Running Head: CASE STUDY CHAPTER 12 & 13

Case Study: Chapter 12 & 13

William Jones

BUS 307: Operations Management & Quantitative Techniques

Instructor: Frank Bucaria

Date: November 17, 2014

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Chapter 12 Case Study: The Realco Breadmaster

Even though with a master production schedule in place, the ability to adapt quickly to

changes within production could have a negative impact on the overall schedule, the MPS

(master production schedule) is an effective tool for planning time lines for producing

commodities. It also projects the amount of inventory promised to the supplier, along with

implementing plans and controls material capacity of resources to meet consumer demands, and

calculates a forecast system for on the job goals to ensure accurate timing and the amount of

inventory that should be produced.

For this paper, the case study in chapter 12 (The Realco Bread-maker) and chapter 13

(Supply-Chain Challenges in Post-Earthquake Japan. In the first case study regarding The Realco

Bread-maker, this product has turned out to be a great success for the owner. The advantages this

product gains over its competitors is price efficiency and unique features. Now that this product

has become a hot commodity, the owner would like to know the projections of how these units

will be produce in a specific timeframe to meet deadlines. In this case the master production

schedule examines the specifics below:

Demand First Second Third Fourth Fifth Sixth Sevent Eighth

Management Week Week Week Week Week Week h Week
Week
Bread- 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000
maker
Weekly
Demand
Booked 23,500 23,000 21,500 15,050 13,600 11,500 5,400 1,800
Orders
Projected
Ending 3,500 500 -1,000 -1,000 -1,000 -1,000 -1,000 -1,000
inventory
Master 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000
Production
Schedule
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Available To
Promise 500 0 3,950 0 30,350 38,850 53,450 0

What do the projected ending inventory and available-to-promise numbers look like? Has

Realco “overpromised”?

From the projects of the master production schedule, the projected ending inventory

shows that there will be a surplus in the inventory to meet the demand if the numbers are

adjusted by 20,000. Projecting the possibility that the suppliers would request to purchase more

inventory this could be an accurate schedule. I believe the Realco Company has not

overpromised because according to the MPS they have more inventory then they need if the

forecast and production number are adjusted accurately during the production process.

In your view, should Realco update either the forecast or the production numbers?

I think the Realco Corporation should update their production numbers due to the

concern of product efficiency. Of course forecasting the product demand to what the consumer

need is very important but what good is it to mass produce when there could be a possibility to

have some faulty products slip through the production line. If there is more product out in the

market that can be sent back to the manufacturer for returns, that would cost the corporation

money down the road.

I would suggest that the Kanban system could be an effective way of “controlling”

inventory production, while making sure the product is manufactured to spec. In the week 5

discussion, I stated that “the Kanban system puts on limit on inventory overstock by controlling

only what needs to be produce step by step. This way, funds are not being wasted on unnecessary
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scrap or miscues from the over production of inventory and not to forget, warehouse space is also

used to create productivity instead of wasted storage” (Jones 2014 para 1.)

Comment on Jack’s approach to order promising.

I think Jack’s approach to order promising can be good and bad at the same time. The

confidence that Jack has in regards to having enough product to meet the demand can be

accomplished according to his forecast and production numbers. With that said, Jack should also

be concerned with the product efficiency just as much as the production angle. As stated above,

this can be done using a system such as the Kanban system

The Advantages?

The biggest advantage with Jack’s approach is that within his approach of an Available to

promise (ATP) ideology to the consumer can be met because due to the completion of the

production numbers. Our text book states that the Available to promise concept indicates the

number of units that are available for sale each week, given those that have already been

promised to customer (Bozarth C.C., & Handfield, R.B. 2013 pg. 364, para 3). Using this system,

we can assume that any surplus of inventory in the warehouse is a positive with a form of deliver

guarantee.

The Disadvantages?

The disadvantage to this approach is that it could leave too much inventory on the shelves

if for any reason the suppliers don’t order as much as forecast. This is a costly way to lose money

by having product sitting for a certain amount of time. Again, here is a good example of how the

Kanban concept can help prevent this vulnerable area within forecasting and production

scheduling. The Kanban system only allows for a stage in production to be completed when
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another stage is finished. Therefore as suppliers or consumers order, the production process can

produce according to orders needed. This could reduce wasted storage space within the

warehouse.

How would formal master scheduling improve this process?

The concept of formal master scheduling would improve this process through accurate

data analysis, to show a hard number of projected product manufacturer orders through a

tracking concept that matches outgoing inventory to the actual customer orders. One article states

that a “scheduled receipt (MPS) is a type of a ‘firm planned’ MPS — it is a Planned receipt

(MPS) from previous periods and MRP calculations that are now released and exist as a

scheduled receipt. It is now a manufacturing order, with a specific content, because of that it is

treated as firm” (Segerstedt, A. 2006 pg. 3595 para 4). Perhaps the improvement of delivery

product on a timed schedule would be accomplished from formal master scheduling.

What organizational changes would be required?

The biggest change within the organizational that would be required would be the role of

responsibilities of the production manager in regards to inventory scheduling. For example,

instead of following a simple inventory forecast of products that would need to be produce in a

general time frame to meet demand, implementing the Kanban system along with the formal

master scheduling would require more structural duties through proper planning. With that being

said, a production manager duties would require more data analysis and research to fulfill these

two systems.

Which do you think is worse, refusing a customer’s order upfront because you don’t have

the units available or accepting the order and then failing to deliver?
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This question is a question that I believe all manufactured based companies fear they

have to answer some day. I think giving the supplier a broken promise that orders will be

delivered just to gain a purchase order is must worse than refusing an order due to a lack of

inventory. For example, the base of my company is to make sure we provide the client’s

customized product in the timeframe that they need it.

The difficult part about my business is that, there are times where orders can come in

during a time where my manufacture in over booked with other production jobs. On one hand, I

don’t want to tell the client we can’t take the order in general because a company’s number one

goal is to become profitable. But, to communicate to the client that we can fulfill the order in a

certain timeframe conducive to the confidence of when we think our manufacture can complete

the order is preferable and keeps the honest barrier in tact between us and the client’s

relationship.

While this might cause for the client to leave and find another vendor, the relationship

has not become compromised money. In business, keeping the commitment and promise to meet

deadlines and product efficiency is the determining factor of how well a business will do long-

term.

What are the implications for master scheduling?

Using my business platform, it is very critical that we understand how long production

start and finish times are with our manufacture. If we are aware of production timeframes, we

can now give our clients a more accurate timeframe of how long it will take to complete their

order.
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Suppose Realco produces 20,000 breadmakers every week, rather than 40,000 every other

week. According to the master schedule record, what impact would this have on average

inventory levels?

The obvious assumption is that there would be an impact on the output of inventory due

to a reduce amount of product. From a financial point of view, this can be helpful for the

business to save money in production cost. When looking at this adjustment from a forecast,

scheduling and planning perspective, there is a high risk that the corporation might not be able to

meet the consumer demand in the future.

Chapter 13 Case Study: Challenges in Post-Earthquake Japan

What are some of the advantages of the supply chain used in the Japanese auto industry

before the March 11 earthquake and tsunami? What were some of its disadvantages?

The two main advantages of the Japanese auto industry was the ability to produce high

quality products along with that ability to boost efficiency in their streamline manufacturing

process/supply process. The disadvantage the Japanese face post-earthquake and tsunami was a

strategic contingency plan to protect the supply chain from this form of disaster. The lack of

forecast solutions (more specific possible environmental intangibles) to produce a surplus of

inventory of car parts was not taken into consideration in the beginning stages of the

manufacturing planning process.

Is Toyota's plan for a "foolproof" supply chain consistent with the Lean production

philosophy?

When observing what the Lean production philosophy represents, this philosophy is

appealing towards preventing inventory waste. After the Japanese suffered the loss of
CASE STUDY: CHAPTER 12 & 13 8

manufacturing due to Mother Nature, their “fool proof” plan was to implement a safety blanket

to protect supply production along with an isolation format that will sustain any future

disruptions in regards to supply production if this tragedy was to happen again.

Taking a closer look at the Lean supply philosophy, our text states that Lean principles

are applied to “eliminate” waste in a firm’s sourcing and logistics, as well as within the firm’s

internal operation (Bozarth C.C., & Handfield, R.B. 2013 pg. 408 para. 7). The core of the Lean

principle is to monitor inventory waste which can be a contrast in how the Japanese were

approaching in retrospect in the development to recovering their automotive stability through

ensuring a surplus of inventory within its’ infrastructure.

Can you think of any additional ways Toyota (and its competitors in the Japanese auto

industry) can improve upon the company's plan to create a "foolproof" supply chain?

Ironically I think the Kanban concept in particularly can improve on the Japanese auto

“fool proof” supply chain. For example, when using the Kanban system, there can be a

synchronization in a form of the Japanese can systematically place a JIT (Just-In-Time) element

of how much inventory will be produced in the appropriate time frame is should be produced.

One article states that “Toyota’s Just-in-Time (JIT) production system is generally regarded as

the best system in the world (Spear and Bowen 1999). Key to JIT production is the kanban

system. For greatest efficiency,

it is important to minimize fluctuation in the order quantity (Monden 1983 Even though the

Japan region is a risk factor for certain weather intangibles does not mean they should over

produce inventory because this could lead to storage waste” (Kotani S. 2007 para 3).
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What impact do you think Toyota's plan will have on the way it handles relationship

management in its supply chain?

I believe that Toyota’s plan will have a positive impact in regards to supply chain

management. The inventory financial flexibility that the Toyota Corporation will propose to its’

suppliers will provide a positive outcome for outsource manufacturers to comply with ease and

cater to the needs of the corporation demands. While this could be a great benefit for Toyota, the

opportunity for globalization in cultural diversity regions could also be accomplished.

Both of these case studies seem to have one thing in common. The critical process to

forecast orders from the consumer demands and that ability to produce inventory according to

where the demand lies has to be address and adjusted. By using formulated methods and

philosophies, most if not all corporations will be able to acknowledge the advantages and

disadvantages to ensure profitable success.

Reference List
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Bozarth C.C. & Handfield R. B. (2013) Introduction to Operations and Supply Management

Third Edition ch 12 pg 364 para 3. Retrieved from: Upper Saddle River, New Jersey: Pearson

Prentice Hall. ISBN: 9780132747325.

Bozarth C.C. & Handfield R. B. (2013) Introduction to Operations and Supply Management

Third Edition ch 13 pg 408 para 7. Retrieved from: Upper Saddle River, New Jersey: Pearson

Prentice Hall. ISBN: 9780132747325

Jones, W. (2014) Week 5 Discussion 2: Calculation of Kanban Cards.

Kotani, S. (2007). Optimal method for changing the number of kanbans in the e-Kanban system

and its applications. International Journal of Production Research, 45(24), 5789-5809.

doi:10.1080/00207540601096940

Segerstedt, A. (2006). Master Production Scheduling and a comparison of Material Requirements

Planning and cover-time planning. International Journal of Production Research, 44(18/19),

3585-3606.