Executive Summary
Farquhar Industries is a medium-size producer of metal products. They have two separate production lines according to the requirements of the manufacturing process. Due to this differentiation, both lines are studied separately.
Based on the demand forecast, we will follow the Aggregate Planning methodology for planning production in an intermediate term, one year. We consider this model adequate, because demand presents variations of +/- 20% in the job shop and more than +/- 30% in the line flow.
Our objective is meet the demand forecast at the minimum cost without damaging the labor relationship with employees.
Job shop
Demand requirements for job shop or manual operations are stated in terms of hours. In
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In addition, we only have an overproduction of 260 hours in the whole year (1%). The production plan suggested would be very flexible, because if demand rises, our workers can always do overtime work and if it suits, we can always postpone the dismissals. On the other hand, if demand decreases, we can cut the overtime hours scheduled, or postpone hiring new employees.
Line Flow
Line Flow´s production is measure in units produced. Contrasting with manual units, these high volume units can be inventoried with a cost of 1,5€/unit/month. At the beginning of the year Farquhar has a stock of 2.000 units. We will reduce it quickly for saving inventory maintenance costs, remaining a residual inventory of 640 units (10% of the monthly top production) to avoid shortages in case of breakdowns.
In order to maximize the total profit, the monthly production plan should be 1900 unit/month for Model S and 650 unit/month
Planning and Forecasting is a vital function of management especially as it is related to inventory management. Planning has four processes associated with it. They are establishing goals, formulating strategies, implementing the plan and evaluating its success. The planning process of inventory will assist the organization choose the correct inventory system resulting in reduced costs and increased efficiency. For any business, having large amounts of inventory could prove to be expensive. In most company’s the management team will forecast sales on a monthly basis in order to keep enough inventories to fill customer orders in a timely fashion but not have an overflow of stock. There are various types of
This should allow the company to continue to increase and expand production to meet consumer demand. The available resources and process changes may also alter the learning curve and as the company pursues the learning curve to achieve cost savings volume must increase for the curve to exist. As production time goes on the amount of labor decrease is smaller than when production first started. As you can see from the analysis it took 3,737.7 labor hours to produce the first 5 batches of sandals and only 6101.8 labor hours to produce 4 times as many sandals as the first batch. Continuing production or increasing production should not necessarily increase cost, due to the fact that labor hours will decrease.
The company should also devise a reward system for those who reach the production goals, making bonuses more worthwhile than working overtime. The bonuses awarded should be posted so employees can see the benefit of reaching production goals. In order to motivate those employees who are working overtime to offset not receiving the bonus awarded to those who reach the goal, overtime hours should be restricted. Employees who are reaching production goals should be encouraged to continue working hard by receiving raises and or promotions to assistant supervisory positions. The assistant supervisor positions would be given opportunities to coach and train employees who are struggling to reach the production goals. Including these incentives in the
Production staff and process workers will be divided into five different teams. Each team will be responsible for the manufacturing of five product lines. Team members will only work on the r specialty line, and rosters will be altered to ensure adequate staff on each line during • he 12-hour production cycle. This may involve changes to staff rosters, in some cases by implementing 12-hour shifts, but will not impact on earnings or result in the loss of any hours of work.
With this overtime occuring often, it is impacting the quality of life of this particular employee which must be examined by upper management and a decision must be made to improve the process in a more efficient manner in order to reduce the overtime days.
* staff need to be hired in shipping(15 workers for one additional hour), dechaffing (one worker), milling(15) and shipping units (20)
A forecasting strategy does not exist at EBBD at this time. The two-fold approach would be a possible solution for the situation. It involves the initial application of a qualitative forecasting method. The methods are best applied when there lacks historical data. Qualitative methods include market research: questionnaires, panels, surveys, and test markets, etc., the analogy of the product life cycle: similar product lifecycle based forecasts, processes or services and professional judgment by the sales force, management, and other knowledgeable
Even though the workers are supposed to work for 8 hours per day, the normal work hours for them is 11-12 hours. In addition to this, they have to fulfill 2-5 hours of compulsory
If you don’t plan properly and staff too many employees- hours may be have to
In order to achieve excellent production capacity and reducing the overall costs the production manager has to find an optimal structure of aggregate planning which will help achieving qualitative and quantitative aspects of the organization.
As a XXXX for XXXX and other small XXXX style products, the increase in technology and electronic forms of XXXX products has resulted in significant decline in volumes and sales orders from the major customer. Statistical decline in the vicinity of XXXX on pagination and total order value over the period Aug 10 – Aug 11 has already provided the business case to reduce XXXX production from a 12 hour, 6 day a week operation to an 8 hour, 6 day a week cycle resulting in redundancies across all areas of the operation. The projection from the customer, and internal commercial projections have forecast that a similar decline over the next 2 – 4 years will result in further downsizing within the business, with a focus on retaining the skilled trades’ positions within the organisation due to the specialist nature of the product. The organisation currently plans the workforce around the Enterprise Agreement (EBA) in operation which has manning levels mandated for minimum requirements to run. At the present moment it is allowing continuous operation without the presence of observable shortages; however a more in depth review of the workforce has uncovered a predicted shortage which will impact the business’ ability to meet production demands in the future. Analysis has shown that the workforce is currently populated by almost a third of its workers being over 55 years of age
Other assumptions that we made for the case study were that we could only use the 7.5-hour workday and one line of production. We also assumed that we were limited to the range of 8 to 12 people stated in the problem. Because we are making complex equipment, we assumed that we could not change the order of the operations themselves but that we could have a station do varying combinations of operations. The projections in the Excel spreadsheet also assume that the engineers’ specified times would be accurate once production begins. Regarding the hardware testing operations, the activities are to be performed on three computers concurrently, so we divided the operation times by three to arrive at the true operation times.
The company is using a batch shop process flow structure. CBF, Inc. bases its board fabrication process on the average job size or on its typical order. This means that the company proceeds with the manufacturing process in batches so as to meet the specific requirements per order. The typical contract that the company currently gets is 60 boards per order. However, due to persisting factory defects, they manufacture a total of 75 boards per batch in order to compensate for 20% of the boards that they typically reject during the process.
Techniques for aggregate planning range from informal trial-and-error approaches, which usually utilize simple tables or graphs, to more formalized and advanced mathematical techniques. William Stevenson 's textbook Production/Operations Management contains an informal but useful trial-and-error process for aggregate planning presented in outline form. This general procedure consists of the following steps: