BUS307 OPERATIONS MANAGEMENT WK 5 FINAL PAPER

Chapter 12 Case Study: The Realco Breadmaster

• Develop a master production schedule for the breadmaker. What do the projected ending inventory and available-to-promise numbers look like? Has Realco “overpromised”? In your view, should Realco update either the forecast or the production numbers?
• Comment on Jack’s approach to order promising. What are the advantages? The disadvantages? How would formal master scheduling improve this process? What organizational changes would be required?
• Following up on Question 2, which do you think is worse, refusing a customer’s order upfront because you don’t have the units available or accepting the order and then failing to deliver? What are the implications for master scheduling?
• Suppose Realco produces 20,000 breadmakers every week, rather than 40,000 every other week. According to the master schedule record, what impact would this have on average inventory levels?

Chapter 13 Case Study: Supply-Chain Challenges in Post-Earthquake Japan

• What are some of the advantages of the supply chain used in the Japanese auto industry before the March 2011 earthquake and tsunami? What were some of its disadvantages?
• Is Toyota’s plan for a “foolproof” supply chain consistent with the Lean production philosophy? Explain.
• Can you think of any additional ways Toyota (and its competitors in the Japanese auto industry) can improve upon the company’s plan to create a “foolproof” supply chain?
• What impact do you think Toyota’s plan will have on the way it handles relationship management in its supply chain?

The Final Paper:

• Must be eight to ten double-spaced pages in length (not including title and references pages) and formatted according to APA style as outlined in the Ashford Writing Center (Links to an external site.)Links to an external site..
• Must include a separate title page with the following: 

  Title of  paper
  Student’s name
  Course name and number
  Instructor’s name
  Date submitted

• Must begin with an introductory paragraph that has a succinct thesis statement.
• Must address the topic of the paper with critical thought.
• Must end with a conclusion that reaffirms your thesis.
• Must use at least four scholarly sources, including a minimum of two from the Ashford Online Library.
• Must document all sources in APA style as outlined in the Ashford Writing Center.
• Must include a separate references page that is formatted according to APA style as outlined in the Ashford Writing Center

CASE STUDY

The Realco Breadmaster

Two years ago, Johnny Chang’s company, Realco, introduced a new breadmaker, which, due to its competitive pricing and features, was a big successacross the United States. While delighted to have the business, Johnny felt uneasy about the lack of formal planning surrounding the product. Hefound himself constantly wondering, “Do we have enough breadmakers to meet the orders we’ve already accepted? Even if we do, will we haveenough to meet expected future demands? Should I be doing something right now to plan for all this?”

To get a handle on the situation, Johnny decided to talk to various folks in the organization. He started with his inventory manager and found out thatinventory at the end of last week was 

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,000 units. Johnny thought this was awfully high.

Johnny also knew that production had been completing 

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0,000 breadmakers every other week for the last year. In fact, another batch was due thisweek. The production numbers were based on the assumption that demand was roughly 

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0,000 breadmakers a week. In over a year, no one hadquestioned whether the forecast or production levels should be readjusted.

Johnny then paid a visit on his marketing manager to see what current orders looked like. “No problem,” said Jack Jones, “I have the numbers righthere.”

Johnny looked at the numbers for a moment and then asked, “When a customer calls up, how do you know if you can meet his order?” “Easy,” saidJack. “We’ve found from experience that nearly all orders can be filled within two weeks, so we promise them three weeks. That gives us a cushion,just in case. Now look at weeks 1 and 2. The numbers look a little high, but between inventory and the additional 40,000 units coming in this week,there shouldn’t be a problem.”

Questions

1. Develop a master production schedule for the breadmaker. What do the projected ending inventory and available-to-promise numbers look like?Has Realco overpromised? In your view, should Realco update either the forecast or the production numbers?

2. Comment on Jack’s approach to order promising. What are the advantages? The disadvantages? How would formal master scheduling improvethis process? What organizational changes would be required?

3. Following up on Question 2, which do you think is worse: refusing a customer’s order up front because you don’t have the units available oraccepting the order and then failing to deliver? What are the implications for master scheduling?

4. Suppose Realco produces 20,000 breadmakers every week rather than 40,000 every other week. According to the master schedule record, whatimpact would this have on average inventory levels?

CASE STUDY

Supply-Chain Challenges in Post-Earthquake Japan

Japanese automakers have long been known for the quality of their products, and especially for the efficiency of their streamlined manufacturing andsupply processes. Thus, few people could have predicted how severely the destructive earthquake and tsunami that struck Japan in March 2011 woulddisrupt the country’s entire auto industry. Matters were further complicated by the damage the quake and floodwaters caused to one of Japan’s nuclearpower plants, interrupting power supplies around the country and creating a dangerous radiation zone for miles around the plant.

Following the quake and ensuing floods, most automotive factories in Japan were closed for at least several weeks, bringing to a halt about 13% ofworldwide auto production. Toyota, Honda, and Mazda shut down many of their parts and manufacturing plants in Japan, and Toyota also announcedplans to suspend production in at least one North American plant because of parts shortages. The company said it would make plant improvementsand run training programs in its other U.S. facilities while the assembly lines were idle or run operations on a part-time basis to conserve its partsinventory. Honda, Nissan, and Subaru also reduced their North American output as they anticipated and tried to deal with expected parts shortages.

The disaster zone in Kesennuma, Miyagi prefecture, 100 days after amassive 9.0-magnitude earthquake and tsunami devastated thenortheastern coast of Japan.

Since one of the guiding principles of Lean production is to keep partsinventories as low as possible, it wasn’t long before these shortages occurred.“The supply chain in the automotive industry is so fragile,” said one legaladvisor to the global auto industry. “It’s based on just-in-time principles, whereyou don’t have a lot of inventories built up, so you leave yourself without muchmargin for error when a supply interruption happens.”

Industry observers predicted that about half of Japan’s auto capacity wouldremain closed for at least eight weeks after the disaster, which would eventuallyput about one-third of worldwide production in jeopardy, as the effects of partsshortages made themselves increasingly felt in manufacturing facilities far fromJapan. One auto industry research firm predicted that about five million cars thatthe industry had expected to sell in 2011 would never be made.

By spring and summer 2011, in fact, U.S. auto dealers were reporting what onecalled “a lot of emptiness” in their showrooms. Many logged dwindling sales assupplies fell to as little as one-fifth their normal levels, and popular cars such asthe Honda Civic and Accord went out of stock. Without new cars to sell, eventrade-in sales were slowing. Honda posted a 27% decline in sales for August2011, and Toyota anticipated a dramatic 31% profit decline for the year.Although the Japanese auto industry worked hard to quickly return to fullcapacity, output was still not fully restored some six months after the disaster.The disaster’s long-lasting ripple effects thus motivated industry executives toconsider some changes in their vaunted manufacturing and supply operations.Traditionally, Toyota had used a single source for many parts that were commonto more than one of its car models. Although the company locally sources about85% to 90% of parts and materials needed for its North Americanmanufacturing operations, a strategy that should make it less vulnerable tosupply interruptions in Japan, it actually builds a larger proportion of its vehiclesin Japan than do the other automakers, so the 2011 disaster was a serious blow.

In response to these problems, Toyota’s management began work to “foolproof” the supply chain so that it could recover from major interruptions inas little as two weeks. The plan had three parts. First, Toyota would increase standardization of auto parts so all Japanese carmakers could share thesupply. These parts would be made in several locations to ensure uninterrupted supply. Next, the company asked its upstream suppliers of highlyspecialized parts, or parts that are sourced from only one location, to hold larger inventories than they had been carrying, as and opened up newoptions for manufacturing such parts to reduce its dependence on single sources. Finally, and perhaps most ambitiously, Toyota took steps to makeeach of its global regions independent of the others in terms of parts supply, so supply chain disruptions in one area will not spill over into theoperations of any other areas.

Questions

1. What are some of the advantages of the supply chain used in the Japanese auto industry before the March 2011 earthquake and tsunami? Whatwere some of its disadvantages?

2. Is Toyota’s plan for a “foolproof” supply chain consistent with the Lean production philosophy? Explain.

3. Can you think of any additional ways Toyota (and its competitors in the Japanese auto industry) can improve upon the company’s plan to createa “foolproof” supply chain?

4. What impact do you think Toyota’s plan will have on the way it handles relationship management in its supply chain?

Sources: Based on C-R Kim, “Toyota Aims for Quake-Proof Supply Chain,” Huffington Post, September 6, 2011, 

www.huffingtonpost.com/2011/09/06/toyota-aims-for-quake-pro_n_950105.html

; J. R. Healey, “Honda Zappedas Nissan, VW Report Strong August Sales,” USA Today, September 1, 2011, 

http://content.usatoday.com/communities/driveon/post/2011/09/vw/1

; M. Ramsey, “Honda Struggles with Supply,” Wall Street Journal, August 17,2011, p. B3; H. Tabushi, “Toyota Expects 31% Profit Slump,” New York Times, June 11, 2011, 

http://www.nytimes.com/2011/06/11/business/global/11toyota.html

?scp=1&sq=toyota%20expects%2031%%20profit%20slump&st=cse; J. Schultz, “With Supplies Dwindling, Some Honda Dealers Foresee Long, Dry Summer,” New York Times Wheels blog, May 4, 2011, 

http://wheels.blogs.nytimes.com/

2011/05/04/with-supplies-dwindling-some-honda-dealers-foresee-long-dry-summer/?scp=1&sq=with%20supplies%20dwindling,%20some%20honda%20dealers&st=cse; N. Bunkley,“Toyota Plans to Reduce Production for 6 Weeks,” New York Times, April 19, 2011, 

www.nytimes.com/2011/04/20/business/global/20auto.html

; N. Bunkley and D. Jolly, “Toyota, Struggling with Part Shortages, to Restart CarLines,” New York Times, March 24, 2011, 

www.nytimes.com/2011/03/25/business/global/25auto.html

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