Great Northern Bank Beds, Inc. Essay Example

not. An extended payback time probably make us Matt Doorman not to invest, contrary to a short payback time which would attract him to invest. In the end of the report, we attached 3 tables which were created to calculate important cost for the decision making. Table 1 regards the first location Beltsville, Table 2 regards the new location Jeep's and, finally, Table 3 presents us the Profit and Loss account. Group 10 operations Management Question 1 Considering the information available on the Beltsville factory, we calculated the total operational time of a batch of only one bunk-bed by multiplying the number of operations of each step by the time that each operation takes to be completed. Afterwards, for the two and the three batch sizes, we simply calculated the double and the triple of that amount. However, to compute the length that one batch takes to be completed, we must take also into account its set-up time.

Therefore, after summing the total operational time with the set-up time, we calculated the time that it takes to manufacture one bunk- bed by dividing the total time of a specific batch by the number of the corresponding attach size. Through the analysis of Table 1, we can see that, although the total time per beach increases with a higher number of bunk-beds produced, the total time per bed decreases. This makes sense considering that the batch's set-up time will be divided by the number of bunk-beds produced, even though the total operational time varies with the quantity produced, the set-up time does not.

The worker will, then, save some time as he will not need to

waste it setting up the machines for the following bunk-bed. Additionally, we know that each worker works 40 hours per week which corresponds o 2400 minutes. Considering this last value and the number of bunk-beds produced per week, we achieve the number of bunk-beds that one worker can produce per week in the different batch sizes. Our group decided to use the integer number, without the decimals, because we assume that the maximum number of bunk-beds that KNOB can produce corresponds to the finished beds.

Latter, to calculate the revenues that we will obtain with sales, we will see that the decimals can make the difference, as the company is able to sell unfinished beds too. We can use the same explanation as in Beltsville to explain the calculations in Jeep's as well as the same conclusions. However, Matt Doorman will impose some changes in the productive process thanks to the additional space available. Now the company is able to purchase new equipment that will decrease both operating time and set-up time and also remove the need for planning, despite the increase of sanding and the introduction of an 3 additional step, shaping.

This can be verified by the increase in the number of bunk- beds produced in a week, that is now nine, even if the number is independent of the attach size. Question 2 To answer the second question we will use similar procedures to the one conducted above. Now the difference is that we have two workers instead of one, which will allow KNOB to increase the production's capacity in the firm. We will assume that an additional worker will enable the

division of operations' time per two, that is, a decrease of 50% in the total operational time of each batch.

Regarding the new location Jeep's, the factory will now be able to have a process with multiple tasks. This meaner that two workers can work in two different tasks at the same time. However, considering that the group decided to assume that the additional worker will imply a decrease in every operation's time of 50%, it makes no difference having two workers doing different steps simultaneously. If the second worker focus on a different task, the total time the first will take to perform the step will be the same as having only one worker.

There would not be any additional benefit and for this reason we do not take into consideration the opportunity of multiple tasking. When calculating the values in the table, we also assumed that the set-up time will to be influenced by the number of workers and it will remain constant Just as we did when increasing the number of bunk-beds per batch. Consequently, in terms of computations, the only difference from Question 1 is the division of the total operational time by two before adding the set-up time.

This will enable a shorter time to produce one bunk-bed and, therefore, a higher amount of bunked produced per week. 5 Question 3 When we want to evaluate the flow rate of a process, it is mandatory to analyses every activity of the process in order to understand the pace of each step. Thus, we computed the capacity per minute and per bed of each step, using the following formula: C =

1 / [setup time per batch + (batch size*total time per batch)] Using this formula, we achieved the values presented in the last two columns of the tables Included In ten attachments under 1 Ana . 1 en TLS regarding ten capacity per minute and the last one the capacity per week, both with one worker. Through the analysis of the table, we can identify the Bottleneck of the process - the activities which take the longest or the activities with the lowest capacity in the process. This makes sense as the time you have to perform a certain activity affects the capacity of production of this activity. The capacity of the Bottleneck of the process will define the maximum number of units possible per unit of time.

Through the results' analysis, we identified the polyurethane as the Bottleneck of the process in Beltsville and the flow rate as 17 units per week. Sanding is the Bottleneck of the process in Jeep's and, as we can see, the flow rate is 46 units per week. Regarding the new configuration of the equipment, we think the main changes for his question are those that alter the time of an activity. Thus, the decision of diminishing the time of the first sanding step and the decision of putting a system of templates to help workers to drill faster affects the overall time of the process.

Consequently, we had to take into consideration the alterations made in the company. If these changes happen in Beltsville, there will be no difference in the flow rate since it depends on the Bottleneck, which did not suffer change. The Bottleneck continues,

therefore, to be polyurethane and the flow rate 17 units per week. Finally, we did the same analysis for Jeep's. On the one hand, the change made in the drilling will not affect the time of the longest activity which is sanding.

One the other hand, the changes in the first sanding step lead to a decrease in the duration of the Bottleneck 6 since this is the longest step. Therefore, the capacity of the activity will increase and the same will happen with the flow rate of the process. 7 Final Decision The main aim of this study is to understand whether the company Great Northern Bunk Beds should move to new facilities in Jeep's or not. With this goal in mind, we will discover how much time it is necessary to cover the investment of building a new factory with the profit we gain from it and see if the project is viable.

Thus, we must make some assumptions and do some computations in order to make a well-thought calicles Ana to propose ten Test way Tort ten production owe organize First of all, we know that the cost of materials is 35% of the sales, the labor costs are $7 per worker and per hour and employees work 40 hours per week. We also know that to be able to move, it is necessary an investment of $30 000. Nevertheless, we needed to make some assumptions due to the lack of information concerning customers.

We assumed that consumers buy unfinished beds or stained beds and that they buy everything that is produced. We established the price of $450 (an average value considering

the price interval given of $199 to $549) and assume that there is no delivery or assembly since we do not know how much it would cost to the company. In order to have more accurate results, we decided to calculate the gross profit for several options of production. Firstly, we computed the revenues for one week and or one bed produced by one worker by multiplying the number of units produced with the settled price.

We decided on $450 as the price and the quantity produced is the one without rounding up, since we have decided to assume that KNOB would sell unfinished beds. Knowing the value of the company's revenues, we can compute the costs of material by multiplying it per 35%. The other costs for the company are those concerning labor which are computed through the number of working hours, cost per hour and the number of employees, which in this case is one. Having now both avenues and firm's costs, we computed the gross profit.

Afterwards, we did the exact same process for batches with two and three beds and, then, did it again but with two workers. The results are all in the Table presented in the Attachment 3. 8 To better compare, we assumed that a month has four weeks. Therefore, we multiplied the weekly profit by four in order to have a monthly profit. At this point, we realized that profits increase with the number of employees as well as with the number of beds per batch. The following step was the calculation of the payback period.

To compute this, we assumed that the money of today would

value as much as the money in the future, that is, a return rate of 0%. Our goal is to know how much time it takes to cover the investment so we can divide the amount invested ($30 000) by the monthly profit and obtain the time in months needed to get the return. We evaluated six different scenarios and we were able to observe that in the one with the lowest profitability (worst scenario possible with the assumptions made), the investment is recovered in three months and three days. We consider this to be a snort pergola AT time and, odometer, It Is a blade project.

Mr.. Doorman should then decide to move his company to a new facility in Jeep's. Besides that, there are other advantages in this decision that have not been taken into account throughout our analysis such as the possible decrease of the company's transportation costs and materials costs besides the possibility of having two tasks of the process done at the same time. We strongly advise Nab's manager Matt Doorman to move and to organize the production process with two workers and with batches of three beds since, within the possibilities that we have studied, this combination was the most rentable one.