Abstract
Any engineering and business project has to be handled with care if success is to be achieved. One has to know the best strategies to use in choosing the most appropriate decision for a project in terms of manufacturing and sales. Most importantly, the aim of every engineering project is to maximize sales and minimize costs. Therefore, Sullivan's case seems to advocate for a lean approach (waste mitigation and efficiency maximization) in handling his business.
Apparently, Sullivan settles for two options, to either hire one or two assistants or purchase new equipment, that is, a router. The new machine would reduce time wastage (muda,muri and mura ) in wood installation, increase precision, add quality, allow for more design flexibility and ensure a bettered cutting consistency. However, it would lead to extra costs in maintenance of the machine, electricity bills, and purchase of the machine.
Identify the needs of Sullivan's customers and perform the necessary task analyses
In this case, there is a class of people, high earners and professional who indisputably prefer hardwood floors, and indeed they are the best. On the other hand, there is a lower class that prefers the same appealing floors but cheaper. As a result, Sullivan is forced to innovate a new flooring design using pinewood, which is cheaper, to duplicate the hardwood floors and make them look identical, though the materials used are different. As a result, Sullivan's orders have increased tremendously and he is unable to manage his main job and his part-time job of wood flooring. When demand rises, adjustments have to be made to meet the demand but at the lowest costs possible.
Considering that Sullivan's frequent customers were high-income families and working professionals, they preferred unique and appealing wood flooring. As a result, his customers preferred hardwood flooring in comparison to other frequently used flooring methods such as wood laminate, ceramic tiles, and vinyl flooring. Apparently, they preferred hardwood flooring because it had an attractive traditional appeal, the wood used was durable, and the maintenance costs for hardwood was minimal. Most importantly, the wood presented a variety of grains, styles and even wood species that made the floor have different looks and thus the customers could either choose. Apparently, those customers who could not afford hardwood floors, preferred Sullivan to make them something that was cheaper and equally attractive as hardwood floors.
Identify the current process used in Sullivan's flooring manufacturing operation. Is it appropriate? Why or why not?
Apparently, Sullivan works alone during his spare time and handles small projects for customers who make various orders. However, the process for preparing the rough wooden planks seems to be taking too long leading to time wastage. Secondly, the process was labor intensive, proving that it could not be handled by a single man if demand was to be met, quality maintained and the expected appeal managed. The five process concept that required the wood to be put through a planer on both sides first, cutting off damaged and unusable parts, trimming the boards by use of lap joining method, joint preparation and sanding the boards.
The floor manufacturing operation and process that Sullivan is currently using are appropriate as it ensures that the final product has the expected appeal, little wood wastage is realized, a high aesthetic value with a sturdy look is created for the final product and most importantly, cheaper wood is used. However, the problem of scope creep sets in, the demand for his products is rising beyond his control and he thus has to adjust the process so as to meet the demand. He has to stop treating his business as an alternative and either quit his carpentry job so as to add more time to his wood flooring business or hire new employees to run the business and work for him.
Apparently, his production operation is ideal and results to quality products but the process creates bottlenecks leading to a reduction in capacity. The reason behind this is because he has no enough manpower and he also lacks the appropriate machinery that can perform the same tasks he is doing at a faster rate thus leading to a higher production capacity. Production has thus become stalled and demand has surpassed the supply too. As a result, the idea of hiring extra employees and a new machine would solve his production problem and lead to a lean manufacturing process where costs and waste are mitigated, efficiency improved and production and profits maximized.
What is Sullivan's theoretical production capacity? Can the forecasted demand be met? How will the proposed new router system affect production output?
Sullivan's theoretical production capacity was found to be about 15 jobs annually. According to calculation, he would use 1200 pine planks, each ten feet long and each square foot being charged at $6. This means that he would earn about $72,000 per year with about 50% of the earnings being subtracted as costs, leading to a profit of about $36,000 annually. This is a rate of about one job per month and in some of the months, two jobs. This was a massive forecast but it was based on the actual demand on the ground. However, with his current operation as an individual faced with fatigue, poor efficiency, time wastage and other production bottlenecks, he would not meet the demand.
Moreover, the theoretical demand could improve if Sullivan used a better strategy of promoting his business in the wood flooring market. He should incorporate other mediums such as the social media and the intranet instead of depending on word of mouth alone. This would lead to doubling of his demand of which he would not meet alone with the limited time and workforce he has. The time take to finish working on one board is fifteen minutes. It means that one floor would take three weeks or more to be completed which is a slow rate.
If Sullivan decides to purchase and employ the new router system in production, the rate of production would rise about fourteen minutes per board instead of the prior 15 minutes. The final product will also be more appealing and precise in measurements, leading to less wastage of wood when the planks are being cut. Time wastage in jointing will also be reduced by three minutes as well as the installation time. The machine will help in the adoption of a lean system whereby it will be easier to improve efficiency and mitigate any sort of wastage from time to material wastage. The last result for his finished floor would be having a higher quality in craftsmanship, precision in dimensions and flexibility in design.
Apart from having a superior output, production rate will increase thus leading to a higher annual production rate and capacity. Demand will also rise as customers will now have a variety of floor designs to choose from and they will be made faster than before assuring better artistic value. The rate of return for Sullivan will rise to ten percent and he will be able to recover half of the money he used in buying the router in five years while still using it on part time basis. However, if he were to use it on a full-time basis and quit his job, it would be recovered in about two-year time.
Balance the line if Sullivan hires one additional worker. Balance the line if Sullivan hires two additional workers. Comment on your findings.
On the other hand, Sullivan could forego the machine since it is expensive and it will lead to maintenance and electricity costs and opt to hire one additional worker. This is a good move as it will reduce the labor intensity and probably lower the rate of production per board to about ten minutes. However, it would not lead to a higher production capacity than 15 floors. It would only ensure that they were made in time and the quality was made better. However, if Sullivan results to better advertising techniques rather than word of mouth, demand would increase and meeting it, would be a problem. Hiring two workers would mean that meeting the demand would be easier as work will be done faster.
Evaluate the qualitative pros and cons and the quantitative costs and benefits of purchasing new equipment, hiring one additional worker and hiring two additional workers.
Hiring one employee is okay and the cheapest move, but it is not enough to handle the labor intensity in the business. The rate of production will improve at a very small margin and it will not be enough to handle the high rise in demand. On the other hand, hiring two employees is ideal as it will reduce the labor intensity, improve efficiency and mitigate time loss in production. However, it will not guarantee the quality of the floors at the end of each production process. There will also be a limitation in floor designs as customers prefer a variety of them. This may lead to a future decrease in production and demand or a stagnant market.
However, purchasing a new machine may be expensive in terms of costs, maintenance and other overhead costs such as electricity. However, it will lead to mass production which will have fewer costs, less wastage, improve efficiency, improved cutting consistency, design flexibility and an increase in demand as words spread on the quality of the products. After a period of five years, Sullivan will start realizing high profits after the expenses for the machine are covered. The quality of the products will be higher too.
As Norm Sullivan, what would you do? Provide detailed support from your qualitative and quantitative analysis.
As Norm Sullivan, I would hire one employee and buy the routing machine. Hiring the single employee will ensure that expenses in terms of wages are kept minimum. At the same time, the employee would improve efficiency by learning how to operate the router and continuing with the production even when I am working on my carpentry job. Hiring two employees would be too expensive in this case.
On the other hand, purchasing the machine may be expensive but it will assist me in quality and artistic mass production of the floor boards so as to meet the high demand. The machine has the advantages of improving quality of the floors and enabling flexibility in designs thus attracting a larger market. Most importantly, production rates and capacity would increase. After about five years, I would be able to enjoy the profits fully after making returns on the money used to purchase the machine.
