Assignment #2 Case Two- Apix Polybob Company
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Assignment # 2
Case Two: Apix Polybob Company
Ken Mack, plant manager for the Apix Polybob Company, was having a heated discussion with Jack Gould, the
production and inventory control manager. Ken was getting tired of frantic calls from Jim Uphouse, the marketing
manager concerning the late orders for their Polybob (polybobs are a fictitious product) customers and was once again
after Jack to solve the problem. Some of the discussion points follow.
JACK: "Look, Ken, I'm not sure what more we can do. I've reexamined the EOQ (economic order quantity lot size)
values and all the reorder points for all our inventory for all our Polybob models, including all component levels
and purchased items. I have implemented strict inventory control procedures to ensure our accuracy levels to at
least 80%, and I've worked with the production people to make sure we are maximizing both labour efficiency,
and utilization of our equipment. The real problem is with those salespeople. We no sooner have a production
run nicely going, and they change the order or add a new one. If they would only leave us alone-for a while and
let us catch up with our current late order bank, we would be okay. As it is, everyone is getting tired of order
changes, expediting, and making everything into a crisis. Even our suppliers are losing patience with us. They
tend to disbelieve any order we give them until we call them up for a crisis shipment"
KEN: "I find it hard to believe that you really have the EOQ and reorder point values right. If they were, we
should not have all these part shortages all the time while our overall inventory is going up in value. I also don't
see any way we can shut off the orders coming in. I can imagine the explosion from Jim if I even suggested such
a thing. He will certainly remind me that our mission statement clearly points out that our number-one priority
is customer service and refusing orders and order changes certainly doesn’t fit as good customer service."
JACK: "Then maybe the approach is to deal with Frank Adams (the chief financial officer). He's the one who is
always screaming that we have too much inventory, too much expediting cost, too much premium freight costs
from suppliers, and poor efficiency. I've tried to have him authorize more overtime to relieve some of the late
order conditions, but all he'll say is that we must be making the wrong models. He continually points to the fact
that the production hours we are paying for currently are more than enough to make our orders shipped at
standard, and that condition has held for over a year. He just won't budge on that point. Maybe you can
convince him."
KEN: ''I'm not sure that's the answer either. I think he has a point, and he certainly has the numbers to back him
up. I'd have a real rough time explaining what we were doing to Ron Morrison (the CEO). There's got to be a
better answer. I have heard about a systems approach called material requirements planning or something like
that. Why don't you look into that? Take a representative model and see if that approach could help us deal with
what appears to be an impossible situation. I'm sure something would work. I know other factories have similar
production conditions yet don't seem to have all our problems."
Following is the information about Polybob model A that Ken suggested as a representative model to use for the analysis:
The following are the master schedule production lots for Model A: Complete 50 units, week 3
Complete 50 units, week 5
Complete 60 units, week 7
Complete 60 units, week 9
Complete 50 units, week 11
Upon seeing this information, Jack stated, "Look at how regular our production schedule is for this model. The reorder points will more than cover requirements, and none have lead times that make it tough to respond. This analysis should show that all the work I did on EOQ and reorder points was right, and the real problem lies with those sales and finance people who don't understand our production needs."
Questions
1.
What are the key issues brought about in the conversation? What are the key symptoms, and what are the
underlying problems? Be specific in your answers.
2.
Use the product information to develop an MRP approach to the problems. Would MRP solve the problems? If
so, show specifically how MRP would avoid the problems discussed by Ken and Jack.
3.
Would an inventory level of 80% be acceptable for effective planning?
""
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orry Emily," Laura said, her voice raised, "these are the same people who did not leave a
Stip after I served them last week. I am not serving them!"
Emily seated the party quickly in another server's section, so that the guests did not notice
the incident. The Lounge got very busy suddenly, and she could not deal with the issue until
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SO
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