case study
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Case StudyU.S. Stroller
Case study 작성요령
Synopsis
개요 설명
Analysis or Answer to Questions
evaluate current system
find alternative methods
evaluate each alternatives
choose one of the alternatives
Terminologies
Master Production Schedule (MPS, 기준생산계획)
schedule (usually weekly) for the end item production
MRP (Type I : Material Requirements Planning, 자재소요계획)
A minimal inventory control system that releases manufacturing and purchase orders for the right quantities at the right time to support the master schedule
Terminologies
EOQ (Economic Order Quantity, Economic Production Quantity)
maximum inventory level :
Total Cost of Inventory
Safety Stock
Terminologies
GT (Group Technology, Cellular Manufacturing)
a manufacturing philosophy in which the parts having similarities are grouped together to achieve higher level of integration between the design and manufacturing functions of a firm
1. Current situation
U.S. Stroller is a manufacturer and distributor of a line of baby strollers.
3 types of strollers are :
regular model : $49, annual sales 54,000
deluxe model : $99, annual sales 24,960
shopping center model : $149, annual sales 27,040
sales can vary by 25%
market share 40%, Japanese companies have just entered the US market with a low-priced stroller that emphasizes quality and reliability of design
Poor profit after tax (only 2% of the sales)
Currently the company uses an MRP system.Now considers JIT and GT.
2. Discuss pros & cons of 2 options
Option 1 (JIT)
Pros :
setup is not necessary. master schedule is frozen to 2 weeks
finished goods inventory from 80 days to 15~30 days inventory cost $765,000 to $210,000 (765 x 22/80), savings $555,000
WIP inventory from 4 weeks to 2 weeks inventory cost $322,000 to $161,000, savings $161,000
Raw materials from 12 weeks to 2 weeks inventory cost $337,000 to $56,000, savings $281,000
reduced inventory : $997,000 (three quarter of current $1,424,000) cost savings = .25 * 997,000 = $249,000
lead time 2 weeks ⇒ shorter response time ⇒ better customer service
dedicated assembly line ⇒ better quality
2. Discuss pros & cons of 2 options
Option 1 (JIT)
Cons :
purchase of 2 assembly lines ($200,000)
⇒ lose production during changeover
more training and management required, cooperation with supplies is needed
lose flexibility
2. Discuss pros & cons of 2 options
Option 2 (cell production)
Pros :
same savings in inventory cost
throughput might be even faster ⇒ less lead time ⇒ better service or further savings
quality will be better
Cons :
additional equipments ($150,000)
more training required
lose flexibility more
3. Impact on MRP system
pull system does not make MRP system necessary
MRP cannot control the shop floor (not perfectly agreed)
MRP is needed only for major events such as changes in demand or product design
4. Which option to recommend?
proceed with option 1 and then move to option 2, if demand and product changes are relatively stableAfter implementing option 1, they will have time to evaluate whether a further move to option 2 is also desirable