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Answer any five (5) of the following questions. Each question carries 12 marks. (60 Marks)
- Outline the similarities and differences between manufacturing and services in terms of operations management.
- Identify the competitive priorities (CSFs) in a service organization of your choice. What is the role of the operations manager in ensuring that these CSFs are achieved in the organization?
- Does your organization emphasize time–based competition? What are the advantages and disadvantages of time–based completion for your organization?
- Identify the daily beliefs and guiding beliefs for your organization. Provide three examples of each. How do these beliefs compare with reality?
- Investigate the types of qualitative forecasting techniques used in your organization. How do senior managers identify the appropriate forecasting technique to use in different circumstances? Do you think these techniques are used appropriately in your organization?
- Describe the basic layout types for manufacturing and service facilities, and identify when each is best used.
- What criteria are used for purchasing decisions of key components in the supply chain in your organization (or one with which you are familiar)
- What do you see as an opportunity to improve the planning process in your organization?
Read the case carefully and answer all the questions. (40 Marks)
Chad’s Creative Concepts (Krajewski & Ritzman, 2002: 23)
Chad’s Creative Concepts designs and manufactures wood furniture. Founded by Chad Thomas on the banks of Lake Erie in Sandusky, Ohio, the company began by producing custom-made wooden furniture for vacation cabins located along the coast of Lake Erie and on nearby Kell’s Island and Bass Island. As an ‘outdoors’ type of person, Chad Thomas originally wanted to bring a bit of the outdoors inside. Chad’s creative concepts developed a solid reputation for its creative designs and high-quality workmanship. Sales eventually encompassed the entire Great Lakes region. Along with its growth came additional opportunities.
Traditionally, the company had focused entirely on custom-made pieces of furniture, with the customer specifying the kind of wood from which the piece would be made. As the company’s reputation grew and sales increased, the sales force began selling some of the more popular types of furniture pieces to retail furniture outlets. This move into retail outlets led Chad’s Creative Concepts into the production of a more standard line of furniture. Buyers of this line were much more price sensitive and imposed more stringent delivery requirements than did clients for the customs line. The custom-designed furniture continued to dominate the company’s sales, accounting for 60% of the volume and 75% of dollar sales. The company currently operates a single manufacturing facility in Sandusky, where custom and standard furniture pieces are manufactured.
The equipment is mainly general purpose in nature in order to provide the flexibility needed for producing custom pieces of furniture. The layout groups saw together in one section of the facility, lathes in another, and so on. The quality of the finished product reflects the quality of the wood chosen and the craftsmanship of the individual workers. Both the custom and the standard furniture pieces compete for processing time on the same equipment by the same craftspeople.
During the past few months, sales of the standard line steadily increased, leading to more regular scheduling of this line. However, when scheduling trade-offs had to be made, custom furniture was always given priority because of its higher sales and profit margins. Thus, scheduled lots of standard furniture pieces were left sitting around the plant in various stages of completion.
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As he reviews the progress of Creative Concepts, Thomas is pleased to note that the company has grown. Sales of custom furniture remain strong, and sales of standard pieces are steadily increasing. However, finance and accounting have indicated that profits aren’t what they should be. Costs associated with the standard furniture line are rising. Dollars are being tied up in inventory, both of raw materials and work in process. Expensive public warehouse space has to be rented to accommodate the inventory volume. Thomas is also concerned with increased lead times for custom and standard orders, causing longer promised delivery times. Capacity is being pushed, and no space is left in the plant for expansion. Thomas decides that the time has come to take a careful look at this new standard furniture line’s overall impact on his operations.
Answer the following questions.
- What kind of operating decisions is facing Chad Thomas’ business today?
- What might Thomas have done differently to avoid some of the problems he now faces?
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