S&Op Case Exercise

Topics: Cost, Costs, Outsourcing Pages: 2 (540 words) Published: October 13, 2008
Executive Summary

This executive summary is meant to provide Ms. Becky Martins with the results of our analysis of the production planning issues Bells Home Appliances, Inc. is currently dealing with. As stated in the exercise notes, Bells is currently undergoing some challenges with regards to their production planning and operations and is attempting to stream line to achieve the most cost effective and timely production schedule possible.

We analyzed many different options when trying to determine the best course of action that Bells should take. Included in those options were using additional workers with no overtime, maximizing current workers with the use of overtime hours, outsourcing to one or more suppliers, and a combination of all the above. We also analyzed using a level or chase approach, all while trying to adhere to Bells established principals with regards to employees and current contracts in place.

The result was that the most efficient and best cost option involves a combination of all the options mentioned above. Our recommendation, included in the spreadsheet below, resulted in the lowest unit cost of all the solutions analyzed, and we feel is fair to the organizations values.

The details:
Maintain the current workforce level of 25 workers for the first 4 periods. During these periods, workers will work a full production schedule and at times, work overtime as well. The reason for this decision is that even with overtime costs, it is still more cost effective to build the part in house than to outsource it. During standard hours, each unit costs $304, which jumps to $316 with overtime. However, that is still less than either of our suppliers can provide, with prices of $335 and $330 respectively. •Build up stock to during periods 2 and 3 in order to meet period 4’s demand. Since Bells wishes to not have any backorders, and since its more cost effective to build a part and pay inventory costs than to have the...
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