Operations Management Space Age Furniture Company Answers Term Paper

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Operations Management

Space Age Furniture Company Answers

What options are open to Coral to address this problem?

The cost of operations is regarded as one of the major issue for a business. The management has to take necessary corrective action to enable the business in handling issues for example cost of inventory handling and labour cost of operations. In certain conditions the business requires management to take decisions that are relevant for increasing quality of operations. The quality improvement initiatives in terms of cost reduction from operations and eliminating waste in the process is also an initiative that is appraised throughout the business operations. The production management and scheduling along with the reduction in capital cost to hold large inventories are approaches that can increase profitability as well as the business prospects.

The options available for carol are based on the analysis of cost for holding large inventories as well as per unit cost of products that are produced during the overtime. The reduction in subassemblies is also a considerable option the management has to take such decisions in order to effectively manage labour force and optimize production. The third viable option for Carlo is to hire a new employee that is not trained and he can be given as assistant to Ed. He can not only train him but utilize his time for staying near the machine during operations while Ed doing the rest of the work. The effective handling of human resources will enable Carol to reduce extra burden on Ed as well as train an employee that can assist Ed in the long-term. The planning for pull production is also a recommended approach to reduce cost and increase efficacy in quality of products. The cost of producing a product is also reduced and handling of operational cost as well as increase in control can also be achieved.

Job scheduling has a wide number and a variety of applications, ranging from the initial designing the product to the different modelling queues in industries. Job shop scheduling is quite important in manufacturing systems, which enables the manufacturer to make the best use of the resources while meeting the due dates (Bhal, 2011). Job shop scheduling plays an important role in small manufacturing companies, and it is critical to the success of small and medium sized businesses, which means that they produce multiple products with small quantity

Question 2:

How would reducing the minimum quantity of subassemblies help?

The materials and parts including the raw materials are a part of the system that converts them into finished products through operations management. The components and subsystems of assemblies are also a significant part of the system. Therefore it is also understood that the appropriate quantities of the systems are required to produce optimal performance. The number of ways in which these parts and components are combined to produce the required results is significant to understand. The assemblies and subassemblies are a part of the integrated process that produces the desired outcomes. The effects of the multiple channel utilization are also important to understand the production of different results (Gupta, & Starr, 2006).

The reduction in minimum quantity of subassemblies can be helped through use of the MRP system enabling the workers on these subassemblies to work on the required points to help product the same results however they will produce the required quantities. The management is required to take decision with respect to effective function of the system thorough the integrated approach. The production quantities can be handled through various numbers of combinations enabling the performance to increase while the cost is reduced. According to Bragg (2007) the reduction in finished good inventory and product variations in the storage the businesses can reduce the inventory cost. The business can also save the warehouse and storage spaces required in maintaining large inventory. The business can also develop common set of subassemblies required to assemble products.

Question 3:

What are the costs of carrying excess items in inventory at each stage?

The inventory models selected by the business are based on the choice made for operations. The organizations assembling products have a number of items in their inventory. It is also observed that at times the quantities reaches up to thousands of items and it becomes difficult for the operations staff to handle such large quantities of components. The cost of maintaining large quantities are not only related to the direct cost of components and items in the inventory it is also related to the space required to maintain such large inventory. A number of organizations reduce their inventory sizes through adopting approaches that enable them to handle small quantities while operating at the optimal levels.

The ordering cost, inventory carrying cost, and other related costs including the accounting and management cost has an impact on the financial conditions of the business. The capital required to maintain large finished goods inventory can also be reduced through selection of the appropriate and efficient model. The decisions for inventory levels are made on the basis of costs that are related to holding extended quantities as compared with the cost of ordering small material quantities (Farouk, Cherian, & Jacob, 2012). The calculated benefits of carrying limited amount of inventory in relation to the optimal performance enables a business to increase profitability with optimal level of capital investment.

The cost table presented below is related to the overall savings through the elimination of inventory. The overall cost saved for the total of 6 weeks is $4,000 for Gemini and $3,450 for Saturn. These cost reductions had not only profound impact on the profitability but it also reduces the capital required to maintain large inventories.









Cost Saved



Cost Saved


Question 4

What is the trade-off between overtime costs and inventory costs?

There are various simple and complex trade-offs involved in calculating the overtime cost and inventory cost. The units of over time capacity are defining in a given period. These production hours are a basis of the solution. The unit costs of regular and over time production is calculated in order to assess the difference of cost. The cost of holding the units in inventory is also estimated in relation to the periods. The production scheduling and inventory controls provide an in-depth understanding of the best practices in a given scenario. The trade-off involved in overtime costs and inventory cost requires a management approach to schedule the productions in accordance with the requirements. The costs of holding large inventories is greater than the overtime cost however it can be resolved through improvement in the production schedule as well eliminating the subassemblies. The operations of a manufacturing can be improved to manage such trade-off.

Processing time per unit: 0.03

No of units produced in one hour: 60/0.03 = 2000

No of hours required to produce 1000 units each = 1

Earnings of Ed for per hour of over time = 22+11=$33

Cost of holding 2000 units for one week = $1,500

The trade-off for the given scenario is that the business will incur expenses of $1,500 for holding the parts in inventory while the overtime cost to the labour will be $33. Therefore it is clearly evident that the business should prefer paying overtime to the labour instead of ordering the production of required units from now. These costs are relevant for consideration during making necessary decisions for evaluating trade-off among overtime labour costs and costs for holding large inventories.

Scheduling is mostly concerned with the distribution of constrained resources to a number of different activities with objective of enhancing the measures. Depending on the situation of the research or the problem, the activities and the constrained resources can act on the many altered forms. Good scheduling algorithm is based upon the type of scheduling we choose, and if the process is good, then it can lower the production cost in the process. The problems based on the scheduling which were studied in 1950's, were relatively simple compared to these types of scheduling techniques. Multiple numbers of algorithms have been designed for ideal solutions. Prabaharan (2006) used two heuristic algorithms including a priority dispatching algorithm, and the simulated annealing algorithm which generates the optimal schedules for the manufacturing time, and also minimizes the time. It is proposed an ant colony optimization algorithm to solve the two machine flow shop scheduling problem basing on the objective of minimizing the completion time.

Question 5

Which type(s) of production processing -- job shop, batch, repetitive, or continuous -- is the primary mode of operation? Explain.

The scheduling system should be accurate in real world constraints so that it can be able to provide the management with the complete information that is needed to make the important decisions. This also includes the ability to use cause & affect logics to estimate the different scenarios before they could decide the course of action. Without the scheduling system the scheduler uses there power by…

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