Potential advantages, Operation Management

Book Edition Company

Book Edition Company produces very rare cover pages for history books. Reader habits change a lot and they change their mind a lot. The cover pages are sold mainly in Germany although there is some trade with foreign countries. After a thorough survey, Book Edition Company expects that foreign demand will enjoy a dramatic increase, while US demand growth will be slight. Presently, cover pages sales are about 150,000 per year, with anticipated sales growth of 12 percent next year and the year after. For the three years following, estimations are for 8 percent growth each year.

Demand is highly seasonal in Germany for this cover pages market, and 60 percent of the annual demand is planned to be sold in October, November, and December. Cover pages are quite easy to store. Consequently, chief staff in charge has come to a decision to smooth production somewhat. Production in August, September, October, and November is set at 12 percent of projected demand. Production for January, February, and March is set at 4 percent and for the other months at 8 percent.

Book Edition Company has asked you to balance the cover pages assembly line to satisfy next year's production. For planning purposes, assume that each month has twenty-one working days. Assume that a shift has 7.5 hours of actual production time. As the assembly-line balancer, you may choose the number of assembly lines, the number of shifts, and the cycle time. Set the production rate so that demand for the peak months can be met. This will mean that extra capacity is available during the non peak months. The precedence list and estimated task rimes are as follows:

Task

Estimated time (seconds)

Immediate predecessor

A

43

 

B

32

 

C

45

A

D

26

A

E

54

A, B

F

8

C

G

44

D, E

H

12

 

I

30

F, H

J

13

G

K

28

I

1.  Balance the assembly line to satisfy the production plan for next year (with a percentage of demand produced each month) as described in me case.

2. Prepare a plan for meeting the projected demand increases for each of the next five years. Assume the production plan does not change.

3. Describe the impact on the present solution if Book Edition Company decided to produce the same amount each month-that is, to level the production. What extra costs would be incurred? What would the risks be? What are the potential advantages?

Posted Date: 2/21/2013 7:39:18 AM | Location : United States







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