Custom molds inc case study answers

BA 3653: Assignment #1 (Due: Oct. 20, 2015)

I. General Instructions 1. Each group (or team) consists of 3~4 students (maximum 5 students)

enrolled in the same section. The right table shows the deduction percentage for other than 3~4 students in a group.

All the group members will get the same grade. You may use “Discussions” to find your partners in the Blackboard.

2. Please read carefully the syllabus to find the detailed information about group formation.

3. Please refer to the right figure for the desirable cover page.

4. A late assignment will not be accepted in any excuse. The answers for assignment & quiz will be either posted on the D2L or handed out in the class. However, the answers for the case study will not be posted. Instead, it will be discussed in the class.

II. Questions [Total 100 points] (Please use your educational guess for incomplete information.) Q1 (10 points): For the Alton Bridge video (https://youtu.be/YiDJeSFBtWI), answer the followings:

(a) [3] Draw the process diagram.

(b) [5] What kind of problems happened to delay the construction? For each problem, describe how many days delayed and how they solved it.

(c) [2] What were the reasons for successful or failed operations? Find at least three reasons.

Q2 (12 points): Watch the BMW video (http://youtu.be/o7XxmbvsfR0).

(a) [2] What would be the ultimate goal in their operation?

(b) [3] What do they provide to customers? Find at least five benefits from the video. How do these services relate to customers’ expectation (that is, explain them with Price, Quality, Time & Variety)?

(c) [3] Draw the flow (or process) chart for a car service (based on the manager’s explanation).

(d) [2] What do they do to customers and technicians, if the repair work is not satisfactory?

(e) [2] What would be the result from their excellent operations?

Q3 (13 points): Read the case of CUSTOM MOLDS, INC. (see page 4-5 in this document).

(a) [3] What are the major issues facing Tom and Mason Miller? (b) [5] Identify the individual processes on a flow diagram. What are the competitive priorities for

these processes and the changing nature of the industry? (c) [5] What alternatives might the Millers pursue? What key factors should they consider as they

evaluate these alternatives?

Q4 (10 points): Watch the King Soopers video (http://youtu.be/nObVu-_Jfqg).

(a) [5] Fill up the blanks below.

# in group Deduction 1 25 % 2 15 % 5 15%

BA3653: HW # 1 (Due: Oct. 20, 2015)

Alex Tender 321234 x02f3@unb.ca Chris Soft 332111 f52r3@unb.ca

Troy Mania 214567 r329t@unb.ca

(Give 1” space here for grading)

Q1.

(a) … (b) …

mailto:x02f3@unb.ca
mailto:f52r3@unb.ca
mailto:r329t@unb.ca
(BA 3653 HW #1) (Page 2 of 5)

Breads Pastry Line Custom decorated Cakes Process (by Classification 2)

Equipments (describe in detail)

Easiness to changing capacity

Skill level of workers Variety of product Capacity or volume mentioned

(b) [3] Draw the process diagram (or flow chart) for Pastry Line. (c) [2] Why does King Soopers Bakery use three different processes?

Q5 (20 points): The layout of a three-stage process consists of three welding machines in parallel (W1, W2 and W3) at stage 1, a single drill machine (D1) at stage 2 and two grind machines in parallel (G1 and G2) at stage 3. The processing times are (where unit is minute): W1: 4, W2: 6, W3: 6, D1: 2, G1: 3 and G2: 5. Buffer B1 is between stages 1 and 2 and Buffer B2 is between stages 2 and 3.

(a) [2] Draw a neat process flow diagram. (It should have the input arrow and output arrow.) (b) [2] What is the minimum MLT? (c) [2] Calculate hourly capacities of each stage. (d) [2] What is the overall capacity of the process? (e) [6] Jobs are numbered 1, 2, 3, 4 and so on (at least draw 9 jobs). These jobs are released to W1,

W2 and W3, whenever it’s necessary. Plot a Gantt chart using the diagram below  to maximize productivity and  to minimize the WIP. ( is more important than .) Job 1 is already plotted for you. (You may copy or cut & paste the diagram to your answer).

4 W1 1 1 1 1 6 W2 6 W3 (B1) 2 D1 1 1 (B2) 3 G1 1 1 1 5 G2

0 2 4 6 8 10 12 14 16 18 20 22 24 26 Parts (f) to (i) are based on schedule described in the above Gantt chart of part (e). Assume that the system becomes stable after six jobs.

(f) [1] Say the finished time for Job 1 ~ 6. (g) [1] From your Gantt chart, what will be the average MLT? (h) [2] What are the contributions to WIP for resources? (i) [2] Verify little’s formula.

Q6 (10 points):

(a) [4] Canada Revenue Agency completes 400 projects per year, on average. In October 2015, it was reported that the number of projects currently “on their plate” (i.e. pending at various stages) is 90. The Agency head claims that the average time to complete a project is less than three months. Is the estimate of average time to complete a project realistic? Justify your answer.

(BA 3653 HW #1) (Page 3 of 5)

(b) [3] “Inventory Turnover” is defined as the number of times that a company’s inventory cycles or

turns over per year. Suppose the inventory turnover for HP Computer was 20 and the average inventory of the company was $100 million (based on purchase price). How much “annual” profit would the company make if they make on an average 2 % profit on each item sold?

(c) [3] A bank finds that the average number of people waiting in queue during lunch hour is 15. On

average, during this period 3 people per minute leave the bank after receiving service. How long do people spend on average in the bank?

Q7 (25 points): Read the Shouldice Hospital in the “Course materials”.

(a) [2] Describe its products or services. (b) [4] Analyze all the costs incurred by customers and compare them with other competitors in the

following table. Assume the value of time lost to employer ranged between $50 ~ 300 per day.

(c) [3] Research about the profitability of the operations in Shouldice. Let’s assume that they

performed 7,000 operations in 50 weeks in 1983. (If you use some assumptions, please specify them.) [Note: Use the following table.]

(d) [3] What are the competitive advantages in Shouldice? List at least four competitive edges. (e) [2] Why is the ratio of nurse to patient low, compared to other hospitals? Find at least three

reasons. (f) [3] Show your neat diagram for admission process before arriving to the hospital. (g) [3] Analyze Shouldice’s process on the quality factors. (on slide #6 @ Topic 2)

(h) [5] What kinds of facilities do they have? For each facility, show the capacity and utilization. Let’s assume that they performed 7,000 operations in 50 weeks in 1982. [Hint: Facilities are exam room, admitting personnel, number of beds, … which related to process the patients.]

Key Resources Capacity Utilization 1. Exam room 6 rooms * [60/17.5] patient/hr * 2 hrs/day 140/206 = 68% <6>15~20min * 5 days/wk = 206 patients/wk 2. Admit. Proc.

…

…

Shouldice Other Hospitals 1. Cost of typical operation 2. Transportation 3. Value of time lost to employer

(at hospital & while recovering)

4. Subtotal before allowance for recurrence 5. Expected cost of recurrence 6. Total cost

Clinic Hospital Revenue

Cost Profit

(sample)

(BA 3653 HW #1) (Page 4 of 5)

[CUSTOM MOLDS, INC.]

Custom Molds, Inc., manufactures custom-designed molds for plastic parts and produces custom-made plastic connectors for the electronics industry. Located in Tucson, Arizona, Custom Molds was founded by the father and son team of Tom and Mason Miller in 1975. Tom Miller, a mechanical engineer, had more than 20 years of experience in the connector industry with AMP, Inc., a large multinational producer of electronic connectors. Mason Miller had graduated from the University of Arizona in 1974 with joint degrees in chemistry and chemical engineering.

The company was originally formed to provide manufacturers of electronic connectors with a source of high quality, custom-designed molds for producing plastic parts. The market consisted mainly of the product design and development divisions of those manufacturers. Custom Molds worked closely with each customer to design and develop molds to be used in the customer’s product development processes. Thus, virtually every mold had to meet exacting standards and was somewhat unique. Orders for multiple molds would arrive when customers moved from the design and pilot-run stage of development to large-scale production of newly designed parts.

As the years went by, Custom Molds’ reputation grew as a designer and fabricator of precision molds. Building on this reputation, the Millers decided to expand into the limited manufacture of plastic parts. Ingredient-mixing facilities and injection-molding equipment were added, and by the mid-1980s Custom Molds developed its reputation to include being a supplier of high-quality plastic parts. Because of limited capacity, the company concentrated its sales efforts on supplying parts that were used in limited quantities for research and development efforts and in preproduction pilot runs. PRODUCTION PROCESSES

By 1985, operations at Custom Molds involved two distinct processes: one for fabricating molds and one for producing plastic parts. Although different, in many instances these two processes were linked, as when a customer would have Custom Molds both fabricate a mold and produce the necessary parts to support the customer’s R&D efforts. All fabrication and production operations were housed in a single facility. The layout was characteristic of a typical job shop, with like processes and similar equipment grouped in various places in the plant. Figure C2.1 shows a schematic of the plant floor. Multiple pieces of various types of high-precision machinery, including milling, turning, cutting, and drilling equipment, were located in the mold-fabrication area.

Fabricating molds is a skill-oriented, craftsman-driven process. When an order is received, a design team, comprising a design engineer and one of 13 master machinists, reviews the design specifications. Working

closely with the customer, the team establishes the final specifications for the mold and gives them to the master machinist for fabrication. It is always the same machinist who was assigned to the design team. At the same time, the purchasing department is given a copy of the design specifications, from which it orders the appropriate raw materials and special tooling. The time needed to receive the ordered materials is usually three to four weeks. When the materials are received for a particular mold, the plant master scheduler reviews the workload of the assigned master machinist and schedules the mold for fabrication.

Fabricating a mold takes from two to four weeks, depending on the amount of work the machinist already has scheduled. The fabrication process itself takes only three to five days. Upon completion, the mold is sent to the testing and inspection area, where it is used to produce a small number of parts on one of the injection molding machines. If the parts meet the design specifications established by the design team, the mold is passed on to be cleaned and polished. It is then packed and shipped to the customer. One day is spent inspecting and testing the mold and a second day cleaning, polishing, packing, and shipping it to the customer. If the parts made by the mold do not meet design specifications, the mold is returned to the master machinist for retooling and the process starts over. Currently, Custom Molds has a published lead time of nine weeks for delivery of custom-fabricated molds.

Dock Dock Receiving raw

materials inventory

Lunch room Packing and shipping finished goods

inventory Cut and trim Dry mix Testing and inspection Wet mix Injection machines

Assembly

Mold fabrication Offices

FIGURE C2.1 • Plant Layout

The manufacturing process for plastic parts is somewhat different from that for mold fabrication. An order for parts may be received in conjunction with an order for a mold to be fabricated. In instances where Custom Molds has previously fabricated the mold and maintains it in inventory, an order may be just for parts. If the mold is already available, the order is reviewed by a design engineer, who verifies the part and raw material specifications. If the design engineer has any questions concerning the specifications, the customer is contacted and any revisions to specifications are mutually worked out and agreed upon.

Upon acceptance of the part and raw material specifications, raw material orders are placed and

(BA 3653 HW #1) (Page 5 of 5)

production is scheduled for the order. Chemicals and compounds that support plastic-parts manufacturing are typically ordered and received within one week. Upon receipt, the compounds are first dry-mixed and blended to achieve the correct composition. Then the mixture is wet- mixed to the desired consistency (called slurry) for injection into molding machines. When ready, the slurry is transferred to the injection molding area by an overhead pipeline and deposited in holding tanks adjacent to the injection machines. The entire mixing process takes only one day.

When the slurry is staged and ready, the proper molds are secured—from inventory or from the clean and polish operation if new molds were fabricated for the order—and the parts are manufactured. Although different parts require different temperature and pressure settings, the time to produce a part is relatively constant. Custom Molds has the capacity to produce 5,000 parts per day in the injection-molding department; historically, however, the lead time for handling orders in this department has averaged one week. Upon completion of molding, the parts are taken to the cut and trim operation, where they are disconnected and leftover flashing is removed. After being inspected, the parts may be taken to assembly or transferred to the packing and shipping area for shipment to the customer. If assembly of the final parts is not required, the parts can be on their way to the customer two days after being molded. Sometimes the final product requires some assembly. Typically, this entails attaching metal leads to plastic connectors. If assembly is necessary, an additional three days is needed before the order can be shipped. Custom Molds is currently quoting a three-week lead time for parts not requiring fabricated molds. THE CHANGING ENVIRONMENT

In early 1991, Tom and Mason Miller began to realize that the electronics industry they supplied, along with their own business, was changing. Electronics manufacturers had traditionally used vertical integration into component parts manufacturing to reduce costs and ensure a timely supply of parts. By the late 1980s, this trend had changed. Manufacturers were developing strategic partnerships with parts suppliers to ensure the timely delivery of high quality, cost-effective parts. This approach allowed funds to be diverted to other uses that could provide a larger return on investment.

The impact on Custom Molds could be seen in sales figures over the past three years. The sales mix was changing. Although the number of orders per year for mold fabrication remained virtually constant, orders for multiple molds were declining, as shown in the following table:

NUMBER OF ORDERS ORDER Molds Molds Molds

SIZE 1988 1989 1990

1 80 74 72 2 60 70 75 3 40 51 55 4 5 6 5 5 3 5 4 6 4 8 5 7 2 0 1 8 10 6 4 9 11 8 5

10 15 10 5 Total orders 230 238 231

The reverse was true for plastic parts, for which the

number of orders per year had declined but for which the order sizes were becoming larger, as illustrated in the following table:

NUMBER OF ORDERS ORDER Parts Parts Parts

SIZE 1988 1989 1990 50 100 93 70

100 70 72 65 150 40 30 35 200 36 34 38 250 25 27 25 500 10 12 14 750 1 3 5

1,000 2 2 8 3,000 1 4 9 5,000 1 3 8

Total orders 286 280 277

During this same period Custom Molds began having delivery problems. Customers were complaining that parts orders were taking four to five weeks instead of the stated three weeks and that the delays were disrupting production schedules. When asked about the situation, the master scheduler said that determining when a particular order could be promised for delivery was very difficult. Bottlenecks were occurring during the production process, but where or when they would occur could not be predicted. They always seemed to be moving from one operation to another.

Tom Miller thought that he had excess labor capacity in the mold-fabrication area. So, to help push through those orders that were behind schedule, he assigned one of the master machinists the job of identifying and expediting those late orders. However, that tactic did not seem to help much. Complaints about late deliveries were still being received. To add to the problems, two orders had been returned recently because of the number of defective parts. The Millers knew that something had to be done. The question was “What?”

(Source: This case was prepared by Dr. Brooke Saladin, Wake Forest University, as a basis for classroom discussion.)

BA 3653: Assignment #1 (Due: Oct. 20, 2015)
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