Distribution Strategy at Shuzworld - Case Study Example

Task Management should organize the process for production into 5 workstations with the required tasks in each workstation for production of the Rugged Work boot. Station Number Task Time 1 A 10 2 B,C 9 3 D 8 4 E,F,G 10 5 H 9 The layout of the 5 workstations provides 10 minutes of maximum time cycle or less for every workstation with an overall time of 46 minutes for each cycle. The start of the cycle begins with task A taking 10 minutes, B and C taking 9 minutes, D taking 8 minutes, E, F, G taking 10 minutes each and H taking 9 minutes. Workstation 2 and 4 has multiple processes of production, therefore, the employees need cross training to perform the tasks for the processes to continue leading to reduction in the time of processing. It is the most efficient arrangement that provides the greatest savings in cost to the company for Work boots production. It improved workflow by 100% efficiency and 0% delay. The time of performance for each task and requirements of sequence needs the assembly line balancing tool of analysis for proper amount of workstations and workflow that is most efficient. The tool calculates the number of workstations required, in this case 5. The maximum time a workstation can operate is 10 minutes and time needed for every cycle is 46 minutes. The calculations guarantee 100% efficiency. The assembly line balancing decision tool helps achievement of highest efficiency in production and reduction in floor space production. When the assembly balancing line is properly balanced, there will be an increase of production and lower cost of production. The Maui sandal will take 4 months to be produced with a total of 20126.97423 hours of labor and costs 20121.71 at a labor rate of $1.08 every hour. The first month requires 3737.741 hours of labor at $4036.76. The second month requires 4775.66988 hours of labour at $5154.62. Third month requires 5511.74336 hours in labor at $5950.10 and month 4 6101.82 hours of labor at $6589.97. The hours for production of the Maui sandal decreases at a slower rate with increase in sandal production. Total labor cost decrease at a slower rate as the line continues to be produced. The information helps determine the levels of employment cost, capacity and product pricing in the market. The decision used here is the learning curve decision tool applied to help formulate strategic decisions of levels of employment cost, capacity and product pricing in the market. Less time is expanded as a result of repeating the same operations. It proves there an increase in time for product production as it takes less time for production. The resources available and changes in process alters the learning leading to the company pursuing the learning curve to gain maximum saving cost, therefore, the curve must increase in order to exist. More production means decrease in amount of labor. From the analysis, it took 3737.741 hours of labor to produce 5 batches of Maui sandals and 6101.82 hours of labor for producing4 times more sandals. The staff plan will gain $37, the most efficient cost for the company. Operator 1 does Job 1, operator for job 2, operator 3 for job 4 and operator 4 for job 3. It is so it can minimize time and decrease costs in the company. The tool used was cost effectiveness analysis for all 4 machine operators and 4 jobs. It determines the machine to do the assigned job at the lowest possible cost. The analysis helps the company save some money and time performing the job. Short term scheduling is the effective means of faster movement of products through faster delivery and the facility leading to lower company costs. Issues surrounding scheduling include capacity planning, done annually or quarterly when purchasing or discarding equipment and aggregate planning, making decisions about people, equipment, facilities and inventory. Short term scheduling techniques include master schedule whereby weekly schedules are made for specific goods, forward scheduling where requirements of a job are identified, backward scheduling where due date begins and last operations are scheduled first. Other techniques include minimum completion time where evaluation will determine the average of time to complete each job, maximum utilization where evaluation will determine percentage of facility utilized and minimum work process inventory where evaluation will determine the average number of system jobs. Rules used to achieve efficient movement of units in Shuzworld include the Johnson’s rule that helps reduce time for processing sequences of jobs across two workstations while minimizing overall down time in the work stations. Another rule is the limitation of rule-based systems of dispatching techniques where all techniques are based on the rule and have limitations. Rules require revision and adjustments in order to change equipment, processes, orders and product mix. Two orders may have the same due date. However, they may have a different status in priority. Task 2 A distribution strategy is made at Shuzworld that meets controls in availability and demand. In addition, it minimizes the overall cost of shipping at the company. POM QM Transportation module software is employed as the decision analysis tool. The tool will give a clear picture of Shuzworld’s distribution pattern. The transportation model is important for evaluating the aggregate planning of production. The model is a linear program dealing with issues in commodities of shipping. The objective is determining a schedule for shipping that minimizes overall cost of shipping while meeting constraints in supply and demand. The model’s basis is the existence of multiple supply and demand points. The transportation model is amenable for finding solutions to other numerous problems like production planning, personal assignment, and scheduling and inventory control. Data Analysis and Recommendation Table of Pattern of Distribution of Transportation (Demand=Supply) From To Shipment Cost Per Unit Shipment Cost Shanghai Shuzworld H Shuzworld H Shuzworld H Shuzworld F Warehouse 2 Warehouse 1 Warehouse 2 Warehouse 3 Warehouse 1 1300 300 200 1800 2200 3 3 4 2 3 3900 900 800 3600 3900 The table above shows Shuzworld distribution in order to minimize their transport costs. Capacity at Shanghai is fulfilled by Warehouse 2 with 1300 units at the cost of $3900. Capacity at Shuzworld H, Warehouse 1 is 300 units, Warehouse 2 is 200 units and Warehouse 3 is 1800. It amounts ton$900, $800 and $3600 respectively. Capacity at Shuzworld F at Warehouse 1 is 2200 units at $4400. The company uses three operator machines to produce women shoes. When the machines are set to run similar tasks, they produce shoes at totally different times. The delays affect cost as the when the shoes take longer to be produced, production will be lower. To increase reliability of the three machines, the best formula would be Rs as each machine has a reliability of its own feasible with the tool of decision analysis. The formula requires taking each machine’s output and multiplying by 3 getting an overall rate for all three machines combined. Untitled Solution Parallel System Parallel system 2 Parallel system 3 Component 1                 .84 .91 .99 Prill System .84 .91 .99 Overall Reliability         .7568 From the chart above, the reliability of all three machines is, 7568 which is rounded to .76. In case of a failure, one machine will serve as a back up using the redundancy analysis. The tool ensures if machine 1 with the lowest reliability breaks down, machine 2 will fall back on and continue the job. Maintaining the machines is the best way to ensure reliability, good procedures and involvement of employees. Employee involvement is a combination of forming partnerships with skill training, employee empowerment, maintenance personnel and reward system. (Heizer, 2010). Maintenance activities affecting reliability should incorporate with the procedures such as lubricating and cleaning the machines, adjusting, monitoring, making minor repairs and maintaining records of the provided maintenance. The reliability tool of decision analysis is the best for finding a back up machine that is reliable during machine malfunction. Reliability increases by 12% when using this tool at Shuzworld minimizing the unreliability issue. The objective of management inventory is to create a balance between investment inventory and customer service. A good inventory management is important to meet low cost strategy. Some of the inventory functions that adds to the company’s flexibility in operations include separating many parts of the process of production, separating the company’s demand fluctuations and provide goods providing customer selection, use up quantity discounts and prevent inflation and upward change in prices. Therefore, the operations manager will need to implement these things to improve their inventory. (Heizer, J and Render, B. 2010) The economic order quantity relates to the problem by minimizing the overall ordering and holding cost for Shuzworld. It helped minimize the shoelaces cost through finding optimal number for ordering while balancing the cost of the company. The operation manager will now be able to improve cost and ordering management. Economic Order Quantity tool for analysis is used to provide the information required to find the operations manager’s team means of optimizing the number of units to place orders for at a time. The method helped them balance the shoelaces’ cost through ordering as required. EOQ solved the problem through minimizing the total order and holding cost of Shuzworld.Top of Form For Shuzworld, one cashier is enough as employing two cahiers on a full time basis is insufficient considering the equations of rate of arrival and service. Comparing the characteristics proves to show that one cashier will have an average of 0.5 customers in line and an average waiting time of 0.08333 with an overall 0.5 checkout time. Alternatively, when hiring two cashiers, the average number of queued customers will be 0.0333 and an average waiting time of 0.0056 with an overall checkout time of 0.6. M/M/s decision analysis tool is best as it allows the use of multiple servers. The difference between the first displayed images from the second is the number of servers. Waiting Lines M/M/1 (Single Server Model) Waiting Lines M/M/s (Double Server Model) The use of this analysis tool supplies information that is accurate for decision making when employing one or two full time cashiers at the company. Performance of the single line waiting system is efficient using this queuing model. Task 3 Shuzworld decided on the production of the Samba Sneaker, bright colored shoes made for teens and pre teens. The company should make an economical decision for reconditioning the existing equipment for the production of the sneakers, buy new equipment or outsource the production to China. The reconditioning option requires $50000 as its fixed cost and $1000 as its variable cost for every produced sneaker. Buying new equipment needs $200000 for fixed cost and $500 for variable cost while outsourcing will needs $3000 for variable costs only for every sneaker produced. The best decision tool to use is Cost Volume analysis. The tool is applied because cost volume profit is a form of accounting useful for short run resolutions. CVP magnifies on the use of information given by the break even analysis. The most critical part of this tool is the point where revenue (total) equals total cost. It is the breakeven point where the company experiences no income or loss. It can be the first examination preceding a more detailed analysis of the CVP. When companies sell more than one form of product, the sales mix, ratio of each product to total sales, will be at a constant. It will cost the company $1050000 if it produces sneaker shoes with reconditioned equipment, $3000000 for new equipment and $700000 if using new production. The company should use new equipment for production as the approach would be beneficial. The best recommendation is to buy new production equipment for the sneaker line as they would produce the product with $700000 making it the lowest production cost. Task 4 The company is looking to put up an additional stand-alone store or a strip mall store. The evaluation must be carried out to decide whether to proceed with constructing the stand alone retail store or a strip mall store. Foregoing the plans altogether waiting for a much better time to carry out the expansion is another possibility. The company ought to employ the decision tree graphical analysis due to the nature of the problem. The reason for using this tool is because it is the most commonly used tool. Profitability problems are very important for future profitability of the company. $20000 is required to be used to perform the market research study to determine whether the market is favorable or not. The study is expected to have a positive success rate of 60% and 4% negative rate. On the positive side, the proposal for a study indicates a 70% increase in the probability of a favorable market. 80% in unfavorable market is expected on the negative side. The expected monetary value, EMV will help determine the best option through multiplying the one state’s probability and the probability of the other nature’s state. The Aurburn stand alone has a probability of $700000 in a 50% favorable market. In the unfavorable market, the company will suffer a loss of $400000. Therefore, the EMV is (0.5)(700000) + (0.5)(-400000) coming to $320000. EMV calculation of the Aurbun Mall store is (0.5)(300000) + (0.5)(-50000) coming to $125000. Of course when the EMV is eliminated, the calculations would sum up to 0. It is based on doing no research. All the changes will contribute to EMV changes analyzed to determine the store to pick. (Chisholm & Whitaker, 1971) The best option is choosing the project producing the highest EMV, which in our case, is the Auburn Stand Alone store. Data was calculated with the use of POM application. The decision tool uses a selected Graphical Decision Tree. It allows for a representation of choices in the company that are visual. The tool shows the options and displays the right direction to follow. Also, the tool calculates the Expected Monetary Value based on minimizing costs or maximizing profits. The information provided was for profitability, therefore, maximizing on the profits was the best option. The output uses the decision tree tool of analysis from POM and OM software which does not allow copy pasting of results but provides well described solutions above. Reason for choosing the decision tool is the purpose it accomplishes.. These are vital topics affiliating cost effectiveness and probability processes. The aim of this task is to recognize issues of cost effectiveness and probability. Cost effective and probability patterns utilize a low variety of manufacturing in high volumes. It is essential for generic products to fluctuate in order to increase customer demand. In a fight to keep production costs low, production mix should come into play to avoid shifting production to other companies. At least 25 batches of kishduz shoes are required to be produced next month and 10 batches of kishduz sneakers this month. The shoe requires $2000 per batch for production and $1500 for production of the sneakers. A production plan should be established for 50 batches to meet all the requirements at the same time minimizing cost. Use the cost-benefit analysis (Mishan, 1976). Restocking the store at the Baltimore stand alone has been quite a fight. Ordering is done by the case, a dozen shoes in each case, from the regional warehouse. The shoes get a daily demand of seven to twelve cases. Upon order submission of new product, the conveyance lead time is in between one to three days with the next morning as day 1. There needs to be a way of testing an inventory policy whereby 30 shoe cases are ordered at a time at the end of the business day whenever 12 cases of inventory lessen. Analytical tools for a direct response are needed (Figueira et al, 2005) In order to improve employee efficiency and operations effectiveness, identifying motivation drivers of employees is the best way to this approach. The McClelland theory on human motivation is used in identifying these motivational drivers. Find out what truly motivates each employee and use it to generate their efficiency (Williams, 1983). An applicable philosophy of operation’s management the company focuses on is the determining of optimal numbers for manufacture of consignments so as to provide for all-out earnings and essential limits. Critical path analysis References Bartel, A. P., Lach, S., & Sicherman, N. (2008). Outsourcing and technological innovations: A firm-level analysis. London: Centre for Economic Policy Research. Chisholm, R. K., & Whitaker, G. R. (1971). Forecasting methods. Homewood, Ill: R.D. Irwin. Figueira, J., Greco, S., & Ehrgott, M. (2005). Multiple criteria decision analysis: State of the art surveys. New York: Springer. Gage, W. L. (1966). Critical path analysis. Draughtsmens and Allied Technicians Association. Heizer, J. & render, B. (2010). Operations Management (10th Ed). New Jersey: Pearson. Mishan, E. J. (1976). Cost-benefit analysis. New York: Praeger. Mun, J. (2002). Real options analysis: Tools and techniques for valuing strategic investments and decisions. New York: John Wiley & Sons. UNEP International Environmental Technology Centre. (2000). Technical workbook on environmental management tools for decision analysis: Technical reference and workbook. Osaka: UNEP International Environmental Technology Centre. Vance, D. E. (2002). Financial analysis & decision making: Tools and techniques to solve financial problems and make effective business decisions. New York: McGraw-Hill. Williams, J. G. (1983). Motivation strategies. Champaign, Ill: Management Learning Laboratories. Read More