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.
2. Prepare a weeldy forecast for the next four weeks each product. Briefly explain why you chose the method you used (Hint: For product 2, a simple approach, possibly some sort of naive/intuitive approach, would be preferable to a technical approach, would be preferable t a technical approach in view of the manager’s disdain of more technical methods.)
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OPERATIONS MANAGEMENT LOOSELEAF W/ CONN
- 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_forwardShe must travel to Kenya to check on quality and transportation. The trip will cost $2,500. The cost of the handbag is $10 and shipping to the United States can occur through the postal system for $2 per handbag or through a freight company which will ship a container that can hold up to 1,000 handbags at a cost of $1,000. The freight company charges $1,000 even if less than 1,000 handbags are shipped. Leslie will sell the handbags to retailers for $20. Assume there are no other costs and benefits. what is the output level that both shipping methods yield same profit? Hoarrow_forwardA company produces and sells electronic components that are purchased by computer manufacturers. The company just received an order for 3000 circuit boards that must be delivered to the customer in 28 days. Shipping takes 4 days and every production run for this component takes 3 days for any quantity of circuit boards between 1800 and 4200. The Bill of Materials (listing the materials and quantities required to produce a single circuit board ordered) is in the table below: Quantity Component Required Input Bare printed 1 board Сарacitor 8 Op amp Resistor 4 Transistor 3.arrow_forward
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- Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning