BUS 307 Operations Management & Quantitative Techniques
Feb 10, 2014
Chapter 12 Case Study: The Realco Breadmaker
1. Develop a master production schedule for the breadmaker. What do the projected ending inventory and available-to-promise numbers look like? Has Realco “overpromised”? In your view, should Realco update either the forecast or the production numbers? A master production schedule for the bread-maker will be presented below. Demand Management Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8. Weekly demand for bread-maker is 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000. Working days in a week is 6 6 6 6 6 6 6 6. MPS demand for bread-maker 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333. Realco Company should update the production numbers since from the available figures, it is clear that the bread-makers produced are far much greater than the demand anticipated. The weekly production is 40, 000 while the assumed demand per week is about 20,000 bread-makers. The production numbers could be adjusted to about 25,000 bread-makers. This is owed to the fact that the highest current order according to Jack Jones is 23, 500. 2. Comment on Jack’s approach to order promising. What are the advantages? The disadvantages? How would formal master scheduling improve this process? What organizational changes would be required? One advantage of this approach is that it is cost effective. This is due to the fact that it is much cheaper to produce a whole batch of a given product compared to production of each single order. One disadvantage that is worth noting is that, the approach may result to overhead production, whereby the production may exceed the actual demand. Moreover, this approach may lead to loss of customers and market share due to failure to meet individual tastes and preferences (Bundy, 1999). Formal master scheduling would improve the process by keeping control and accountability of the entire production and shipment promising. Additionally, it can help protecting lead time and booking future deliveries. The schedule controls the manufacturing process and not the customer demand. One of the organizational changes that would be necessary in the adoption of a formal master scheduling is managerial changes whereby the company has to hire a master scheduler to be in charge of the process. Technological changes such as installing master scheduling software are also necessary. 3. Following up on Question 2, which do you think is worse, refusing a customer’s order upfront because you don’t have the units available or accepting the order and then failing to deliver? What are the implications for master scheduling? Accepting an order and then failing to deliver is worse that refusing a customer’s order upfront because of unavailability of units. As noted earlier, master scheduling plays the role of controlling the manufacturing process rather than the customer demand. This means that orders would only be accepted following availability of units. Master scheduling enables a company to know the number of units or products available for sale. Knowledge of the available units of products guides the order placement and acceptance process. It is thus appropriate to refuse a customer’s order upfront in cases where units are not available. Additionally, accepting an order and then failing to deliver may result to losing of customer base or market share due to false promises. Customers tend to rely on companies that are trustworthy. Hence, failing to deliver an order may break the trust and rapport between a customer and a business. 4. Suppose Realco produces 20,000 breadmakers every week, rather than 40,000 every other week. According to the master schedule record, what impact will this have on average inventory level? Inventory refers to the materials and goods that a company can sell. This level is especially crucial...
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