Exercises

1. A firm that produces electric golf carts has just received an order for 200 carts, which must be ready
for delivery at the start of week 8. Information concerning the product structure, lead times, and
quantities on hand is shown in the following table. Use this information to do each of the following:
a. Construct a product tree.
b. Construct an assembly time chart.
c. Develop a material requirements plan that will provide 200 golf carts by week 8 assuming lot- for-
lot ordering.

2. Using the diagram below, do the following:

a. Draw a tree diagram for the scissors.
b. Prepare an MRP plan for scissors. Lead times are one day for each component and final scissor
assembly, but two days for the plastic grips. Six hundred pairs of scissors are needed on day 6. Note:
There are 200 straight blades and 350 bent blades on hand, and 40 top blade assemblies on hand. Use lot-
for-lot ordering for all items.
3. The demand for product X is 20 units. Each unit of X requires 2A, 1B and 4C. Each
unit of B requires 3D and 1A. Each unit of A requires 2F and ø 2D. Each unit of C
requires 1A and 4E. Each unit of D requires 5F and 2G. The following table gives the
time and inventory of each part.

X A B C D E F G
Time (weeks) 1 1 3 1 2 1 4 3
Inventory (units) 2 5 4 10 5 4 7 30

a/ Construct a product structure. Identify all levels, parents and components.

b/ Prepare a time- phased product structure
4. Use LFL, EOQ, PPB technique to find the suitable lot sizing alternative for the
following data:
Week 1 2 3 4 5 6 7 8

Gross Requirements 750 1250 1200 1100 800 900 1150 850
 Lead time 2 weeks
 Setup costs = 10.000.000VND
 Holding costs = 260.000 VND/year.
 Beginning inventory = 750 units and ending inventory requirement = 750 units

Case
Stickley Furniture
Introduction
www.stickley.com
L.&J.G. Stickley was founded in 1900 by brothers Leopold and George Stickley. Located just outside
of Syracuse, New York, the company is a producer of fine cherry, white oak, and mahogany furniture. In
the 1980s, the company reintroduced the company’s original line of mission oak furniture, which now
accounts for nearly 50 percent of the company’s sales.
Over the years, the company experienced both good and bad times, and at one point, it employed over
200 people. But by the early 1970s, the business was in disarray; there were only about 20 full-time
employees, and the company was on the brink of bankruptcy. The present owners bought the ailing firm in
1974, and under their leadership, the company has prospered and grown, and now has 1,350 employees.
Stickley has five retail showrooms in New York State, two in Connecticut, one in North Carolina, and its
furniture is sold nationally by some 120 dealers
Production
The production facility is a large, rectaning with a 30-foot ceiling. Furniture making is labor
intensive, although saws, sanders, and other equipment are very much a part of the process. In fact,
electric costs average about $60,000 a month. The company has its own tool room where cutting tools are
sharpened, and replacement parts are produced as needed.
Worker skills range from low-skilled material handlers to highly skilled craftsmen. For example,
seven master cabinet makers handle customized orders.
The process (see figure) begins with various sawing operations where large boards received from the
lumber mills are cut into smaller sizes. The company recently purchased a computer-controlled
“optimizer” saw that greatly improves sawing productivity, and eliminates some waste. Workers inspect
and mark knot locations and other defects they find on each piece of lumber before feeding it into the
saw.
The computer then determines the optimal set of cuttings, given the location of knots and other
defects, and standard lengths needed for subsequent operations. Approximately 20,000 board feet are cut
each day. Subsequent sawing operations provide additional cuts for specific jobs.
Workers then glue some of the pieces together; they will end up as tops of tables, desks, dressers, or a
similar item. Large presses hold 20 to 30 glued sections at a time. Other pieces that will become table or
chair legs, chair backs or other items go through various shaping opera- tions. Next comes a series of
sanding operations, which remove excess glue from the glued sections, and smooth the surface of both
glued pieces and other pieces.
Some of the pieces may require drilling or mortising, an operation in which rectangular holes and
other shapes are cut into the wood. The company has a CNC (numerically controlled) router that can be
pro- grammed to make grooves and other specialty cuts. Some items require carving, which involves
highly skilled workers.
Next, workers assemble the various components, either into subas- semblies, or sometimes directly to
other components to obtain com- pleted pieces. Each item is stamped with the date of production, and
components such as dresser drawers, cabinet doors, and expansion leaves of tables also are stamped to
identify their location (e.g., top drawer, left door). Careful records are kept so that if a piece of furniture is
ever returned for repairs, complete instructions are available (type of wood, finish, etc.) to enable repair
people to closely match the original piece.
 The furniture items then usually move to the “white inventory” (unfinished) section, and
eventually to the finishing department where workers apply linseed oil or another finish before the items
are moved to the finished goods inventory to await shipment to stores or customers
The company uses a level production plan (maintain steady output and steady labor force). Demand is
seasonal; it is highest in the first and third quarters. During the second and fourth quarters, excess output
goes into inventory; during the first and third quarters, excess demand is met using inventory. The
production scheduler uses a schedule that is set for the next 8 to 10 weeks.
Production Control
Job sequence is determined by the amount of remaining inventory (days’ supply on hand), and
processing time. Lot sizes are determined by factoring in demand, setup costs, and carrying costs. Typical
lot sizes are 25 to 60 pieces. There are many jobs being done concur- rently. Each job is accompanied by a
set of bar codes that identify the job and the operation. As each operation is completed, the operator
removes a bar code sticker and delivers it to the scheduling office where it is scanned into the computer,
thereby enabling production control to keep track of progress on a job, and to know its location in the shop.
The company’s policy of level output coupled with seasonal demand patterns means that prior to peak
demand periods, excess output is used to build up inventories, which is then drawn down when demand
exceeds production capacity during periods of peak production.
Inventory
In addition to the “white” inventory and a small finished goods inven- tory, the company maintains an
inventory of furniture pieces (e.g., table and chair legs) and partially assembled items. This inventory serves
two important functions. One is to reduce the amount of time needed to respond to customer orders rather
than having to go through the entire production process to obtain needed items, and the other is that it helps
to smooth production and utilize idle machinery/workers. Because of unequal job times on successive
operations, some workstations invari- ably have slack time while others work at capacity. This is used to
build an inventory of commonly used pieces and subassemblies. Moreover, because pieces are being
made for inventory, there is flexibility in sequencing. This permits jobs that have similar setups to be
produced in sequence, thereby reducing setup time and cost.
Quality
Each worker is responsible for checking his or her quality, as well as the quality of materials received
from preceding operations, and to report any deficiencies. In addition, on several difficult operations, quality
control people handle inspections and work with operators to correct any deficiencies. The company is
considering a TQM approach, but has not yet made a decision on whether to go in that direction.
Questions
 1. Which type of production processing—job shop, batch, repetitive, or continuous—is the primary
mode of operation at Stickley Furniture? Why? What other type of processing is used to a lesser extent?
Explain.
2. How does management keep track of job status and location during production?
3. Suppose the company has just received an order for 40 mission oak dining room sets. Briefly list
the kinds of information the company will need to plan, schedule, and process this job.
4. What benefits, and what problems, would you expect, given the company’s level production
policy?
5. Can you suggest any changes that might be beneficial to the company? What are they?
What benefits, and what problems, would you expect, given the company’s level
production policy?
If the company apply level production policy, it can maintain a tight yet stable
workforce .This will help in ensuring that workers who have been in the company are
assured of their jobs. In addition, changing staff is normally a hectic and costly
process that entails a lot of dynamics. By retaining the workers, Stickley furniture
will be able utilize available resources in a cost-effective way while offering
continuity to work done.
Other benefit can be timeliness and delivery of products in an effective manner.
Business systems with timely or speedy deliveries, for that matter, are considered to
be effective since they are able to satiate the needs of their clients appropriately while
also being able to serve the maximum number of clients
The company also offers modicum flexibility to the workers. Such flexibility
accords the workers an opportunity to freely express their ideologies in the
production process. Flexibility creates room for customizations to be made during the
process of production, allows for changes to be made in the products in case some
fluctuations occur in the market. In turn, this orients more satisfaction by the already
existing clients while offering new market ventures and a chance for market
advancement by attracting new clients.
There may have some problem here.
Dynamic nature of Stickley’s level of production policy presents a series of issues
and factors that have to be keyed if success is to be achieved. Examples of these
factors include: identifying the objectives of production process, determining the
fitting mix of production facilities and equipment that will give best results, knowing
various workers and their potential with regards to the job at hand. The chances of
one of these dynamics failing are quite high. In fact, in most production processes
that are not keenly planned or well-coordinated, such failures are normally common.
The failure of just one aspect of a production process can have a detrimental effect on
the entire process thus creating a myriad of problems for one or another aspect of the
production.
On another note, if a worker is reserving physical space for a particular inventory,
some new technologies and extra costs have to be involved. This entails more
spending by the company and thus increases in costs—which have an effect on the
overall product. In addition, usage of the “just in time process” in such an endeavor
might result in nearly no physical inventory.
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Can you suggest any changes that might be beneficial to the company? What are
they?
Firstly, the Total Quality Management (TQM) approach has been overly used by
many companies with positive results witnessed thereof. The TQM approach entails
the use of quality methods to constantly or periodically change business processes
and make them more efficient. In TQM, the changes are normally made gradually
thus making it easy for its implementors to monitor the progress being made. It is for
this reason that I would highly recommend that this approach be implemented by
Stickley’s management.
Secondly, in case Stickley furniture starts witnessing problems with their processing
systems, based on implementation or adoption of approaches like TQM, they can
consider proven methods of system rectification like re-engineering. In most
instances, re-engineering is used to make huge or radical changes in companies that
need to be solved urgently and adequately. At the moment, however, Stickley has not
reached the phase whereby urgent changes are required thus no need for re-
engineering.
Thirdly, Stickley furniture should consider the usage of a production method like
“just in time’. This will greatly help in revolutionizing the flexibility of operations
thus creating an opportunity for easier customizations and better production.
Fourthly and finally, cost-effective methods should be adopted by the company to
help reduce production costs thus ensure more profitability. Also, this will create a
situation whereby the prices of products and services by Stickley furniture are
cheaper and thus more affordable to more clients.
References