Space Age Furniture Company
Space Age Furniture Company
Space Age Furniture Company is a company that deals with the manufacture of tables and cabinets to hold microwave ovens and portable televisions. All these products have different sizes and shapes but they all undergo the same production and assembling procedures. Examples of these products – the Saturn microwave and the Gemini TV stand have a part (no. 3079) that requires machining on a special lathe used only for making that part. The MRP system has reduced inventories and improved on-time deliveries.
The theme of this paper includes the developing of 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 so called lot size of 1,000 for sub-assemblies has produced a huge demand for part 3079. Also, the paper will also look into ways of improving the sub-assemblies in lot sizes of 1,000 while also analyzing the trade-off between overtime costs and inventory costs. In addition, a new MRP that improves the MRP will also be reviewed along with a comparison and contrasting of the types of production processing and determination of which the primary mode of operation is and why. Finally the paper will discuss the ways through which the management can keep track of job status and location during production. It will also recommend any changes that might be beneficial to the company and/or add value for the customer.
Lot Size of 1000 for Sub-Assemblies and Part 3079
Space Age had estimated that it would 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 as shown below:
Part 3079 is used in subassemblies: no. 435 which applies to Gemini TV stand and subassembly no. 257 which apples to 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 uses a special lone type of lathe and hence can be produced at any quantity desired. The company made a decision that these subassemblies should be made in minimum quantities of 1,000 at a time (Vonderembse & White, 2013).
MRP for Space Age Furniture Company
From the information provided, there are two different subassemblies in the company. The first one is no. 435, which is used in Gemini TV stand while no. 257 is used in the Saturn microwave stand. Part no. 3079 is used for both subassemblies. Each of the subassemblies is also used in each of the final products and plays an important part in the production process.
Thus, the inclusion of the two subassemblies in the development of MRP should be done first. MRP has the following vital data requirements: the master production schedule, bill of materials, and the inventory records (Nakhla, 1995). The Master Schedule File drives the system and generates material requirements. This will be at the level of the subassemblies. On the other hand Bill of Materials serves two purposes; first it lists all the components of a product and the quantities needed to make the product. Second, it shows the relationship amongst those components, which indicates product structure, meaning that part 3079 is used for 257 and 435. Finally the inventory file is important because in order for the MRP to work, accurate inventory records must be kept (Vonderembse & White, 2013). The inventory must be able to support the production of subassemblies in lot sizes of 1,000.
Improvements to the MRP
Improvement to the MRP is done because it results into the increase in the product’s demand and always if done correctly this could lead to a huge profit for the company. A new MRP will help control the inventory while also schedule the proper resources for productivity and indeed result into the improvement that is so much needed if the demands of part 3079 are to be met. The concentration on part 3079, the most demanded part, is one of the most desired MRP improvements. Thus, the goal would be to meet the demand by allowing the subassemblies to produce more of part 3079 and finding a supplier as well.
Another vital MRP improvement that can be made is the introduction of Cross-training. Only Ed was able to set part 3079 in this case. Due to the hour restrictions and the fear of over working him, Space Age had certain restrictions and was unable to meet the demand. However, by training other people to set 3079, they will be able to increase productivity in the long run. This will require commitment of more resources by Space Age Furniture.
Finally, the last improvement is to increase the minimum quantities from 100 to a higher figure based on demand. The MRP comes into play here, as the scheduling of product must meet the demand of product plus inventory. Then the goal would be that each of these improvements would come together so that the demand can be met by never running out of supply.
Trade-off between Overtime Costs and Inventory Costs
Overtime costs refers to the costs that every company gets but try to limit them based on the financial burden they could put on the company. An organization can save money periodically by conducting a wide review that leads to better management of overtime costs (Riso & Kendig, 1987). Overtime refers to the time when an employee works more then they are obligated to work in a day or week according to local laws. These costs count as expenses because they are not often planned for and can vary from week to week. One of the keys to the MRP is to help reduce overtime costs caused by lack of production or unaccounted demand. Overtime costs are a cost of productivity.
Inventory costs on the other hand may include insurance, storage costs, taxes and depreciation. They are costs as a result of productivity. They have the biggest impact yet they are always the least controlled. MRP always helps control these costs by ensuring that the extra inventory will go down because you will be ordering parts according to what is needed and not storing unused parts. The MRP will reorder when down to a minimum meaning that you will use what you have in stock with the thought of more products coming in.
Some of the overtime costs are accrued based on the overage of inventory and with the new system in place to order equipment as needed based on performance, this will cut down on extra man hours needed to handle the inventory which also possibly cuts down the inventory. The process of developing a program to minimize inventories requires reviewing maintenance operations, parts usage and inventory levels (Brady, 2006).
The MRP ensures that both costs are concentrated on and become easy to control. This means that the extra costs previously incurred as a result of overtime and inventory can be used to purchase machines or more inventories. The new MRP would have software that automatically orders the equipment based on minimums. This would be done automatically which calls for less overtime that was previously used by an employee inputting orders into the suppliers system. The trade-off is huge, as an MRP will allow these costs to be reduced as much as possible and will also lead to a more productive business.
Comparing and Contrasting the Types of Production Processing
There are different types of production processing which may have differences and similarities between them. These processes include the following:
- Job Shop
A Job Shop is a manufacturing facility that produces several different products in smaller batches. An example of a Job Shop is a Machine shop which is ussually general and flexible enough to meet a variety of needs. For flexibility, job shops generally have a much higher unit cost than line flow or batch processes for the same product (Vonderembse & White, 2013). The outstanding characteristic of the job shop is that it does not produce large quantities of the same products but is dominated by a large number of different products produced in smaller volumes.
A Batch refers to when quantities are not sufficient to support dedicated production facilities. Therefore, several groups or batches are produced using the same facility. These products look alike and have similar processing requirements. For example, an item such as a container is built in the same manner but comes in different sizes. It is one of the most common processing as you can select in the MRP to build a batch through software. The demerits of batch production are that changeover time is non productive, and extra inventory must be maintained to satisfy demand for the products that are not being produced. Multiple batches of the same product may be executing at various stages of completion (Wojewodka, 2011).
Repetitive processing occurs when the same thing is done over and over again in production especially in companies where they only produce one type of product. In this case the system is set that it repeatedly does the same thing over and over. This will help Space Age to reap benefits when they need to produce a high volume of a single product. On the other hand, the Continuous flow usually does not identify individual units; rather, the product is mixed and flows together in a continuous stream. This is most common when you want to have something run non-stop. This would be the best way to set part 3079 in a way that it will only be producing that one crucial part for weeks without interruptions.
All of these four processes are effective and can be used in production. There are specialties that can be used in different instances which make it good for a manufacturing company. Depending on the type of production that needs to be made and the amount of volume, the process to be used will be known. In the instance of the job shop, not all machines are compatible. Despite their similar qualities, they cannot do different jobs from the ones they are assigned to.
For the case of Batch processing, it is difficult to give each machine a program they will have to follow. Repetitive processing on its part, machines wear out when used the same way over and over again. In Continuous production, it is difficult for a machine to run for days or even weeks without any interference. Due to the maintenance and quality of the product, the machine has to be checked every once in awhile. Any of these processes has their own characteristics and can be used in different instances. Therefore, it is important to understand what these processes can do and how they can be used effectively. The following is a table of the process alternatives and its characteristics:
|Process||Volume||Product Variety||Product Flow||Facility Layout||Fixed costs||Variable Costs||Equipment|
|Continuous Flow||High||Standard||Dominant||Product||High||Low||Special Purpose|
|Assembly Line||High||Standard with minor modification||Dominant||Product||High||Low||Special Purpose|
|Batch||High||Some variation||Dominant||Product||High||Low||Some flexibility|
|Flexible manufacturing system||High||Moderate variety||Dominant||Product||High||Low||Flexible|
|Manufacturing Cell||High||Moderate variety||Dominant||Product||Moderate||Low to moderate||Flexible|
|Job Shop||Low||Major differences||Random||Process||Low||High||Flexible|
|Project||One||One-of-a-kind||Not applicable||Fixed position||Low to moderate||High||Flexible|
Tracking of Job Status and Location during Production
Keeping track of job status and location has to be done by the management all the time in order to ensure successful production. This information will help the company know its level of production and where improvements can be made. Sometimes a job is done too quickly or not enough which causes high inventory costs and possible overtime costs. To track the job status and location during production, a few things have to be done by the management.
The real time data collection method can be a very effective method. This involves knowing where the job stands and how much it needs to be done in the allotted time to stay on schedule. Staying on schedule is important for staying productive and meeting demands. When real time tracking is done, you know if an employee or machine is doing its job and if any changes need to be made. For the machines, they also need to be monitored regularly to make sure the maintenance is not an issue and the machines are performing properly. The reports based on the productivity of the machines and employees have to be produced regularly since it will help make recommendations to ensure that they remain productive. Remaining productive requires having the right staff and amount of staff.
Recommended Changes beneficial to the company and/or add value for the customer.
The decision on what change should be applied will often become the most difficult part. Each organization has its main objective being to make additional profits. In order to achieve this objective, first thing that the company could do is to choose one of the production processes. The status of the company and the need to produce one particular product over and over due to demand, it may help identify if it’s best to use the repetitive process. Also, the purchase of a machine that is able to produce the same product over and over again will be the best move for the company as it ensures that with or without manual help the machines will be able to operate on their own (Vonderembse & White, 2013).
The use of an effective MRP is another change that should be put into consideration. MRP is the outline to the production process and if the overall production process is not running as successful as possible, then the MRP needs to be updated. Therefore, an improved MRP will help reduce the delays during purchase and supply. It will also help the process of change should there be a change in the market pattern or supply issues since it’s easy to adjust it. In business, there are always sources of strategies to improve performance from both friendly and rival organizations. Thus the knowledge of the ins and outs of your company can be huge in the instant that a big change occurs. Space Age Furniture should thus give much emphasis on its MRP and ensure the reduction of both overtime and inventory costs. Once these costs are reduced, more product and eventually a bigger profit will result.
In Conclusion, the current world of manufacturing and business requires all organizations including Space Age Furniture to be up to date on all matters that pertains to their line of production and business. If the proper MRP is in place, production will improve exponentially and the business continues to stay efficient and effective. The users of MRP should be involved hands on during its implementation (Salaheldin & Francis, 1998). The trade-offs between overtime costs and inventory costs are an important step in improving profit and should be put into serious consideration. In addition, the much needed understanding of the types of production processes will help in using the most productive process. Finally the management has to keep track of job status and location during production. All of these changes are a challenge to Space Age Furniture Company to implement them in order to improve the business since change comes with results and results can lead to bigger and better things among them more profitability.
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Vonderembse, M.A. & White, G.P. (2013). Operations Management .San Diego, CA Bridgepoint Education, Inc.