Case Study
“MacPherson Refrigeration Limited”
Mohamed Yehia Emam (S1500733)
George Gabriel George (S1501034)
Table of Contents
Table of contents Page 2 1. Introduction Page 3 2. Problem Statement Page 3 3. Performance Measures and Trade-Offs Page 4 4. Assumptions Page 5 5. Iterative Plan Page 5
5.1. Integer Programming Model Page 5
5.2. Integer Programming Model Considering Overtime Page 6
5.3. Integer Programming Model Considering Hiring/Firing Page 7 6. Conclusion Page 9
1. Introduction
In this case study, production planning of MacPherson Refrigeration Limited (MRL) for the next year is conducted. In order to
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The decision maker of the project who is going to decide to implement the provided solution is Linda Metzler, production planning manager of MRL. Her objective is minimizing the cost while keeping the reputation of the company at high levels considering the future of the company. Her decision criteria and performance measures are in detail in the next part and environment related assumptions are described in assumptions.
3. Performance Measures and Trade-Offs
In order to compare the different aggregate plans, there should be some performance measures in accordance with the objectives of decision maker. These measures would be used in order to define a plan as “better” than any other plan and they are grouped according to their relevancies in parts.
The first tool to compensate demand fluctuation is building inventory as given in the case text. Quantitative trade-off of this tool is basically the opportunity cost of holding inventory which is given as $8 per unit per month. In addition, keeping products for long time intervals in inventory could lead them to hold outdated products which can be though both quantitative and qualitative trade-off. Considering that these aspects should have been included in the inventory holding cost; no additional modification related to these trade-offs are considered.
The second mentioned tool is using overtime which is considered as making some of workers work for an additional 40 hours a week. The obvious benefit of
In order to maximize the total profit, the monthly production plan should be 1900 unit/month for Model S and 650 unit/month
The timing of capacity changes also needs to be taken into consideration to achieve maximum efficenty given that demands of their products varies with seasonal changes. The ability to react to market demand changes quickly will determine manufacturers flexibility in keeping up with these demands. Manufacturers needs facilities to produce, whether warehouses to store its raw materials or finished goods, or manufacturing plants to produce their products. Services facilities are needed by certain manufacturing industries such as consumer electronics to cater for returns. Distribution centres also determine the efficenty of production distribution and un-nesessary inventory holding will result in higher holding cost. Such facilities require large investments and are integral of the manufacturer’s supply chain strategy and thus proper planning is needed when making these decisions regardong the size, location which affect the overall operations. How manufacturers run their productions also determine how successful will they be in terms of productivity and quality levels. Different types of equipment and processes also affect the cost and output of the manufacturing plant. Information systems that flow both upstream and downstream affects the forecasting, planning, inventory and production levels, they must be robust to ensure the manufacturing firm is able to react accordingly to changing demands and variations. In addition to their internal environment,
Select an existing production organization. Analyze the organization’s current vision, mission, business strategy, operation strategy, supply chain, total quality management, just-in-time philosophy, forecasting method, statistical technique, facility location, work design, project life cycle, and project management. Note: You will need this information in order to complete this and subsequent assignments.
During the game, I realized that wide gaps in orders of every role in the supply chain such as factory, distributor and retailer create inventory management challenges. For example, distributor records 0units between week1-week 4 compared to retailer within the same period. The retailer records 3units, 5units, 2units and 2units between weeks 1- week 4. The same applies to factory with 0units from weeks 2-4. Addressing inventory management problems requires developing an average unit level to avoid disappointing customers when demand
The customers, wholesalers and retailers may order in large quantities with the expectation that they will receive a greater allocation of products that are in short supply. The impact on the supply chain is significant as the forecasted demand is greatly, and unrealistically, increased with these inflated orders. Eventually orders disappear and cancellations pour in, making it impossible for the manufacturer to determine the real demand for its products
* Least expensive of the three strategies due to the lack of excess inventory and employee overtime
“For companies today, MRP is a computerized information system. As such, it requires data to provide the information needed for decision making” (Vonderembse & White, 2013, Section 9.5, para 6). The goal of this paper is to read the Space Age Furniture Company case study and develop an MRP for Space Age Furniture Company using the information in the case including the production of sub-assemblies in lot sizes of 1,000 considering the lot size of 1,000 for sub-assemblies has produced a lumpy demand for part 3079; suggest ways for improvements over sub-assemblies in lot sizes of 1,000, analyze the trade-off between overtime costs and inventory costs, calculate a new MRP that improves the base MRP, compare and contrast the types of production processing—job shop, batch, repetitive, or continuous—and determine which the primary mode of operation is and why, describe ways that management can keep track of job status and location during production and recommend any changes that might be beneficial to the company and/or add value for the customer.
As Coral reviews the master schedule and the pending orders, she can see that given the current plan, they will not process enough subassemblies to cover the upcoming orders. The master schedule is a statement of exactly what will be produced. It must simultaneously satisfy the needs of sales and marketing and be feasible in terms of operations. Developing a master schedule that is close to the aggregate plan, yet still satisfies marketing and operations, is not an easy task. The aggregate plan was developed based on a strategy that maintained acceptable inventory and workforce
In today’s operational management arena, there are certain expectations from a managerial aspect that must be met in order to be successful. A comprehensive look at the Space Age Furniture Company will show exactly what the Materials Requirement Planning (MRP) calculations are for this company at present time and then take the information given in order to properly suggest ways to improve the sub-assemblies. In addition, there will be an analysis on the trade-offs between the overtime and inventory costs. A calculation will be made on the new MRP that will improve the base MRP. This paper will also compare and contrast the types of production processing to include the job shop, batch, repetitive, or continuous, and determine which
Within the retail environment, scheduling and a rapid response to changing consumer sentiments are critical. As such, the organizations systems must reflect this change in consumer dynamics to maximize sales and profitability. A systems approach works well in accomplishing this task. In many instances, consumer demand, consumer sentiments and macroeconomic factors all influence one another. In the context of Macys, macroeconomic factors determine consumer demand and confidence. Attempting to forecast this demand, the organization must then adjust scheduling and inventory levels accordingly. The input elements in this system would therefore be aligned with macroeconomic considerations. Aspects such as income growth, discretionary income, consumer confidence, tax policy, and commodity prices all affect the system. For instance high gas prices, can potentially cause less discretionary income for individuals. This lack of discretionary income ultimately hinders the amount of spending on discretionary items. This lack of spending impacts Macys on the output side as the company must now lower inventory levels or markdown merchandise to compensate consumers. Therefore inventory management is critical system in which Macys can use to add value to the consumer, the company, and its
I have taken it upon myself to test two inventory management systems and have found a system that will yield the least cost to Parts Emporium Inc. The two systems I have tested are the Continuous Inventory System and the Periodic Inventory System. Using data that I have gathered from the products DB032 and the EG151, I have compiled calculations and have concluded a continuous inventory system would be best for our corporation. Attached you will find said calculations; I would like to take this moment and present the continuous inventory system and recognize all of the relevant costs. The following is an explanation of each calculation under the continuous inventory system:
Produce more products so there is less restocking issues but not more than the market calls for (supply and demand),
In order to achieve excellent production capacity and reducing the overall costs the production manager has to find an optimal structure of aggregate planning which will help achieving qualitative and quantitative aspects of the organization.
Our consultancy handled the project very successfully and was able to reach the target given by the Bob. Our team able to provide and modernize the plant on time meeting up the purposes thereby decreasing the cost, rise in productivity and gearing up the revenue to the firm. Overall our consultancy really
❖ Adjustments to inventory levels should be made in order to accommodate demands during peak seasons and low selling months.