Om Chapparal Steel

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OPERATIONS MANAGEMENT ASSIGNMENT ON

CHAPARRAL STEEL (ABRIDGED)

SUBMITTED TO:
PROF. N. NARAYANAN

SUBMITTED BY:
SECTION D – GROUP 7
MAYANK GUPTA – ABM09027
SHILPA AGARWAL – PGP28177
SONIA RAO – PGP28209
VISHAL DASSANI – PGP28224
TABLE OF CONTENTS
SERIAL NUMBER| TOPIC| PAGE NUMBER|
1.| Introduction| 2|
2.| Product Strategy| 3|
3.| Manufacturability| 4|
4.| New Product Opportunities| 4|
5.| Product Mix| 4|
6.| Competition| 5|
7.| Strategic Move| 6|
8.| Process Design| 7|
9.| Job Design & Work Systems Design| 9|
10.| Scale & Capacity Planning and Management| 10| 11.| Design and management of incremental and step development projects| 13| 12.13.| Multi Activity ChartConclusion| 18 19| | | |

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INTRODUCTION
Chaparral Steel Company, located in Texas, owns and operates a technologically advanced steel mill that produces bar and structural steel products by recycling scrap steel. Chaparral's facilities and its operating philosophy reflect the latest advances in electric arc steelmaking. We have analysed the case from product design dimension of operations management. Product design itself has multiple dimensions associated with it like * Product lifecycle related decisions

* Product value by analysis
* New Product development/enhancement opportunities
* Manufacturability
* Design Aspects: robust and modular
We have discussed these points based on the information available in the case, over and above these points we have discussed some additional issues which are specific to this case. Also we will see implications of macro as well as micro level goals on product design. The proposed expansion of capacity would add a second electric furnace, continuous caster and rolling mill that would more than double the capacity of existing operations. The proposed layout of the expanded plan put both furnaces and their continuous casters in a single melt shop, but put the rolling mills in separate buildings. Chaparral Steel has proposed heavy capital expenditure in its production capacity growth. Despite the high costs and the risks involved, such a major step is justified considering the below mentioned points

* The company, Chaparral has been making heavy capital expenditure in its capacities from the last four years. And this expenditure has been translating into the higher returns in form of the incremental product sales. Sales have leapt from 203,000 tons to 383,000 in the span of 4 years. * The proposed investment in electric furnace, continuous caster and rolling mill will increase the capacity by more than 200 %. * Apart from these, in the areas where chaparral is contemplating to venture out, there is a little competition from the domestic steel makers of US in terms of capacities and capabilities. Also, they will almost be better than the foreign steel players from Korea in America in terms of price competitiveness and offerings. * Chaparral steel plans to follow the old model of having light, modular construction with machinery that could be quickly changed over and upgraded. So this capital expenditure will be worthwhile keeping in mind the future investments in capacities to tap economies of scale. * The potential market is estimated to increase by 600,000 tons in next 10 years by 1987 and the company has presence in 20 states currently which it plans to expand to more number of states. * Company is also looking towards product augmentation by introducing beams of 3 categories for home segment where there lies an opportunity to tap up to 50 % of the market.

PRODUCT STRATEGY
In the initial years of operation Chaparral steel produced products like reinforcing bars and special quality billets. Over the span of next four years company started producing other small merchant shapes like angles channels etc. because of higher...
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