Production Management

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Case : Rochester Manufacturing Corporation

Dr. Ric Enriquez

Mark . HaoLiang

Rochester manufacturing corporation
Rochester manufacturing corporation (RMC ) is considering moving some of its production from traditional numerically controlled machines to a flexible machining system (FMS)

lts numerical control machines have been operating in a high-variety . low-volume .inter-mittent manner.

Machine utilization. As near as it can determine is hovering around 10%. The machine tool salespeople and a consulting firm want to put the machines together in an FMS .

they belive that a 3,000,000 expenditure on machinery and the transfer machines will handle about 30% of RMC is work .there will ,of course .be transition and start-up costs in addition to this.

The firm has not yet entered all its parts into a comprehensive group technology system .but believes that the 30% is a good estimate of pruducts suitable for the FMS this 30% should fit very nicely into a family .a reduction. Because of hgher utilization should take place in the number of pieces of machinery

the firm should be able to go from 15 to about 4 machines and personnel should go from 15 to perhaps as low 3.similarly .floor space reduction will go from 20,000 square feet to about 6,000 throughput of orders should also improve with this family of parts being processed in 1 to 2 days rather 750,000 savings ,and annual labor savings should be in the neigh-borhood of 300,000.

Although the projections all look very positive an analysis of the project is return on investment showed it to be between 10% and 15% per year. The company has traditionally had an expectation that pro-jects should yield well over 15% and have payback periods of sub-stantially less than 5yers.

1. as a production manager for RMC .what do you recommend ? why ? 2. prepare a case by a conservative plant manager for maintaining the statue quo until...
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