Operations Management

Operations Management

The Space Age Furniture Company manufactures tables and cabinets to hold microwave ovens and portable televisions. These products aremade in various sizes and with
various features, but all follow basically the same production and assembly operations. However, two ofthese products—the Saturn microwave stand and the Gemini TV
stand—have a part (no. 3079) that requires machining on a special latheused only for making that part. At present the machine is run by Ed Szewczak, a machinist who
also operates other machines in Space Age’sshop. Once set up and started, the lathe can run nearly unattended. However, the machinist must be present (even if not
actually attendingthe machine) any time one of the machines, including the lathe, is in operation. At present, Ed works a regular 40-hour week. However, dueto the
workload for producing part 3079, it has been necessary to schedule frequent overtime for him in order to finish the necessary partson time.

Coral Snodgrass, operations manager for Space Age, has just heard from Ed’s foremen that Ed is becoming unhappy about so muchovertime. As Coral knows, Ed has been with
the company a long time and is an excellent, reliable employee. Skilled machinists with Ed’sexperience 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, SpaceAge carries no finished-goods
inventory. Instead, everything in the master schedule is being produced for customer orders, so all productsare shipped almost immediately. Previously Space Age had
estimated that it cost $1.25 per week to store each Gemini and $1.50 per weekto 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 usedin 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 madein minimum quantities of 1,000 at a time, although there is no
problem with capacity on the equipment that makes them. In fact, an orderfor 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 thesesubassemblies 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-handinventory 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 holdingeach 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 final 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.

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