PRODUCTION MANAGEMENT (CASE 3 & 4 ASSIGNMENTS)

Like I said, I want you guys to have variety of this assignment:  so, here is another one for Production Management.  In this one, remember to start with your front page that will contain your information.  Also, you don’t need to include the question:

"Note: There are other assignments on the blog, please, explore the blog and make your choice". 

For: Questions and answers email: theotherwomaninmarriage@gmail.com

KADUNA TOY COMPANY

Kaduna Toy Company (KTC) views its primary task as making for stock a standardized line of high quality, unique toys that last from publum to puberty. As a rule, KTC introduces one or two new toys a year. In August, 1994, the owner and manufacturing manager, Idris Jibrin, has been informed by his toy inventors that they have designed a “Jackson doll”. 

This doll will stand two meters high and is capable of break dancing and singing via an electronic voice synthesizer. One of the company’s three manufacturing staff departments, design engineering, states that the product can be made primarily from the molded plastic using the firm’s new all purpose molders. KTC, in its previous initial production of new toys, has relied heavily on its skilled workforce to debug the product design as they make the product and to perform quality inspections on the finished products. Production runs have been short runs to fill costumer orders.      

If the “Jackson doll” is to go into production, however, the production run size will have to be large and assembly and testing procedures will have to be more refined. Currently, each toy maker performs almost all processing step at his or her work bench. The production engineering department believes that the assembly of the new toy is well within the skill levels of the current work force, but that the voice synthesizer and battery operated movement mechanism will have to be sub-contracted.

KTC has always had good relations with sub-contractors, primarily because the firm has placed its orders with sufficient lead-time so that its vendors could optimally sequence. KTC’s orders with those of some larger toy producers have always favored long range production planning so that they can keep the toy business all year. The supervisors of the firm’s three production departments (castles, puppets, and novelties) have been perceived to be favorable to the new product. The novelty department supervisor, “Fred” has stated, “My workers can make any toy – you give us an output incentive and we will produce around the clock”.

The marketing department has forecast a demand of 5,000 “Jackson dolls” for the Christmas rush. The doll should sell for N28.50. A preliminary cost analysis made by the process engineering department is that they will cost no more than N5.00 each to manufacture. The company is currently operating at 60 percent capacity. Financing is available and there is no problem with cash flow. Idris jibrin is wondering if he should go into production of “Jackson dolls.”

QUESTION:

Indicate the correct and current policy choices on the manufacturing policy.  Based upon your findings, should KTC introduce the “Jackson Doll?”

PROBLEM:

1.    KTC is not operating at full capacity which means over time most of its equipments on the workers have been laying idle. As a result of the under utilization of its assets, the firm over a period of years have been incurring some unnecessary cost such as cost of maintaining its machines, depreciating cost as well as labour cost. This has in turn led to an increase in the cost of production of the firm.

2.    This case revealed that KTC has a lot of idle cash of their disposals. For a firm to have an idle cash that could finance such a huge project, such a firm can be said to have a very poor cash management.

3.    For the novelty department supervisor to demand for an output incentive for his workers, it implies that the company has no or non effective incentive policy required to motivate workers.

4.    In spite of  the fact that the firm is not working at full capacity, they are still not able to develop some of their employees on the skills required for the voice synthesizer and battery operated movement mechanism. Sub-contracting this aspect of the production of “Jackson doll” would automatically increase the cost of production.

SOLUTION

1.    Provided that the company has the capacity [Capital, Machine & labour] required to produce Jackson dolls, coupled with the demand forecast made by the marketing department for the Christmas rush, I would suggest to Idris Jibrin to go into the production of “Jackson dolls”

2.    “Jackson dolls” has the potential of generating a huge profit for KTC. There is a huge margin between the cost of manufacturing each doll [i.e #5 each] and the selling price per doll [i.e #25.50 each]. This means that the firm would generate a contribution of #23.50 per doll [#28.50 - #5.00]

3.    I would advice KTC to always plan for short term or long term investment when it has idle cash or expects a cash surplus.

4.    KTC should implement an effective incentive programme that would motivate the workers to give the company their very best.

5.    In order to reduce the cost of production, KTC should train some of its workers on voice synthesizer and battery operated movement mechanism.

  JONAS’S GYMNASIUM

Jonas has been in the body building business for many years in Lagos.  His gymnasium, originally built for men now consists of separate facilities for men and women located beneath a chicken parlour in main Island Lagos.  Jonas views the primary task of his business as “providing” a full range of body building and weight reduction services for upper and middle class men, women and children. 

Currently, he has 20 employees who work with the customers in designing their health programmes.  His gym has separate weight lifting and exercise rooms for men and women, a pool, a sauna bath and a small running track behind the building.  While Jonas states that every customer is different, he makes men go through his 23 steps conditioning course and women follow the diet in “Jonas’s Energy Diet” pamphlet.    Customers are usually enrolled in a 10-week introductory course and then left to advance at their own pace. 

 

The gym is molded after the one Jonas first managed on an army barracks in Port Harcourt.  Jonas maintains that the Spartan atmosphere is necessary to build mental and physical toughness.  With some pride, Jonas notes that he has all of the latest barbells and slant board apparatus.  Jonas has always viewed his major inventory items as liniments and bandages, which are ordered periodically from a wholesaler or are purchased from a nearby drug store if stockouts occur.   Other items are purchased from a local sporting goods store. 

Jonas is very concerned about keeping all of his staff busy and keeping the equipment in constant use.  So he requires that customers follow a specific hour-by-hour schedule on equipment use.  If the equipment is scheduled to capacity, he requests that his customers come at slow periods during the day or evening.  This procedure has met with some resistance from customers, but Jonas tells them that that is the price they must pay if he is to provide the most up-to-day health centre services. 

Jonas has done a survey of the prices charged by the other four health centres in the area and his fees are about average.  The other health centres have about the same number of employees, although two of them use licensed beauty consultants.  Jonas considers this an unnecessary frill and tells all of his customers that anybody who works for him is an expert on all aspects of body maintenance.  Jonas has instituted a policy of job rotation whereby each member of the staff, with the exception of the clerk typist, changes activities each hour.

Employees are paid by the hour and are primarily graduates who are interested in athletics.  Turnover has not been a problem, even though Jonas pays only slightly more than the minimum wage. 

Although, Jonas’s capacity is fully utilized, the number of memberships has dropped off from 500 to about 300 in the last six months and profits have dropped proportionately.  His accountant is looking into the possibility of raising membership fees.

Questions:

1.    Develop a new primary task for Jonas’s Gymnasium.

2.    Based upon your analysis, what steps do you recommend Jonas takes to reverse the trend in memberships?

  PROBLEM

1.    It is obvious that Jonas is paying more attention to satisfying his own needs and less of that of his members and as a result making decisions to meet his own needs. For him to see that all his staff are always busy and that his equipments are in constant use, he required that costumers slow periods during the day or evening and costumers should follow a specific hour-by-hour schedule on equipment use. This is one of the reasons why there has been a drastic drop in the number of membership.

2.    Another reason for the drop in membership was because Jonas could not offer the additional service offered by his competitors [beauty services]. Jonas only specialized a fall range of body building and weight reduction services. Most of his members must have switched over to his competitors providing that additional services [beauty services].

3.    His services were not designed to suit the convenience of his members.

SOLUTION:

1.    To reverse the trend in membership, Jonas should adopt the previous programme scheduled before the adoption of the specific hour-by-hour schedule on equipment use.

2.    Jonas should design programmes that favours the time & schedule of the costumers instead of himself.

3.    Jonas should also hire a licensed beauty consultant who can offer beauty services to his members. This should be taken seriously if Jonas is to reverse the trend in membership.

4.    In addition to the introduction of beauty services to his body building and weight reduction services, Jonas should carry out a lot of publicity about the range of services and to also further reduce the price charge of his services to further attract new members.

5.     Jonas’s new primary task should be to providing a full range of body building weight reduction and beauty services for upper and middle class men, women and children.

REFERENCES:

www.theotherwomaninmarriage.blogspot.com

www.wikipedia.com