Reference no: EM131438213

INTRODUCTION

L&J.G. Stickley was founded in 1900 by brothers Leopold and George Stickley. Located just outside of Syracuse, New York, the company is a producer of fine cherry, white oak, and mahogany furniture. In the 1980's, the company reintroduced the company's original line of mission oak furniture, which now accounts for nearly 50 percent of the company's sales. Over the years, the company experienced both good and bad times, and at one point, it employed over 200 people. But by the early 1970's, the business was in disarray; there were only about 20 full time employees, and the company was on the brink of bankruptcy. The present owners bought the ailing firm in 1974, and under their leadership, the company has prospered and grown, and now has 1,350 employees. Stickley has five retail showrooms in New York State, two in Connecticut, one in North Carolina, and its furniture is sold nationally bhy some 120 dealers.

PRODUCTION

The production facility is a large, rectangular building with a 30-foot ceiling. Furniture making is a labor intensive, although saws, sanders, and other equipment are very much a part of the process. In fact, electric costs average about $60,000 a month. The company has its own tool room where cutting tools are sharpened, and replacement parts are produced as needed. Workers skills range from low-skilled material handlers to highly skilled craftsmen. For example, seven master cabinet makers handle customized orders. The process begins with various sawing operations where large boards received from the lumber mills are cut into smaller sizes. The company recently purchased a computer controlled " optimizer " saw that greatly improves sawing productivity, and eliminates some waste.Workers inspect and mark know locations and other defects they find on each piece of lumber before feeding it into the saw. The computer then determines the optimal set of cuttings, given the location of knots and other defects, and standard lengthd needed for subsequent operations. Approximately 20,000 board feet are cut each day. Subsequent sawing operations provide additional cuts for specific jobs. Workers the glue some of the pieces together; they will end up as tops of tables, desks, dressers, or a similar item. Large presses hold 20 to 30 glued sections at a time. Other pieces that will become table or chair legs, chair backs or other items fo through variousshaping operations. Next comes a series of sanding operations, which remove excess glue from the glued sections, and smooth surface of both glued pieces and other pieces. Some of the pieces may require drilling or mortising, an operation in which rectangular holes and other shapes are cut into the wood. The company has a CNC ( Numerically controlled ) router that can be programmed to make grooves and other specialty cuts. Some items require carving, which involves highly skilled workers. Next, workers assemble the various components, either into subassemblies, or sometimes directly to other components to obtain completed pieces. Each item is stamped with the date of production, and components such as dresser drawers, cabinet doors, and expansion leaves of tables also are stamped to identify their location. Careful records are kept so that if a piece of furniture is ever returned for repairs, complete instructions are available (type of wood, finish, etc.) to enable repair people to closely match the original piece. The furniture items then usually move to the " white inventory " (unfinished) section, and eventually to the finishing department where workers apply linseed oil or another finish before the items are moved to the finished goods inventory to await shipment to stores or customers.

AGGREGATE PLANNING

The company uses a level production plan ( maintain steady output and steady labor force ). Demand is a seasonal; it is highest in the first and third quarters. During the second and fourth quarters, excess output goes into inventory; during the first and third quarters, excess demand is met using inventory. THe production scheduler uses a schedule that is set for the next 8 to 10 weeks. PRODUCTION CONTROL Job sequence is determined by the amount of remaining inventory (days supply on hand), and processing time. Lot sizes are determined by factoring in demand, setup costs, and carrying costs. Typical lot sizes are 25 to 60 pieces. There are many jobs being done concurrently. Each job is accompanied by a set of bar codes that identify the job and the operation. As each operation is completed, the operator removed a bar code sticker and delivers it to the scheduling office where it is scanned into the computer, thereby enabling production control to keep track of progress on a job, and to know its location in the shop. The company's policy of level output coupled with seasonal demand patterns means that prior to peak demand periods, excess output is used to build up inventories, which is then drawn down when demand exceeds production capacity during periods of peak production. INVENTORY In addition to the "white" inventory and a small finished goods inventory, the company maintains an inventory of furniture pieces and partially assebled items. This inventory serves two important functions. One is to reduce the amount of time needed to respond to customer orders rather than having to go through the entire production process to obtain needed items, and other is that it helps to smooth production and utilize idle machinery/workers. Because of unequal job times on successive operations, some workstations invariably have slack time while others work at capacity. This is used to build an inventory of commonly used pieces and subassembles. Moreover, because pieces are being made for inventory, there is flexibility in sequencing. This permits jobs that have similar setups to be produced in sequence, thereby reducing setup time and cost.

QUALITY

Each worker is responsible for checking his or her quality, as well as the quality of materials received from preceding operations, and to report any deficiencies. In addition, on several difficult operations, quality control people handle inspections and work with operators to correct any deficiencies. The company is considering a TQM approach, but has not yet made a decision on whether to go in that direction.

1. Suppose the company has just received an order for 40 mission oak dining room sets. Briefly list the kinds of information the company will need to plan, schedule, and process this job.

2. What benefits, and what problems, would you expect, given the company's level production policy?

3. Can you suggest any changes that might be beneficial to the company? What are they?