Absolute Level Company is losing money in spite of the high volume of sales.
1.To attain optimum production efficiency and reduce production costs 2.To determine the viability of the proposed assembly line based on use conveyors
AREAS OF CONSIDERATION
1.Product Line – full line of levels; 85 models; 12 models account for over 50% of sales and which are manufactured for stock; all other units are made against orders on hand; largest sellers are aluminum level (in 4 lengths) and metal-bound level (in 7 lengths). Levels are used in determining grades in laying foundations, brick walls, and tile pipes. The production of levels is highly cyclical, broadly following the trend of the construction activity. In normal times, competition is severe.
2.Problems on the Existing Operations in the Assembly Department – Problems (either no system or inefficient procedures) are in the areas of: (a) production planning & control, including order scheduling, and economic order quantity level; (b) inventory management, including supplies handling, monitoring and control, including storage; purchase requisition procedures; (c) quality control procedures , i.e., no in-process quality checks within each functional area); (d) rejects monitoring and management;
3.Manpower – Some factory workers are under-utilized. The senior workers are doing the same job for several years; they are prone to complacency, may exhibit “familiarity blindness”, and are resistant to change.
ALTERNATIVE COURSES OF ACTIONS
1.Lower inventory levels of materials and finished goods. Majority of the company’s assets are tied up in inventory. With 85 models, it would mean having a large amount of finished goods inventory. 12 have already been identified having the highest sales. Long term forecasting should be done in order to further identify which of these items in inventory could be trimmed down to a minimum level or even...