Chad’s Creative Concepts Case Study
1. What types of decisions must Chad Thomas make daily for his company’s operations to run effectively? Over the long run?
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
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The custom line has taken priority, however, due to the higher dollar sales, and the standard lines products were often left temporarily incomplete till the custom orders were met. This is a significant problem because the consumers of the standard furniture expect lower lead times and lower prices.
3. How has the move to producing standard furniture affected the company’s financial structure?
The profits have increased for the company with the custom line accounting for 60% of volume and 75% of dollar sales according to this case study. The standard line has seen a continued increase in sales as well. What comes with the increased profit due to the increased manufacturing is the need to put higher amounts of capital into storing the higher inventory. With the company being at capacity, the lead times may not be meeting consumer demands either. The expansion that is needed would initially cost Chad’s Creative Concepts greatly. Without some type of expansion (which would most likely require a new plant), soaring inventory costs will need to be attended to.
4. What might Chad Thomas have done differently to avoid some of the problems he now faces?
Perhaps Mr. Thomas should have studied and evaluated what pursuing a standard line of furniture in addition to maintaining the custom line of furniture would
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Lastly, the company suggest to expand their current inventory through increasing production and capacity. With the increase in production rate the company can gain more consumers as a whole through supply and demand. Doing this would give the company an opportunity for more exposure and perhaps better brand recognition.
CR goes up: increase the size of the company → more internal control concern over new line of product’s inventories.
5) Threat of substitutes is low, in comparison with technology that constantly evolves, furniture cannot be easily substituted. But its insignificant impact is fully neutralized by high competition problem.
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