Chapter 14: The Casual Furniture Company
Read the case in chapter 14 and answer the following questions:
1. Develop the MRP for all of the components.
2. During week 1 of the plan, the bracket supplier notifies CFC that the order for 600 units will not arrive as planned. Instead, 300 will arrive this week and 300 will arrive next week, instead of all 600 arriving at the same time. Will this affect production and, if so, to what extent?
3. Now that the plan has been developed, is it feasible to consider the capacity of the cutting department? What recommendations do you have?
4. If you could change the lead times or lot-sizing policies used for any of the components, what changes would you make? Why?
Sample Answer
Sample Answer
Chapter 14: The Casual Furniture Company Case Analysis
Introduction
The Casual Furniture Company (CFC) operates in a competitive market, requiring efficient production planning and inventory management to meet customer demands while minimizing costs. This analysis addresses the material requirements planning (MRP) for CFC’s components, assesses the impact of a delayed order from the bracket supplier, examines the capacity of the cutting department, and explores potential changes to lead times and lot-sizing policies.
1. Develop the MRP for All Components
To develop the MRP for all components, we need to define the structure of the product and its components. Let’s assume CFC produces a specific type of furniture that comprises several components: brackets, legs, tabletops, and screws. Based on the Bill of Materials (BOM) and production schedule, we can outline the MRP as follows:
Example BOM Structure
– Finished Product: Outdoor Table- Components:- Brackets: 4 per table
– Legs: 4 per table
– Tabletops: 1 per table
– Screws: 16 per table
MRP Calculation
Assuming CFC plans to produce 150 outdoor tables in week 1, the MRP for each component would be:
Component Quantity per Unit Total Quantity Needed Available Inventory Net Requirements
Brackets 4 600 0 600
Legs 4 600 200 400
Tabletops 1 150 50 100
Screws 16 2400 1000 1400
Summary of MRP Findings
– Brackets: Order 600 units.
– Legs: Order an additional 400 units.
– Tabletops: Order an additional 100 units.
– Screws: Order an additional 1400 units.
2. Impact of Delayed Order from Bracket Supplier
The notification from the bracket supplier that only 300 units will arrive in week 1 instead of the planned 600 units will significantly affect production:
Impact Analysis:
– Production Capacity: CFC needs 600 brackets to produce 150 tables. With only 300 arriving, production can only commence on 75 tables in week 1.
– Production Delay: This means that the remaining tables (75) will be delayed until week 2 when the additional brackets arrive.
– Resource Allocation: Labor and resources allocated for producing the full quantity in week 1 may need to be adjusted, leading to inefficiencies and potential overtime costs.
Conclusion:
The delayed order will directly reduce the number of tables produced in week 1 from 150 to 75, affecting overall delivery schedules and possibly customer satisfaction.
3. Feasibility of Considering the Capacity of the Cutting Department
Considering the capacity of the cutting department is essential for effective production planning.
Capacity Analysis:
– The cutting department must prepare the necessary parts (legs and tabletops) based on the MRP.
– If each tabletop takes approximately X hours to cut and each leg takes Y hours, we must calculate total cutting time based on the number of pieces needed.
Recommendations:
1. Capacity Assessment: Conduct a detailed capacity analysis to ensure the cutting department can meet the demand for legs and tabletops based on both current and future orders.
2. Production Scheduling: Implement staggered shifts or overtime in peak weeks to handle increased demand.
3. Flexibility in Operations: Train staff on multiple tasks to increase workforce flexibility and efficiency during high-demand periods.
4. Changes to Lead Times or Lot-Sizing Policies
To enhance efficiency, several changes can be considered regarding lead times and lot-sizing policies:
Proposed Changes:
1. Reduce Lead Times:
– Work with suppliers to negotiate shorter lead times for critical components like brackets and screws. By reducing lead times, CFC can respond more quickly to changes in demand without overcommitting inventory.
2. Implement Just-In-Time (JIT) Inventory:
– Adopt a JIT approach for non-critical components, minimizing excess inventory and associated carrying costs while ensuring that materials arrive precisely when needed.
3. Lot-Sizing Policies:
– Shift from fixed lot sizes to variable lot sizes based on demand forecasting. This allows CFC to produce smaller batches more frequently, reducing inventory holding costs and improving cash flow.
Rationale for Changes:
By reducing lead times and implementing flexible lot sizing policies, CFC can improve responsiveness to market changes, reduce waste, and ultimately enhance customer satisfaction through timely deliveries.
Conclusion
Effective material requirements planning is critical for The Casual Furniture Company’s operational success. Addressing the impact of delayed components, assessing departmental capacities, and optimizing lead times and lot-sizing policies are essential strategies for improving production efficiency and maintaining competitiveness in the market. By implementing these recommendations, CFC can better navigate challenges and enhance overall performance.
