Nichols Company Case Study
Joe Williams is the president of Nichols Company (NCO), which manufactures three primary products and has over 355 employees. In addition, NCO has been having some issues with their supply chain in the past few months and it has affected their customer service. This paper will summarize the case study, determine NCO's appropriate forecasting technique, discuss the impact of aggregate planning, weigh NCO's various cost factors associated with carrying inventory, and make recommendations for improvement.
Mr. Williams was approached by his Director of Marketing, Mr. Barney Thompson, and announced that they had lost a large order due to a backorder of tubing, which is used during their manufacturing process. This was not the first time that that Mr. Williams has heard bad news like this recently. NCO has had a disturbing trend recently were inventory levels are too high or there have been stock outs that have resulted in late deliveries, customer complaints, and cancelled orders. In addition, overtime has become an issue because NCO's forecasting numbers have been sub-par and the employees have to stop the production run that they are currently working on, and they have to make products that are on high demand. Consequently, Mr. Williams has had enough, so he put a meeting together in an attempt to discuss the latest problems and to come up with viable solutions.
Many different organizational entities from NCO were at the meeting. Attending the meet were Allison Bright of production and inventory control, Trevor Hansen of purchasing, and Margaret Wu of accounting. The meeting was very verbal and it lasted all morning. Mr. Bright suggested that the forecast that he receives from marketing are always off, and they are always rushing around trying to expedite products in order to meet demand. Mr. Thompson believed that the company runs too lean, and they need a large inventory of finished...