Both of these cabinet types require a part which is referred to as part 3079. In order to reduce part 3079, a skilled machinist is required to program and stand watch on a special lathe. The skilled machinist, De Squeezes, is unhappy because of the increase in overtime to produce part 3079 due to the implementation of material requirement planning (MR.) system. Space Age Furniture has adopted the MR. system in order to reduce storage cost. The estimated storage cost for specifically part 3079 is $1. 50 per week for the Saturn microwave stand and $1. 5 per week for the Gemini television stand therefore; the part is produced when needed and Space Age Furniture does not want to have an abundance of parts n hand. The master schedule for producing the Saturn and Gemini cabinets is illustrated in Table 1. Table 1 Saturn and Gemini Cabinets Master Schedule Week 2 3 4 5 6 Saturn 300 400 600 Gemini 700 500 Part 3079 is used in subassembly no. 435, which is used in the Gemini television stand and no. 257 used for the Saturn microwave stand. In each subassembly one of part 3079 is used, and only one of each subassembly is used in the final product.
Even though, the lathe is only used to product part 3079, Space Age Furniture determined the subassembly will only be produced in quantities f 1000 minimally (Venturesome & White, 2013, Chap. 9). Based on the case study and the information provided, an MR. will be developed to accommodate Space Age Furniture with a focus on subassembly production while considering the minimal 1000 predetermined production, suggest an alternative plan for subassembly production while considering the cost variance between overtime and storage.
Additionally, develop an alternative MR. that will allow an analysis to compare and contrast production processing in order to determine the primary mode of operation. Lastly, this analysis will attempt to provide management with the means to accurately track job statuses throughout the production process and provide recommendations to increase satisfaction for both the company and the consumer. Space Age Furniture MR. Based on the information provided in the Case Study of Space Age Furniture, Space Age Furniture produces the Saturn and Gemini cabinets, which requires a subassembly that consists of part 3079 for each.
Subassembly 257 is needed for the Saturn cabinet and subassembly 435 is needed for the Gemini. Simply, one of part 3079 is needed for each subassembly 257 and 435 in order to construct he final product. Each subassembly including part 3079 is a key component and is required. In turn, part 3079 and the subassembly, 257 and 435, are a vital piece of production requirements that must be considered when developing the MR.. The MR. key requirements are made up of the master schedule, bill of materials, and inventory records.
The master production schedule is a plan developed to provide direction with regards to production, inventory, and staffing, to name a few, which determines future production limits for the end product (Inventory Solutions Logistics Corporation, 2015, p. 1). The master acquirement plan is the overall plan that is developed by management to allocate resources and control production output. The MR. does not breakdown or give details of what resources and/or parts that are required to produce the end product. The master schedule drives operations and inventory requirements.
Next, the bill of material is a list of material or components that will be required to produce the determined final product that is obtained from the master schedule. This includes the quantity needed of each component. The bill of material also shows how the parts or components are related to the finished reduce. For example, part 3()79 is used to produce subassembly 257 and 435 in order to construct either the Saturn or Gemini cabinetry. Lastly, inventory files are imperative to this process. In order for a company to produce an end product, management must know the amount of material that is on hand or needs to be produced.
Inventory files must be accurate to ensure the company is producing only enough parts and/or assemblies that are needed which is determined by the master schedule. If inventory files are not accurate and there are more produced then what is needed, the company will be subjected o an addition cost for storage. With regards to Space Age Furniture, the master schedule is determining the quantity of 1000 end products should be produced. The primary challenge within the MR. environment is how to meet the predetermined quantities and order due dates while maintaining and/ or adapting to various fluctuations (Toe, Bathwater, & Graves, 2011, p. 11). Improvements As stated previously, the MR. environment can be challenging when there are fluctuations in demand and/or resources. In most cases, MR. is implemented due to an increase in demand however; Space Age Furniture has an additional sue, as a result of the mandatory output, Space Age Furniture’s current resources are inadequate and cannot continue to meet the company needs. The predetermined output is a mix of the Saturn and Gemini cabinets totaling 1 000 per week. In order to produce and meet company goals, Space Age Furniture lacks the adequate resources to produce part 3079.
Part 3079 requires a specialized machinist to operate a lathe used only to produce said part. At this time, Space Age Furniture has only one machinist who runs the specialized lathe. In order to adjust resources to accommodate for the fluctuation in demand ND increase human resources, the focus of improvement revolves around part 3079 and the resources needed to meet demand. Space Age Furniture challenge is to find a way to increase the output of part 3079 with adequate human resources in order produce the subassembly required for the Saturn (257) and Gemini (435).
Not only does Space Age have to plan for meeting quantity goals, it must also consider associated costs and the trade-offs that are available such as; storage costs, overtime costs, training, addition resources, outsourcing, etc. There are several options to which the company can select o implement however; the challenge is finding the right mix. Considerations between storage costs ($1. 25/$1. 50 per week) and overtime costs ($33 per hour) must be analyzed to determine which option would be the lesser cost. Additionally, Space Age Furniture can outsource part 3079.
By outsourcing part 3079, Space Age Furniture relinquishes control of part 3079 being produced and eliminates further stress on human resources. The cost of outsourcing must be comparable to the costs that were eliminated by no longer producing the part in- house. An alternative to outsourcing the entire lot of part 3079 would be to only outsource the quantity that cannot be meet by in-house resources. Again, a cost comparison must be completed to further assess this option. The downside to both of these options is whether or not the supplier can meet the need of the company on a continuous basis without delays.
Additional options are to hire a new employee or to cross train existing employees to qualify to operate the lather to produce part 3079. If a new employee was to be hired, the cost and time to bring up to speed may not be efficient. Cross-training is a likely option since the resource can be selected from the current pool of human resources. Cross-training can be done by either the current machinist or outsource the training depending on the production schedule and resource availability will further define the course of action, yet this option seems that it would be the best approach under the given circumstances.
By cross-training currently employees, the employer can ensure part 3079 would constantly be available for production, train employees who are already loyal to the company which promotes performance management relating to continuous improvements (Canaan, 2014, p. 374), and produce the demand of current and future demand. In addition to cross-training a current employee, Space Age Furniture could increase production of part 3079 to ensure the quantity never falls short of what is needed. Trade-offs Within any organization, company, or even households, there are trade-offs that are utilized to meet the needs of the invested party.
Trade-offs are used in order to meet the needs of the company while considering the specific circumstances of each such as; demands, resources, costs, and any other variables that can be utilized to benefit the entity. With regards to Space Age Furniture, overtime cost and employee satisfaction is the primary reason for the change. Space Age Furniture currently has all but one resource in order to meet the product demand, which is an additional lathe operator. The trade-off between costly overtime and cross-training additional employees to operate the lathe has many advantages for Space Age.
There are federal regulations established by the Department of Labor under the Fair Labor Standards Act of 1938 that enforce current and future overtime regulations which can have a significant impact to how an employee is paid overtime and company policy and costs (Rorer, R. E. , & Wills, 2014, p. 4). By providing an additional lathe operator, the company can avoid regulatory violations and dissatisfied employees with regards to excessive overtime. In turn, companies can avoid high overtime costs thus reducing expenses.
The other alternative would be to reduce assembly production which would eliminate the need for overtime or an additional lather operator. Further examining costs, overtime costs fall under productivity whereas; inventory costs are the result of productivity. Inventory cost can also consist of; insurance on what is being stored, the actual cost of storing parts, product depreciation, and axes associated to inventory. Space Age Furniture has implemented an MR. in order to manage and control such costs. The MR. system will help streamline the reordering of parts needed in order to meet production needs.
The system will only order when needed or adjust the quantity when demand increases or decreases. In turn, inventory will be sustained which will eliminate or reduce inventory therefore; reducing cost associated to inventory costs. New MR. A new MR. that improves the base MR. is one that focuses on costs and controls. Associated costs with regards to overtime and inventory can be educed and utilized to increase capital or applied to research and development to ensure product demand continues. Other usages can be to purchase MR. software updates to increase current capabilities of the current system.
For instance, the software updates include an automatic feature to where an employee does not need to manually input orders. Instead, the system will reorder parts/assemblies as needed while controlling inventory and its costs. The quantity of when the system when reorder parts/assemblies are predetermined which can be adjusted if the master schedule fluctuates. Compare and Contrast the Types of Production Processing There are several different types of production processing such as; job shop, batch, repetitive, and continuous.
Each company will determine which mode is best for it operations. A job shop is an example of a manufacturing facility that produces a limited production. A machine shop and electric shop are just a few examples of a job shop. These shops provide a special service but can adapt to provide a variety of needs. For example a machine shop may be used to weld or repair within the production process however; it can also be used for fabrication. This flexibility is convenient however; it comes with a cost which separates it from the batch production processes.
Job shops vary from the other types of production processes due to the fact it has the capacity to produce a variety of products but with a limited quantity and usually geared towards specialty products. Batch production processing involves producing several groups of a product rather than the whole lot. Batch production is not continuous which causes production delays. The products that are produced by batch processing are the same or similar in type and share the same assembly requirements. An example of a batch product could be picture frames. Picture frames are of like or similar material but can be produced in various shapes and sizes.
The disadvantages of batch production processing is there is a delay in production due to changeover, a surplus of inventory is required to supplement demand. Repetitive production processing is comprised of the following characteristics; mass production, products are the same, products are stocked and are not needed throughout the production process, supports rate based scheduling, and requires assembly lines (MS: Management Study Guide, 2013, p. 1). Continuous reduction processing is a constant flow of products being produce with no interruptions.
The type of production can support a mix of products as well as, a single product such as part 3079. With regards to the Space Age Furniture, the job shop production process is not an ideal fit due to its limited production capabilities. The batch production process has natural changeover delays and would not improve the dynamics of the compass production process. The repetitive processing production is the best can be beneficial if demand only one type of product was needed however; there are two subassembly that are squired for the finished product.
If this method was used to produce product 3079 a bottleneck will be created at the subassembly 257 and 435 however; the best fit for Space Age Furniture and its part 3079 is the continuous production processing method which can produce a predetermined amount that is needed to meet demand. Even though the continuous production process can be beneficial to Space Age Furniture, management must factor in a schedule to maintain the good operation of the lathe machine. Space Age Furniture currently only has one machine which is used for roughly 12 hours a day.
Space Age will eave to determine the life expectancy of the machine and determine if another lather will have to be purchased in order to increase the production of part 3079. If the current lather can withstand the added production hours, then a maintenance schedule will have to be created to ensure the machine will function properly during times of production. The wear and tear of the lathe machine due to the additional hours of operation should also be considered when budgeting for capital expenses.
Management – Tracking Job Status and Location during Production In order for a company such as Space Age Furniture o be successful, production must be able to keep up with demand along with controlling costs. Management must be able to track job statuses and location during production in order to control inventory quantity, manage overtime costs, and/or to simply make decisions on the production process during resource fluctuations and/or outside variables that can impact production. One method that can be utilized to help keep management informed is the real time data collection method.
The information that is provided is in real-time, meaning management will be able to have access to the most up-to-date information available. This is no time-lapse or additional calculations that are required. Production can be increased or decreased based on the job status and the location during production in order to ensure orders are met and inventory is not overloaded. A successful company must be able to meet its demands without delays by utilizing this approach management will be able to obtain real- time information to make informed decisions.
Lastly, management can also determine if machines are running efficiently and whether or not maintenance is required to continue future production. Recommendations All companies including Space Age Furniture must be able to adjust and adapt to product demand. Production is based on what is demanded by the consumers therefore; it is imperative for management to understand and focus products that meet customer demands. Due to the increased demand for the Saturn and Gemini cabinets, the continuous production process would best meet the needs of Space Age Furniture.
The repetitive method could meet the need of the company however; this method is geared towards only producing one product which, in this case, could create a bottleneck effect at the subassembly phase. In edition, it is recommended the MR. system that is being utilized be updated to ensure Space Age Furniture resources are being used efficiently along with controlling inventory and its related costs. The updated MR. system should be simplistic and easy to adjust in order to accommodate production needs.
The updated MR. system should reevaluate the current resources and production demand to reduce overtime and increase production to meet the production needs. Companies that can easily adapt to the various components involved with production will have a greater chance of sustaining in an environment that is constantly changing. Space Age Furniture should also consider benchmarking competitors to evaluate their methods and processes. By making these changes, Space Age Furniture can meet production needs, reduce overtime costs, and align resources appropriately.
Conclusion Based on the case study and this analysis, Space Age Furniture can benefit from an updated MR. system to ensure the company can adapt to change, whether an increase or decrease in demand, allocate resources efficiently, and reduce inventory costs yet ensure production can produce sufficient quantities to meet demand. Additionally, the MR. system along with real-time data collection, f properly utilized, can ensure management has the available information to adjust its resources and adjust production if warranted.
