1. This company needs to incorporate time for both custom and standard furniture. They need to allocate resources such as labour and equipment to each product line. This also involves employee hours and number of employees needed. Also, Chad should determine and assign better craftsman to more custom jobs, which are more difficult. The custom furniture is more costly and requires more skill, therefore individual workers need to spend more time and need more skills. In cases, where there are many orders to complete, Chad needs to determine the amount of overtime hours feasible to finish the job. The company is increasing sales, but the process is not running at full potential nor is it 100% efficient.
In the case where orders are piling up, Chad needs to prioritize and schedule accordingly. This is crucial because custom made furniture and standard furniture have different lead times. Custom made furniture takes more time than standard furniture, which means that standard furniture is ready quicker than custom made units. When orders are placed, Chad needs to promise more realistic delivery times.
Decisions about inventory levels and work in process must be made day to day. As inventory adds up, costs add up as well. Overall funds put toward equipment and production must be decided such as buying new equipment and machinery. Moreover, Chad needs to relocate and change the layout of the equipment and machinery. Having two different product lines, Chad needs a more organized layout to ensure materials or people don’t get mixed up.
2. Standard furniture sales are steadily increasing, causing a dilemma in production. The problem that arises is that custom furniture is more profitable, and with the increased orders in sales for standard furniture, the standard furniture is put aside while employees work on the custom furniture. This creates high levels of inventory, WIP, and high costs to house these products.