its high quality, low cost
products.
▪ On October 10, 1969 Hawthorne had just signed a contract to
deliver 100,000 lbs of plastic strapping to the David F. Pynes
Strapping Co., located in nearly Gardena, California.
▪ .
.
CONT…
▪ Pynes produced and sold a line of plastic strapping, the fastest growing part of
which was used for bundling such items as magazines and newspapers
▪ Plastic was rapidly displacing bailing wire in this segment of the strapping market.
▪ The cost of wire and plastic were comparable but plastic was more flexible than
wire
▪ Pynes had agreed to pay Hawthorne 60 cents per pound for high quality strapping
and 50 cents per pound for average quality .
▪ And would sell it at a price of $1.00 per pound for high quality 75 cent per pound
for average quality strapping.
 PRODUCTION DECISIONS

▪ It would have to produce by extruding

polypropylene resin, which cost between 20 cent
and 25 cent per pound.
Issue:
• If the critical length < average length,then
production of high quality strapping waspossible if
theright equipments were used.
• High quality strapping with shorter chain was
impossible to produce @Hawthorne.
• Process 1: simple extruding machine is used to
produce average quality strapping.
• Process 2:Produces high quality strapping
from long chain raw material.
• Process 3: High quality strapping.
 All three processes required one pound of raw material per
pound of strapping.
Process 2 and process 3 set up costs did include an
allocation of $200 per production run.

PROCESS FIXED COST VARIABLE COST

P1 13 CENT PER POUND $200 set up cost

P2 15 CENT PER POUND $700 set up cost

P3 17 CENT PER POUND $1200 set up cost

 PROBLEMS
• Which process should Mr. Nelson specify for
the manufacture of polypropylene strapping?