As a result of this overproduction, another negative effect of just-in-case manufacturing is a decrease in cost efficiency. The most obvious costs would include storage and warehouse expenses (Conrad “The Advantages of…”). In order to have these large inventories, there have to be places to hold such large quantities of goods. Storage costs comprise of preserving the accumulated product to ensure that it functions properly. If the cars or parts are unable to perform, stock might have to be discarded, increasing physical waste. The products lost mean that money and opportunity for profit are lost. In addition to storage costs, there are also warehouse expenses, in which energy consumption, personnel, and assorted equipment are needed to maintain the facility and product. Since our just-in-case manufacturing method requires that we make large amounts of cars, we need places to store them. The more product, the more warehouses, which means there are more warehouse costs that will diminish any profit that we make.
The company is weakened mainly by its lack of technological advancement in every area of production. For example, if the company chose to modify their equipment to produce their “Atherley” model as well, it would be able to lower production costs of this model, in turn increasing the profits of this model further. In addition, the Atherley Furniture Company greatest threat is the decreased market for their “Parkdale” model. The “Parkdale” model has the most time consuming and costly production. With lack of a market for this model, the company stands to continue to lose profits. In conclusion, if the company wishes to continue to operate their chair division profitably as well as efficiently, the above issues need to be addressed and corrected.
They can operate on a just in time method, when they get a constant understanding of demand. This way they can cut production costs, by only making what they need. They can also predict when they need more inventory to make sure that they never run out of stock for their customers to purchase.
The current production process that Thicketwood Ltd is utilizing can no longer keep with the demand of custom kitchen cabinets. Management must implement a new step to the production line to increase efficiency; however, they must also maintain quality as the customers that are purchasing these cabinets expect top quality for the amount of money they are paying.
a. After analyzing Pro-Forma Income Statement for all four quarter the utilization of Just-in-time strategy in Quarter 2-3 would have made Lean in Enterprises for more profitable. Since the premise of Just-in-time is to reduce waste and make sure that the supply chain is working efficiently to meet the customer demand. Just-in-time inventory is the minimum inventory necessary to keep a perfect system running. In Operation Management Heizer and Render define JIT inventory as the exact amount of the good arrives at the moment it is needed. (p. 2010) The ability to implement this strategy in Quarter 2 and Quarter 3 would have been very beneficial to the company expenses. The Just-In-Time strategy would have help the company avoid the $8,163 holding cost an excess capacity cost of $491,524. Just-in-time strategy would have prevented additional production after the product had low customer demand. Just-in-time would have also prevented the same waste
Stickley Furniture has a long tradition of manufacturing and selling fine furniture goods. The Consulting Firm has been charged with the responsibility of evaluating and explaining how the company operates and tracks jobs and inventory. Also, the pros and cons of how orders are processed are evaluated. Finally, suggestions are made regarding the way the company should handle forecasting, inventory, work measurement, facility layout, shipping, quality, goals, and recognition. A full change in operations could result in greater customer satisfaction, reduced electricity usage, greater customer satisfaction, faster and less costly delivery of goods sold, less
In addition, the company’s production process is very efficient and results in a minimal amount of raw material waste. These factors and the small-front investment for the product will enable to company to offer the products at the lowest possible cost in relation to similar products in the market.
Chad Thomas needs to make sure daily manufacturing schedules are aligned with the current orders. The fact that the same set of employees and the same set of tools are being used to manufacture both the custom and the standard pieces of furniture is definitely problematic. In order to meet the demands of each product, it is critical that scheduling be created in the most efficient of manners given the current constraints. Allocating all the resources properly is a key along with scheduling and layout. In regards to long term decisions, Mr. Thomas is going to have to decide
The Space Age Furniture Company manufactures tables and cabinets to hold microwave ovens and portable televisions. In this paper, I will explore ways that the company can be more efficient in the time to manufacture these parts and the overtime hours involved. To accomplish this, I will look at the type of operation, trade-off between the costs of overtime and inventory, ways that management can track job status and offer any suggestions regarding these issues.
The Theory of Constraints indicates that excess capacity from ‘subordinate’ departments should be utilized to lessen the strain on the bottlenecked department. Until the constraint on production has been removed management should subordinate everything else to the constraint. The proposed action of outsourcing inspection from the coating and sharpening department will free-up more valuable direct labor hours in the area of constraint. A separate inspection station before the final stage of production should be added to the production process. An employee from the chemical bathing stage will be cross-trained to inspect products as needed for the brief periods of inspection required. Because the second process has been deemed subordinate to the area experiencing constraint its excess capacity can be utilized in a more valuable capacity. Each additional hour in the coating and sharpening process will result in a firm benefit of $1250, or the contribution margin per unit of constraint for the Model C210. The addition of an inspection
Change, creativity and innovation are essential elements for survival and growth of an organization. Creativity is vital for the birth of fresh and beneficial ideas. Creative thinking allows groups and individuals to solve problems or stimulate to think differently in order to bring forth fruitful ideas. The above mentioned creative thinking enabled our team of six different personalities to come together and implement a plan to solve a complex problem in a hospital. Our assigned task was to recommend a plan in order to alleviate hospital readmission among elderly population within thirty days of discharge. In this paper the author is narrating the team dynamics, functionalities and personal competencies in the process of recommending a change in the system. As a member in the innovation leadership team the author is also reflecting on the assessment, capacity for innovation in the organization which is the hospital where the team is assigned.
One nurse. One schoolteacher. One bookkeeper. Three people with some managerial experience in nonmanufacturing settings. Mr.Woody (with help) your must now decide how to design his new organization. This design will include the management structure, pay system, and the allocation of work to individuals and groups. The bar stool making process has 15 steps: 1. Wood is selected. 2. Wood is cut to size. 3. Defects are removed. 4. Wood is planed to exact specifications. 5. Joints are cut. 6. Tops are glued and assembled. 7. Legs/bases are prepared. 8. Legs/bases are attached to tops. 9. Bar stools are sanded. 10. Stain is applied. 11. Varnish is applied. 12. Bar stools are sanded. 13. Varnish is reapplied. 14. Bar stools are packaged. 15. Bar stools are delivered to the customer. Mr.Woody currently manufactures three kinds of bar stools (pedestal, four-legged corner, and four-legged recessed). There is no difference in the difficulty of making the three types of bar stools. Major cost variations have been associated with defective wood, imprecise cuts, and late deliveries to customers. Mr. Woody must decide how to organize his company to maintain high quality and profits. He has thought about several options. He could have some individuals perform the first step for all types of bar stools; he could have an individual perform several steps for one type of bar stool; or he could have a team perform some combination of steps
Production concept assumes that customers will want to buy products or services that are easily available and affordable. Hence, management would focus more on production efficiency and distribution of the product. This concept is useful when the demand of a product is higher than its supply. Coca-cola is one of the successful examples of companies that adopt production concept. The company makes Coca-cola can be purchased almost everywhere in a country, either urban area or rural area.
The manufacturing cost can be lower as the rearrangement of the production line to meet urgent order can be minimize or even eliminated.
A common way of decreasing the amount of inventory a business holds on a daily basis is implementing a just-in-time inventory process. A Just-In-Time inventory system means that the business gets the materials for a product, as they are demanded. “The electronic data