After work sampling was complete, the team collected data to generate spaghetti diagrams. Team members stood in different work areas watching operators perform their jobs. On a current layout drawing, team member drew paths of where operators were traveling too. Each individual operator’s spaghetti diagram can be seen in Appendix 7. Each production area is shown below on Figure 11, 12, 13, 14, 15, 16 and 17. These figures do not represent frequency, they only represent path to the destination. As shown in the figures, there is a significant amount of movement and travel beyond an operator’s specific work area. Figure 11: Fabrication Area Spaghetti Diagram Figure 12: Alternative Fabrication Workstation Spaghetti Diagram
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Table 7: Expected Travel Expenses ImageFirst Signs will anticipate a savings of $99,300 per year. This calculation is based on labor costs, space utilization, reduction in rework, and inventory costs. These calculations can be seen in Table 8 below. Labor cost is calculated in two fold. First by multiplying the number of operators (17), number of weeks per year (50), average hourly cost per employee ($16), and the average number of hours anticipated to be saved with the implementation of the deliverables (2 per operator). Second by multiplying the number of shipping and receiving operator (1), number of weeks per year (50), average hourly cost per employee ($16), average number of hours anticipated to be saved with the implementation of the deliverables (5). Space utilization was calculated by considering the average monetary impact of bringing in two new machines. Per Dave, the facility needs to be preparing for two machines. One will be arriving in April and the other one is anticipated to arrive late summer. Reduction in rework was calculated by multiplying an average cost to fix a sign ($250) by the number of months in a year (12) by the average number of defects needed to be fixed per month (5). Lastly, inventory costs were calculated by considering the average number of extra material on hand (20) by the average cost per foot of the material. As seen below in Figure 19, ImageFirst can anticipate an 85% ROI for this
The advantage of replacing the manufacturing lines now would be combat the decreasing efficiency rate (within 5 years it has declined from 90% efficiency to 76% efficiency when the target is 80%) and to intervene with the deterioration that has
Management should note that the level of activity was above what had been planned for the month. This led to an expected increase in profits of $1,100. However, the individual items on the report should not receive much management attention. The favorable variance for revenue and the unfavorable variances for expenses are entirely caused by the increase in activity.
Specific Activities 3 4. Milestones 5 5. Dependent Relationship & Legs 5 6. RACI chart 6 7. Scheduling 11 7.1 Estimation of Most Likely Case Duration 11 7.2 Durations of Added Tasks 11 7.3 Critical Path 12 7.4 ES, EF, LS, LF & Slack 13 8.
Customers must use the internet to fill out an online form to address their complaints or service needs. These forms are processed by employees in your department. Currently the turnaround time on any given form is between four to eight hours. This creates a number of other customer complaints. Project Call Center is designed to reduce this turnaround time by 75% by creating and staffing a call center in Tampa. Building acquisition, building renovations, building fit out, IT system upgrades, and hiring and training of staff are estimated to cost $8.5 million dollars. This $8.5 million dollars can be paid evenly in any two quarters in the next year. In addition, seven new employees will need to be hired at $40,000 burdened labor costs per year to staff the call center. Management of this project could easily be done with the current in-house staff. Most of the work of this project would be outsourced and will have minimal impact on day-to-operations.
In order to meet customer demands for higher product quality, to comply with federally-mandated environmental regulations, and to reduce production costs, HCC must spend $2,000,000 within the next three years to upgrade equipment. The upgrade is expected to result in production efficiencies that will lower material and labor costs by reducing defective products, process waste, in-process inventory, and production man-hours through simplified work processes. It has been over a decade since significant modifications were made to the production facilities. Those changes were mostly technical in nature and did not substantially alter work processes or reduce overall employment. The average productivity gain in the industry for the past five years has been 3% per year. Financing for the loan to purchase the equipment
Answer: It seems like Bridgeton and its consultants assumed that the savings from outsourcing those two products would be 435% of the direct labor dollar cost for those products - calculated amount $53,496.
In line with our objective, we proposed two different models both resulted in reducing the total cost. Proposed scenarios are:
The cost of implementation of the options: It deals with the technicians and the reduction in time of implementation. This leads to better customer service and increases efficiency of the technicians. Also considering a customer base reduction of 5% (Exhibit 2), $1 million dollars will be a prudent investment.
By implementing Centralized warehouse system, Polaroid would achieve a net annual savings of $5.7 Million. Savings through reduction of workforce will be $2.5 Million and Warehouse rental savings will be $1 Million
The above cost system was efficient during the 1980s because it split up overhead over three cost pools, adding an additional pool, which has machine hours as its cost driver. This proved efficient because “[w]ith increased usage of automated machines, direct labor run time no longer reflected the amount of processing being performed on parts, particularly when one operator was responsible for several machines.” Packet, pg. 7.
Another huge expense the company had was all the improvements they were making. It would cost the company about $500,000 per year, since they did not use a contract manufacturer. They estimated they lost a total of $200,000 per year. Because of all the costs, Scotts is experiencing difficulties at the Temecula plant. They are considering the possibility of completely outsourcing the spreaders manufacturing and assembly to China to save costs. Scotts Miracle-Gro already has experience in outsourcing. They have already outsourced the most complex components of the spreaders to China. They are considering completely outsourcing the company in hopes that they will profit from the move. In doing so, they would have to shut down the Temecula plant and, by closing the plant, Bob Bawcombe, will lose all the skilled laborers he has trained and his efforts to keep them by hiring temporary workers, will have gone to waste. Another issue to complete outsourcing is there “in-molding labeling” technology. If Scotts decides to outsource, it needs to provide the contract manufacturer with the equipment and the know-how to perform “in-molding labeling”, if not, they must remove the feature from its spreaders. An additional concern with this plan is if they do offer the training and equipment, it is questionable that the manufacturer will be able to use the current mold from Temecula. They would need 10 molds at $40,000 each and each mold lasts approximately five years.
1. Use the Overhead Cost Activity Analysis in Exhibit 5 and other data on manufacturing
Synopsis and Objectives The owner of a midsize folding carton printer is considering the replacement of an old machine for cutting sheets of paper from rolls (a sheeter) with a new one. This standard capital budgeting analysis, which requires identification of both the relevant cash flows and the relevant discount rate, is enhanced by an alternative that is not explicitly stated but can be readily identified and analyzed—to outsource all sheeting and close down the sheeting operation. This alternative, which turns out to be financially optimal based on quantifiable case facts, forces students to consider strategic and other nonquantifiable
Synopsis and Objectives The owner of a midsize folding carton printer is considering the replacement of an old machine for cutting sheets of paper from rolls (a sheeter) with a new one. This standard capital budgeting analysis, which requires identification of both the relevant cash flows and the relevant discount rate, is enhanced by an alternative that is not explicitly stated but can be readily identified and analyzed—to outsource all sheeting and close down the sheeting operation. This alternative, which turns out to be financially optimal based on quantifiable case facts, forces students to consider strategic and other