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. However, 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
necessary 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.
|
MasterSchedule |
||||||
|
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 equipment. 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
subassembly 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. Whenever 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:
a. 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.
b. 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.
c. Analyze the trade-off between overtime costs and inventory costs.
d. Calculate a new MRP that improves the base MRP.
e. 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.
f. Describe ways that management can keep track of job status and
location during production.
g. Recommend any changes that might be beneficial to the company
and/or add value for the customer.
