Case Name :      Daikin Industries

Authors :           Chris J. Piper, Tetsu Imigi

Source :             Ivey Publishing

Case ID :            904D18

Discipline :        Operations Management

Case Length :    11 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

The president of Daikin Industries Residential Air Conditioning Shiga Factory confronted the prospect of an unseasonably cold summer at a time when the Shiga Factory had large quantities of its products in inventory in anticipation of strong summer sales. The president was concerned not only about pending losses in the current year, but also about the factory’s long-term survival. Unprofitability was unacceptable and Daikin was caught in a stagnant market in which it was increasingly difficult to build share by product differentiation. The Shiga Factory had been forced to use large inventories to cope with uncertain demand and a long and unwieldy supply chain. The president must decide whether to reduce the number of models, build a lower cost factory outside Japan, or exit the business. He must also determine whether there are any other options.