1.

0 CASE STUDY: MANDEXOR MEMORY

Background

Mandexor Memory with its parent company in the US is currently experiencing a poor
record of meeting production targets at its European Disk Drives Division and has therefore
appointed a new Operations Manager in Mat Frankel to turn things around and to see to the
reorganization of the sales and marketing functions into one division. The core objectives of this
paper will thus be to analyze the current capacity and output levels vs the demand as per the
forecasts and then determine how Mandexor can balance optimal output with demand using the
right capacity planning and control strategies to achieve its production targets in the European
Disk Drive Division.
Question:

1) What level output will be required each month for the plant to meet its demand?

They are going to plan the production levels for the factory in such a way as to give
everybody what they want. From now on, they schedule in such a way as to minimize their own
costs, give marketing the goods they want when they want them, and keep inventory levels at a
minimum.

Month Consumer PC Professional Total

Jan 5,500 7,950 2,750 16,200
Feb 5,190 7,560 2,650 15,400
Mac 5,950 8,800 3,050 17,800
Apr 7,100 10,400 3,500 21,000
May 5,500 8,300 2,700 16,500
Jun 5,050 7,250 2,500 14,800
Jul 4,900 7,190 2,410 14,500
Aug 4,750 7,050 2,350 14,150
Sept 5,050 7,550 2,550 15,150
Oct 5,600 7,750 2,700 16,050
Nov 5,150 8,800 2,600 16,550
Dec 7,550 12,150 3,800 23,500

2) What combination of ‘strategies’ would you recommend in order to meet the

production plan?

First, keeping production levels constant and absorbing demand fluctuations by varying
finished goods stocks. Then, using overtime on an extensive basis in peak periods and allowing
underutilization of labour during slack periods. Next, hiring an extra shift for peak production and
laying them off later in the year, if necessary. Lastly is subcontracting out some of our parts
fabrication over to assembly.

3) How might production levels be changed in the light of changes in the forecast
demand?

The production levels might be changed in the light of changes in the forecast demand
using preliminary costings.

Cost of stock

Finished goods stocks are no longer a factory item. Previously we have charged at an
annual rate of 20 per cent factory cost to include all warehousing and handling costs. Current
warehouse capacity is 20 000 drives. Occasionally extra storage space is rented.

Overtime

Current union agreements require four weeks’ notice for any overtime. However, in
practice some weekday overtime can be arranged at shorter notice. Up to two hours a day can
be worked over the eight-hour week day shift. Weekday and Saturday overtime rates are 150
per cent of standard rates. Sunday rates are 200 per cent of standard rates.

Hire temporary workers

Recruitment would incur costs but much of the ‘personnel’ effort required could come
from existing resources. Productivity of new workers would also be low, but again this is difficult
to quantify.

Subcontracting

We have put out some work to local subcontractors before-usually simple parts
fabrication work. We generally expect to pay subcontract prices of between 120 per cent and
125 per cent of our own factory costs.
Mandexor Memory

Mandexor Memory with its parent company in the US is currently experiencing a poor
record of meeting production targets at its European Disk Drives Division and has therefore
appointed a new Operations Manager in Mat Frankel to turn things around and to see to the
reorganization of the sales and marketing functions into one division. The core objectives of this
paper will thus be to analyze the current capacity and output levels vs the demand as per the
forecasts and then determine how Mandexor can balance optimal output with demand using the
right capacity planning and control strategies to achieve its production targets in the European
Disk Drive Division.

2.0 CASE STUDY: BOYS AND BODEN (A)

BACKGROUND
Boys and Boden was a small, successful, privately owned company in small town that has been
trading since 1895. They are renowned as a leading force in the building and plumbing trades,
providing a complete range products and materials to the trade, which made doors, staircases
and other timber products.

They strive to meet the exacting needs of the future. Their customers can always rely on top
quality products and service.

Their aim is to save customer’s money; this coupled with an ability to provide an ever expanding
list of satisfied customers with exactly the right product, at the right time, and at a competitive
price, means that Boys and Boden will continue to lead the field.

In addition to this, they are equipped to meet customers’ requirements. All aspects of trading are
looked at, including deliveries, invoicing and credit control. They believe the package that offer
is the best. Not only does it offer pricing consistency, but customers can be assured that their
account is being looked after by key members of staff. Deliveries to site are catered for on a
daily basis, enabling your staff to get on with the job in hand.

As independent merchants, they still hold the majority of the market share in their area. They
believe that they have the flexibility to meet their customer's needs and the service to support
their promises.

They hope that they can work together on future projects and hopefully a Trading Agreement
can be arranged to cater the requirements

Question:
1) To what extent could (or should) Dean expect to apply the philosophies and
techniques of JIT to the running of the staircase cell?

Dean should apply the philosophies and techniques of JIT fully because this system will
speed up the process flow through cellular manufacturing. Currently there is a lot of waste on
the factory floor and there is a lot of duplication of efforts. This is hampering the productivity of
the joiners. As a result, even though the estimated time of completion takes into consideration
the possibility of delays, most of the projects are still not being completed on time. This problem
can only be solved by implementing the JIT system. The JIT system will refine the existing
system in terms of process modularity and product modularity and as a result, the joiners will be
able to locate the necessary processes in order to complete the projects on time.

2) What are likely to be the main categories of costs and benefits which should be taken
into account?

One of the non-financial benefits of the JIT system is the enhanced level of motivation
on the part of the employees. Implementing the cell manufacturing system means that there will
be less supervision in the individual cells and as a result, employees will be empowered to
make their decisions. This will add to the motivational factor of the employees. Other benefits
are minimization of inventory (cited in Aaker, 2004). This will minimize the level of carrying costs
and therefore facilitate the implementation of the cost minimization strategy. The costs will be
incurred from upgrading the machinery so that they could be made compatible with the cell
manufacturing system. Another cost category can be in the form of separate cells requiring the
same machinery and therefore the result is duplication of resources and this adds to the level of
expenditures required in making the process effective.

3) At what stage, and how, should Dean sell his idea to the Joinery Manager and to the
workers?
 Dean should sell the idea to the Joiner manager and to the workers at the very start
during the conceptual stage. Converting to the JIT system means that this will be a project of
managing change. Most projects of this kind fail because employees are unwilling to accept
change. Therefore it is a critical success factor to involve the workers from the very beginning in
order to make them contribute to the process. In fact the success of the conversion depends on
the early involvement of the workers because they are in the best position to generate ideas on
how to maximize the efficiency of the process design. In this respect, it is a critical consideration
to maximize the number of contributions from the workers because they will ultimately be
responsible for making the new operational processes effective.

4) How different would the cell work (job design) be to that in the main Joinery
Department?

The cell work would be different because the entire floor of the department would be
divided into small cells that would specialize in different parts of the product manufacturing
process. Previously it was not specified where different products were placed on the department
floor. The location of the equipment was also not specified. However that would all change with
the conversion to the cell manufacturing system. The new system would also differ in terms of
the workers being assigned to individual cells rather than being responsible for all parts of the
process. It would also involve training the workers so that they can adapt to the cell
manufacturing system (cited in Hill & Jones, 2007). Also, once the new system is made
operational, the Joiner Manager would need to supervise less and would be in more of a
support position.
5) Should Dean differentiate the working environment by providing distinctive workwear,
such as T-shirts, and distinctively-painted machines in order to reinforce a cultural
change?

Dean should implement the suggested changes because as mentioned before, the
project is one of managing change. This means that the management should build an
organizational culture that is based on the process of innovation. Employees are the most
important assets of an organization and therefore the top management should create the best
possible working conditions designed to maximize employee satisfaction. This is a critical
consideration in the present scenario because the existing processes are going to be
redesigned fundamentally. This means that Dean will have to sell the idea to the workers
because the cell manufacturing system will entail completely different work processes.
Therefore Dean should implement the suggested changes in order to bring about cultural
change.

6) What risks are associated with Dean’s proposal?

The risks associated with Dean’s proposal have to do with the costs that will be incurred
as a result of the factory floor being rearranged. There will also be work stoppages during the
implementation process. Therefore the challenge for Dean will be to manage project
implementation in such a manner that the normal process flow is not disrupted during the
transition period. The risks also have to do with the employees not being motivated enough to
make the switch to a new manufacturing philosophy. Additional costs will be incurred in the form
of formal training and development programs that will have to be conducted in order to help the
employees adapt to the new structure. Also, the equipment might have to be upgraded from
time to time. These upgrades might be costly in the event that the equipment is bolted to the
floor.
2.0 CASE STUDY: BOYS AND BODEN (B)

1) Evaluate the proposed CAD/CAM system in terms of its contribution to each of the five
operations performance objectives. In doing this, you could make comparisons between
the existing and proposed system.

Quality Performance Objectives

Quality is more than conformance to a specification. It’s also how well a product
performs its intended function, the desirability of the product’s features and the reliability of a
product. Quality also refers to the product’s durability, the ease with which the product is
serviced and the degree to which the customers believe the product meets their needs and is a
good value.

Speed Performance Objectives

Speed objectives refer to the rate at which a company can generate sales quotes and
how rapidly and often a company can deliver its products. In addition, speed refers to such
issues as the time required to manufacture one or more products and the time the company
needs to research and develop a new product.

Dependability Performance Objectives

Company’s operations as dependable if the company produces and delivers products to
its customers on time and according to agree to costs and prices. A company also measures
dependability by the product’s ability to function as designed and as expected and to perform
consistently over a reasonable amount of time.

Flexibility Performance Objectives

Flexibility requires that a company can produce products of different levels of quality and
with various design modifications. Flexibility also requires a company to adapt operations to
meet new or changing delivery schedules and production volumes.

Costs Performance Objectives

Costs performance objectives refer to the variation in unit cost due to changes in the
volume a manufacturer produces and the variety of products produced. In most cases, the
higher the variety of products produced, the lower the volume produced and the higher the unit
cost, and vice versa. Equally important, the cost of each product will vary, which affects the
product prices, running costs and profits.
2) Analyse the degree of automation inherent in the proposed system. What other
process elements could be automated, and what are unlikely ever to be automated?
Explain your rationale.

The CAD and CAM systems is both a method of manufacturing and the automated
systems in which individual engineering, production, marketing, and support functions of a
manufacturing company are organized. So, more higher the degree of automation in CAD or
CAM systems, the more critical is the integrity of the data used to control the machines.

Next, on receipt of customers’ orders, their sketches and any other forms of information
supplied by the customer detailing their requirements will be delivered to the small design office.
The two CAD designers will extract the dimensions and apply them to the CAD staircase
templates held on the system. Trials indicate that this will be a relatively quick process, taking
between half and hour and two hours depending on the complexity of the design.

Thus, a detailed drawing of the whole staircase can be produced very quickly, and a
copy can then be sent back to the customer for their confirmation. The system holds all the
details on each staircase, so that when confirmation and approval is received, the details can be
immediately passed electronically to the CAM system.

After that, it should be possible to e-mail the drawings to a customer, but at present most
builders prefer paper and many sites do not even have faxes. It will be a few years before they
can link electronically to both the buyers and the site managers of even the larger builders.
Smaller builders may never adopt this technology.
3) Is there any evidence that the CAM technology could be purchased at a smaller scale?
And if so, why has Dean Hammond not considered that option? Is the proposed scale too
big lambitious a change from the existing jobbing processes?

There is no evidence that the CAM technology could be purchased at a smaller scale.
Dean Hammond, General Manager of Boys and Boden (B&B) not considered that option
because as a small company they are not supposed to purchase larger scale. If they are do that
it is will cause a great loss to their company. The small company must choose the lower price to
minimize the costs.

Next, it is clear that there are a few very large manufacturers of staircases in the UK, but
they specialize in standard sizes which are sold in huge quantities to large builders and
merchants. In effect, making commodities and their manufacturing systems are designed to
make large batches of standard components, which are assembled on production lines. It is
clear that they will never be able to compete profitably in this part of the market.

After that, it is to find ways of increasing the overall productivity of the system. They
know that there should be a way of getting the data directly transferred to the wood, and they
know this has been achieved in many industries using CAD or CAM. So, if the proposed scale
too big lambitious, it is will make a great change from the existing jobbing processes.
4) Where is there any integration between technologies? What the technologies that had
been applied in company?

Integration plays a very important role in the future of CAD or CAM products. It is
happen when factory team workers will select and prepare the pre planed timber for all the
components to be produced for a staircase, working from a detailed cutting list and drawings
supplied by the CAD system. They will involve then pass these components through a sanding
machine. They will continue until a full set of pieces is ready on a trolley. This “kit” of materials
will then wait in a small buffer area prior to being machined on the CAM.

The CAM operator will then carefully position each piece of timber in turn on an
adjustable vacuum clamping device forming part of the bed of the CAM machine. Precise
alignment will be facilitated by a laser light outline projected from the ceiling, corresponding to
the staircase and component reference stored in the CAM server. The operator then will initiate
the automatic machining of the components. The CAM machine will select appropriate tooling
from its own tooling “library” and will complete the entire machining of the component with no
further operator involvement.

The company had identified the best supplier of CAD systems for special stairs, and
have already ordered a two workstations system, so that they can begin trials of this as soon as
possible. Even if the company decide not to go ahead with the manufacturing system, they can
continue to supply joinery design services using this new design technology. The digital output
of the CAD is adaptable to the input requirements of the proposed CAM.

Eventually, specialization and technology will displace the slow and inefficient traditional
generalist craftsmen. The CAD or CAM technology could actually be used to machine virtually
any joinery components, but that they simply must not be distracted by this capability. They
want to specialize just in stairs, and therefore should not get into making windows, doors or any
other special products, even in quiet periods.
5) To what extent does the proposed CAD/CAM system provide future opportunities to
integrate customer, information, and material processing technologies? Could this
provide USPs (unique selling points) for the company?

 The proposed CAD/CAM system provide future opportunities to integrate

customer:

The first point for system provide the future opportunities are makes the company
more accessible by the customer. By having a CAD/CAM software in the company, the
company can receive CAD models from customers faster and easier than ever before. The
company will be able to open CAD files easily, setup the tool path for machining and perform
simulations that provide valuable information for the company in the quoting process such as
the calculation of cycle times. Manufacturing can deliver products to market faster and more
affordable than ever before. This has a lot to do with technological advancements in CAM
machining and in CAD/CAM software. The software allows users to design faster, manage
projects, test and simulate as well as machine faster than ever.

The second point is provide the good quality of the product for the customers. The
boys and boden company provide an excellent quality of the staircase. Their company become
a specialist, not just serving the local area, but providing non-standard staircases throughout the
country. The delivery time also will have quicker than the average local joinery shop, and also
the costs will have to be much lower to more than offset the higher delivery costs.

 The proposed CAD/CAM system provide future opportunities to information:

The point for the system provide future opportunities to information are to share the
information or knowledge between the departments so designs can be done right for the first
time with manufacturability taken into consideration. When everyone works on the same
system, this is much easier to do and the benefits can be substantial. Unfortunately in some
cases, designer do not realize the impact of their decision on the manufacturing process.
Design features that are difficult to manufacture can add extra costs to jobs. When CAM
programmers and designers work with the same system, it is much easier for both disciplines to
work together. Some CAD/CAM systems have the ability to copy features and store them in a
library for later use or can create custom features.
  The proposed CAD/CAM system provide future opportunities to material
processing technologies:

The point for the system provide future opportunities to material processing technologies
are the technology makes complex machining more simple and effective cost. The CAM
machine provides the solution to make the type of jobs much easier than ever before. The
process will start with select and prepare the pre-planned timber for all the components to be
produced for a staircase, working from detailed cutting list and drawing supplied by the CAD
system and the last process will ended with assembly and packing the staircase. This
processing is only CAM system can offer. This also an even be customized by the CAM
operator with a little training.

Could this provide USPs (unique selling points) for the company?

Yes, the company could provide the USPs. This is because USPs giving more insight
information and control over the total internal and external production progress. These specially
developed for a small and medium sized of the companies. USPs also important because it can
show that differentiates the product from the competitors such as the lowest cost, the higher
quality or the first ever product of its kind. The USPs could be thought of as “ What you have
that competitors do not have”.
6) Carry out a net present value calculation for this project, based on discount rate of 8
percent:

The formula of the net present value: cr

(1+r)ͭ

= 80,000

(1 + 0.008)4

=£317,460.32

7) Summarize the pros and cons of the investment.

The pros of the investment:

 Easy to make perfect product

 Lower labour cost
 Easy to make minor and major adjustment
 Duplicated produced more easily ( no human error)

The cons of the investment:

 This system is very expensive as are the machine controlled by the software
- The higher maintenance
 Often difficult to use. The operator has to be highly trained.