Case Study: Space Age Furniture Company
Read "Space Age Furniture Company" in Chapter 9 of your text. 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.
The purpose of the final 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.
Writing the Final Paper
The Paper:
• Must be 10 to 12 double-spaced pages in length (not including the title and reference pages) and formatted according to APA style.
• Must include a title page with the following:
o Title of paper
o Student's name
o Course name and number
o Instructor's name
o Date submitted
• Must begin with an introductory paragraph that has a succinct thesis statement.
• Must address the topic of the paper with critical thought.
• Must end with a conclusion that reaffirms your thesis.
• Must use at least five scholarly sources.
• Must document all sources in APA style.
• Must include a separate reference page, formatted according to APA style.
• Space Age Furniture Company
• The Space Age Furniture Company manufactures tables and cabinets to hold microwave ovens and portable televisions. Theseproducts are made in various sizes and with various features, but all follow basically the same production and assemblyoperations. However, two of these products-the Saturn microwave stand and the Gemini TV stand-have a part (no. 3079) thatrequires machining on a special lathe used only for making that part. At present the machine is run by Ed Szewczak, a machinistwho 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, isin operation. At present, Ed works a regular 40-hour week. However, due to the workload for producing part 3079, it has beennecessary 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 somuch overtime. As Coral knows, Ed has been with the company a long time and is an excellent, reliable employee. Skilledmachinists with Ed's experience and employment record are extremely difficult to find. Coral wonders what can be done toalleviate this problem.
• Recently, Space Age began using an MRP system that has helped reduce inventories greatly and improve on-time deliveries. Infact, Space Age carries no finished-goods inventory. Instead, everything in the master schedule is being produced for customerorders, so all products are shipped almost immediately. Previously Space Age had estimated that it cost $1.25 per week to storeeach Gemini and $1.50 per week to store each Saturn that wasn't shipped immediately. The master schedule for producing thesetwo items for the next six weeks is shown below.
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Master Schedule
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Week
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|
1
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2
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3
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4
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5
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6
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Gemini
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600
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400
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700
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500
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400
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600
|
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Saturn
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300
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400
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400
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600
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300
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300
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• 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 usedin 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 thesubassemblies are produced using the same equipment. To minimize change over time, Space Age has decided that thesesubassemblies should be made in minimum quantities of 1,000 at a time, although there is no problem with capacity on theequipment 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 for1,000 of subassembly 257. Lead time for both these subassemblies is one week, and no inventory is expected to be on hand foreither 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-uptime, 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.