Space Age Furniture Company The Space Age Furniture
Company manufactures tables and cabinets to hold microwave ovens and portable
televisions. These products are made in various sizes and with various
features, but all follow basically the same production and assembly operations.
However, two of these products—the Saturn microwave stand and the Gemini TV
stand—have a part (no. 3079) that requires machining on a special lathe used
only for making that part. At present the machine is run by Ed Szewczak, a machinist
who also operates other machines in Space Age’s shop. Once set up and started,
the lathe can run nearly unattended. How- ever, the machinist must be present
(even if not actually attending the machine) any time one of the machines,
including the lathe, is in operation. At present, Ed works a regular 40-hour
week. However, due to the workload for producing part 3079, it has been neces-
sary to schedule frequent overtime for him in order to finish the necessary
parts on time.
Coral Snodgrass, operations manager for Space Age,
has just heard from Ed’s foremen that Ed is becoming unhappy about so much
overtime. As Coral knows, Ed has been with the company a long time and is an
excellent, reliable employee. Skilled machinists with Ed’s experience and employment
record are extremely difficult to find. Coral wonders what can be done to
alleviate this problem.
Recently, Space Age began using an MRP system that
has helped reduce inventories greatly and improve on-time deliveries. In fact,
Space Age carries no finished-goods inventory. Instead, everything in the
master schedule is being produced for customer orders, so all products are
shipped almost immediately. Previously Space Age had estimated that it cost
$1.25 per week to store each Gemini and $1.50 per week to store each Saturn
that wasn’t shipped immediately. The master schedule for producing these two
items for the next six weeks is shown below.
Master Schedule
Week 1 2 3 4 5 6
Gemini 600 400 700 500 400 600
Saturn 300 400 400 600 300 300
The part in question, 3079, is used in two
different subassemblies: no. 435, which is used in the Gemini TV stand, and no.
257, which is used in the Saturn microwave stand. One of part 3079 is used in
each subassembly, and one of each subassembly is used in each of the final
products.
Part 3079 may be produced in any quantity since the
lathe that makes it is not used for anything else. However, both of the subassemblies
are produced using the same equip- ment. To minimize change over time, Space
Age has decided that these subassemblies should be made in minimum quantities
of 1,000 at a time, although there is no problem with capacity on the equipment
that makes them. In fact, an order for 1,000 of subassem- bly 435 is due to be
received in week 1, as is an order for 1,000 of subassembly 257. Lead time for
both these subassemblies is one week, and no inventory is expected to be on
hand for either part at the beginning of week 1. There is not any on-hand
inventory of part 3079, and there are no orders in process.
Ed Szewczak earns $22 per hour and gets a 50%
premium for any overtime work. When- ever part 3079 is made, there is no set-up
time, but processing takes 0.03 hour per unit. It costs $0.25 per week to hold
any of these parts over from one week to the next. The cost of holding each
subassembly in inventory is $0.75 per unit per week
Respond to the following and include any
Materials Requirement Planning (MRP) calculations:
Develop
an MRP for Space Age Furniture Company using the information in the case
including the production of sub-assemblies in lot sizes of 1,000.
The
lot size of 1,000 for sub-assemblies has produced a lumpy demand for part 3079.
Suggest ways for improvements over sub-assemblies in lot sizes of 1,000.
Analyze
the trade-off between overtime costs and inventory costs.
Calculate
a new MRP that improves the base MRP.
Compare
and contrast the types of production processing—job shop, batch, repetitive, or
continuous—and determine which the primary mode of operation is and why.
Describe
ways that management can keep track of job status and location during
production.
Recommend
any changes that might be beneficial to the company and/or add value for the
customer.
The case study should
demonstrate your understanding of the reading as well as the implications of
new knowledge. The paper should integrate readings, scholarly sources, and
class discussions into work and life experiences. It may include explanation
and examples from previous events as well as implications for future
applications.
The
purpose of the case study is for you to culminate the learning achieved in the
course by describing your understanding and application of knowledge in the
field of operations management.
