Concept explainers
M&L MANUFACTURING
M&L Manufacturing makes various components for printers and copiers. In addition to supplying these items to a major manufacturer, the company distributes these and similar items to office supply stores and computer stores as replacement parts for printers and desktop copiers in all the company makes about 20 different items. The two markets (the major manufacturer and the replacement market) require somewhat different handling. For example replacement products must be packaged individually whereas products are shipped in bulk to the major manufacturer.
The company does not use forecasts for production planning. Instead, the operations manager decides which items to produce and the batch size based on orders and the amounts in inventory. The products that have the fewest amounts in inventory get the highest priority. Demand is uneven, and the company has experienced being overstocked on some items and out of others. Being understocked has occasionally created tensions with the managers of retail outlets. Another problem is that prices of raw materials have been creeping up, although the operations manager thinks that this might be a temporary condition.
Because of competitive pressures and falling profits the manager has decide to undertake a number of changes. One change is to introduce more formal
With that m mind the manager wants to begin forecasting for two products. These products are important for several reasons. First, they account for a disproportionately large share of the company’s profits. Second, the manager believes that one of these products will become increasingly important to future growth plans and third, the other product has experienced periodic out-of-stock instances.
The manager has compiled data on product demand for the two products from order records for the previous 14 weeks. These are shown in the following table.
*Unusual order due to flooding of customer’s warehouse.
1. What are some of the potential benefits of a more formalitzed approach to forecasting?
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OPERATIONS MANAGEMENT (LL) W/CONNECT
- Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. As the Marketing Manager for Southeastern Corrugated, what would you do upon receiving the request for quotation from Coastal Products?arrow_forwardMpho is an avid seamstress and want to sew and sell high quality, reusable, designer face masks during the current Covid-19 pandemic. She will design and sew the masks herself and use her automatic embroidery machine to put her logo on each mask sold. With the help of her son, deliveries will be made all over Gauteng within 3 days of placing the order. Every mask will have a unique threelayer design with adjustable straps to ensure comfort and fit. Mpho’s only expense is the material needed to sew the masks and delivery costs. At this stage, Mpho’s target market is limited to Gauteng. Draw a diagram to illustrate the transformation process of Mpho’s new business. Be sure to include all relevant elements, headings and arrows to indicate the flow of products/ servicesarrow_forwardX1=29000 X2=5 I need a step by step answer please (not on excel please)arrow_forward
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- Shoes Ltd. manufactures three items: Sneakers, Takkies and Sandals. The table below contains information regarding these products: Sneakers (R/ unit) Takkies (R/ unit) Sandals (R/ unit) Material cost 60 75 40 Labour cost 24 68 42 Variable overhead cost 7 12 16 Fixed overhead cost 36 23 11 Selling price per unit 870 990 650 Volume of production 12 000 28 500 31 200 Fixed overheads are allocated to products based on direct labour hours. Direct labour hours are constrained and therefore limited to 140 000 hours. The direct labour rate is R25 per hour. w Required: Q.3.1 Calculate the contribution margin per labour hour and then rank the products in order of profitability. Q.3.2 Calculate the number of units of each product that needs to be manufactured toarrow_forwardX1= 29000 X2=5 I need a step by step answer please :)arrow_forwardThe Frist Corporation has the followinginternal controls related to inventory:1. Only authorized inventory warehousing personnel are allowed in inventory storageareas.2. All inventory products are stored in warehousing areas that are segregated fromother storage areas used to house equipment and supplies.3. All inventory held on consignment at Frist Corporation is stored in a separatearea of the warehouse.4. The inventory purchasing system only allows purchases from pre-approved vendors.5. The perpetual inventory system tracks the average number of days each inventoryproduct number has been in the warehouse.6. Microchips are embedded in each product and when inventory items are removedfrom the warehouse to shipping, radio-frequencies signal a deduction of inventoryto the perpetual inventory system.7. On a weekly basis, inventory accounting personnel take samples of inventoryproducts selected from the perpetual inventory system and verify that the inventoryis on-hand in the warehouse…arrow_forward
- As regard to customer data as well as data from transactions, the Amazon Go model is premised on hundreds of pictures being taken of every person entering and exiting the store. Amazon then stores these pictures for long enough to identify the products being purchased, before the images are deleted. Credit card information is captured at the point of registration for the app that is required to use the Amazon Go stores, and then credit and debit card information is captured when purchases are made. Further receipts are issued after purchases are made, and the system also records how long an individual has been shopping for (this is printed on the receipt). With a need to capture and store such large volumes of information that is both sensitive and personal to people, it is not surprising that many are concerned for the security of the information and the potential for the information to fall into the wrong hands. Amazon Go stores are in their infancy, and have not had to deal with any…arrow_forwardA busness is aunchng a new product. The aunch wil require a number of related actvties as follows hre (7 weeks) select an advertising agency (2 weeks), plan an advertising campaign wth the agency (4 weeks),products from the manufacturer (13 weeks) select distributors for the product (9 weeks), take initial orders fromoperation (12 weeks), pack enough products for the launch stock (8 weeks), order the launch quantty ofthe distrbutors (3 weeks), dispatch the initial orders to the distrbutors (2 weeks). (a) What is the earest timeconduct the advertsing campaign (10 weeks), design the packaging of the product (4 weeks), set up packinga sales manager (5 weeks), requre the sales manager to recruit saes peope (4 weeks), tran the sales people that the new product can be ntroduced to the market? (b) If the company hre traned salesmen who do notneed further training, coud the product be introduced 7 weeks earler? (c) How long could one delay selectngthe advertising agency? In the example above,…arrow_forwardOur Kapeng Barako is well-known in Batangas. This product's packaging is made of glass, aluminum,and other plastics. Make a list of the advantages and disadvantages of employing each of these threematerial types for the production of these packaging materials for Kapeng Barako, including cost,recyclability, energy consumption, fuel consumption, and forming processes.arrow_forward
- Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning