Read the case below and answer the following questions.
In a large publishing company in New York, a young woman, Laura, was hired as a copy editor for one of the many journals produced by the company. Seven other employees worked on this team editing this Journal, including a senior editor named Tim. Laura had worked there for about a month when she and her fellow co-workers went for happy-hour after work. Everybody had a great time and had consumed a fair amount of alcohol. When everybody was leaving the bar to head home, Tim, who had been secretly attracted to Laura since she started work at the journal, hailed a cab and offered to share the ride with Laura. Laura accepted the offer. Once she was inside the cab, Tim then suddenly made an aggressive advance toward her. Horrified, Laura pushed him away and told him to get out of the cab. Mortified, Tim slinked out of the cab.
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The next day, Laura came to work with some apprehension. How would she deal with Tim? Would the cab incident affect her job? Although Tim did not supervise her, would he try to get her fired? Tim immediately went to her office and apologized for his extremely inappropriate behavior in the cab. Relieved at his apology, Laura decided not to pursue the matter through any formal channels in the office. She figured that since Tim apologized, there was no need to dwell on the incident. After all, Laura was a new employee, still in the process of learning the office politics and proving herself as being a competent editor. She did not want to rock the boat or bring negative attention to herself.
,
Everything would have been okay if Tim had stopped at just one sincerely expressed apology. However, whenever he found himself alone with Laura, Tim apologized again. And again. He said he was sorry about the incident at every opportunity he had for three months. This constant apology was awkward and annoying to Laura. Ironically, by Tim apologizing continuously for his unwanted attention in the cab, he was foisting another form of unwanted attention upon Laura. When he first started apologizing, Laura told him that "it was okay". After three months of many apologies, she reached a point where she asked him to stop apologizing, to no avail. Frustrated, she confided in a few co-workers about her unusual dilemma. Consequently, these co-workers lost respect for Tim.
Although the cab incident was not common knowledge in the office, Tim sensed that others knew about it by the way they interacted with him. The incident became the office "elephant" that the employees "in the know" saw, but didn't explicitly acknowledge. Meanwhile, Laura was tired of hearing Tim apologize and her feelings of discomfort increased. So when another editor position opened up in another journal division of the company, she applied for the job and was transferred to the other journal. In her new position, she didn't have Tim bothering her anymore. But she was unhappy with her new job. The journal material was very boring. She didn't work as well with her co-workers as she did in the previous journal (excepting Tim). She realized that she really enjoyed her old job. She began to regret her decision to avoid the conflict with Tim by moving to the new job. In an effort to seek advice as to how to solve her problem, Laura decided to consult with the company ombudsman.
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Required:
Question: Propose a solution that the company ombudsman can offer through interpersonal intervention.
The solution should cover:
In: Operations Management
In: Operations Management
Throughout this chapter, you were encouraged to take control of your life and establish your own definition of success. This chapter has a strong “all development is self development” theme. Can we really control our own destinies? Can we always make our own choices? Mike Hernacki, author of The Ultimate secret of getting absolutely everything you want, says yes: to get what you want, you must recognize something that at first may be difficult, even painful to look at. You must recognize that you alone are the source of all the conditions and situations in your life. You must recognize that whatever your world looks like right now, you alone have caused it to look that way. The state of your health, your finances, your personal relationships, your professional life, all of it is you're doing, yours and no one else's.
In: Operations Management
Human resource management Case
Gerald Mahoney was working in the women’s shoe department and doing the best that he could to sell a fairly expensive pair of boots to a young lady who obviously could afford to shop at a much classier store. For some unfathomable reason, however, she decided to shop at Marcy’s. After a few minutes of trying on several pairs of boots, Gerald was able to gently persuade Ms. Monahan to buy one of the store’s most expensive boots. He rang up the sale and was complimenting himself on his persistence when out of the blue the customer said:
“Why is an obviously highly talented man like you, who has just sold me a pair of shoes I probably don’t need or even want, working at a place like Macy’s? My name is Ms. Monahan, and I am the director of recruiting and training at Home Builders, and I can tell from the way that you have handled this sale that you would make a superb home salesperson. Here’s my card. Why not call me tomorrow morning, and we can arrange a time for you to come in?”
Gerald thanked Ms. Monahan for her kind words and told her he certainly would call her. He called the next day and she seemed quite receptive to his call. She asked him to fax over a resume and said that she would get back to him (or her assistant would), in order to set up an appointment for him to interview with her and some of the key salespeople in the firm. Gerald ended up faxing his resume three days after talking to Ms. Monahan. Her office emailed him with a link to an online blank job application, which he quickly filled out. A nerve-wrecking week went by, and Gerald finally received an appointment for an interview for the following week.
The interview started at 9. a.m.. First, before he met with anyone, Gerald took a battery of tests and filled out a set of questionnaires. The exams included everything from basic math to what
seemed to be an IQ test, to questions about self-image, his honesty, and his preference about the type of work he liked to do. Rather than having a long break for lunch they had a working lunch where HR went through the entire compensation package: a base salary plus commission, medical benefits, and a really good retirement plan where the firm contributed 5% of his salary.
His first interview that afternoon seemed to set the tone for the rest of the day. Gerald had a wonderful interview with the Sales Director, Sam Arden, and found it easygoing, laid-back. Sam, after telling Gerald about the firm and the job, asked Gerald some brief standard questions about his background and sales history and what made Gerald special enough to become a sales associate with Home Builders. Gerald expected these questions and was quite prepared. The next series of questions, however, were very different from anything he had experienced before. Sam would tell him a little story and then ask Gerald what he would do or say if he were the sales associate in the fictional story. No one had ever asked Gerald’s opinion about anything at his prior job and he felt he had finally found a firm that cared about what he thought. Gerald thought he sailed through these scenarios with flying colors.
After the interview with Sam, Gerald was directed to a small conference room where three people who identified themselves as area managers and one person from HR asked him a series of questions about his selling approach, his work habits, and his ability to work with a sales partner. This session was repeated in another room with another three area managers and another person from HRM. Both of these sessions included a series of follow-up questions that Gerald was happy to answer. In both of these interviews after the one with Sam, he was always asked to explain the most difficult sales situation he has ever faced and how he has handled it. However, apparently he was not the only candidate the company was looking at since in the second interview with the area managers and the HRM representative he sat together with a different candidate in the room and both were asked the same questions to which they often had similar but sometimes also very different answers. Gerald felt that his answers were overall much better than the responses of the other candidate. He even felt that the interviewers had to make suggestions to the other person in terms how to answer, basically giving the other candidate only the option to agree or disagree with the suggested answers. They never did this when they asked him questions. At 5 p.m. the last session ended and Sam walked in and told Gerald he would contact him in a week to let him know the decision of Home Builders.
In the days after Gerald left, some HRM personnel of Home Builders screened Gerald’s online profile accessing his Facebook and Twitter as well as Instagram account. From the list of his contact on those three social media HRM randomly picked a few individuals and contacted them in order to get some references. Gerald learned about it only by chance as one of his friends contacted him via email asking if he could respond to Home Builder’s request – Gerald answered affirmative. Later he would find out that ten other of his acquaintances, friends and even a coworker at Marcy’s had been contacted by Home Builders.
A week went by, and Gerald had not heard anything from Home Builders. He finally called and was told that a letter was in the mail to him and he should await arrival. Three days later, and with continued impatience at work and at home, Gerald received the letter. The first word he read, “congratulations”, sent him into an ecstatic frenzy. He then read further and realized that
12
this is not what he was told. Their job offer was commission-based only, and, assuming that medical and dental packages ran about the same cost and that coverage was the same as his current job, Gerald would lose paid vacation time but perhaps gain in terms of contributions to a retirement plan. Gerald though: “This is not the same great deal that I was told about during the interview process! Who sold who in the job?”.
At the same time as Gerald was asking this question to himself, Angie was standing at her (former) desk at Home Builders picking up her personal items and wondering how she had gotten into this mess. At one shoulder was the head of HR and at the other was one of the security officers. They were there to escort her out of the building as soon as she retrieved her personal items. Thinking back, the last hour or so had been a whirlwind. She had come to work like she had for the past several months, maybe a little late and a little hungover, but she was there. Shortly after she had sat down at her desk to start making phone calls, her supervisor had called her into her office. She asked her to accompany her to the HR Manager’s office. Once there, she saw a printout of her Facebook page, but at least they weren’t the postings she first had considered putting up. She was really glad that when she graduated from college she had purged her account of all previous personal pictures.
Angie knew, like all of the other employees, that management had recently been going through some of the social networking sites to review potential recruits before they decided to hire them, but she didn’t know anything about management reviewing current employees’ webpages. Well, she thought, my pages are pretty clean since I was warned about this by career services in college. However, what she saw next really bothered her. There was the highlighted section of her blog from last Thursday. She had forgotten about that! In the post, she had noted that she had a whopping hangover because of the night out on Wednesday and saw her post: “I think I’ll call in sick because I just can’t face working for that idiot with this headache. I’ll take a pill and relax today taking a sunbath”. Well, now they knew that she wasn’t sick. How could she have been that stupid?
As she sat there, she suddenly realized that this was no normal conversation – it looked more like an inquisition. And when the HR manager informed her that the company was going to terminate her employment by today – i.e. right away - and she would be required to pick up her personal belongings right now, she couldn’t believe it. What had happened to freedom of speech? What had happened to a person’s right to have a life outside of work? Could they monitor her personal communications that had nothing to do with work and then use them against her? She wasn’t sure, but she thought that was wrong. Nonetheless, here she was cleaning out her desk with a security guard next to her. She should have been more careful: the internet is full of references to people fired for things that they posted on their personal webpages. And it doesn’t necessarily matter if you set your pages to private. Your friends may still capture comments that you’ve made on their pages without you even knowing about it. In addition, recruiters may use your “friend” list to find people to call for references, and if your friend is unaware of the purpose of the call, they might say something that you’d rather wish they didn’t. Employers can look at who has recommended you on sites such as LinkedIn and may approach those references as well.
As Angie finished packing her personal belonging she noticed that the security guard had filmed her cleaning out her desk. While she was walking to the exit, she already saw the recording being streamed on the video monitors placed all around the corporate headquarters and other employees were watching it and staring at her while she was walked through the crowd followed by the security guard like a criminal. The subtitle of the video said: “This is how we deal with problematic employees!”... This seems to have been a modern version of the medieval pillory punishment which publicly exposed and shamed culprits. Some of her colleagues were also her friends and after her dismissal they did not want to meet her anymore. In the evening after her dismissal she started to have depressions and a first panic attack - both even got more intensive with time passing! A large part of her social network and friendship was cut off as a result and this further pushed her into a severe depression in the months after the incident. Angie soon needed psychoanalytic treatment and antidepressant medication to get by.
Not long ago her career in the company seemed to have been quite bright: she was asked to attend various workshops that were designed to train future junior managers. Apparently, she was in the roster of those employees who may be promoted into leadership positions she thought. Angie was familiarized in one of those workshops with strategic management and business strategies and analyzed her own company’s strategy using Porter’s concept of business strategies. A leadership workshop, as it was called, was also quite interesting: next to some presentations about some leadership theories and HRM issues she would be asked to engage into some role plays – one was about “democratic leadership” and the other about how to discipline subordinates. Now she was the one to be disciplined while she was never in the position to use what she has learned by herself. But, perhaps, at least she learned something in the workshop which will help her to address the way she was dealt with by the company: how they handled her case was not correct, she thought!
While Angie encountered this problem, Nora, one of several supervisors at Home Builders that has 50 sales teams, each with 10 members, was busy with performance evaluation. For this, Nora was supposed to use a graphical rating scale that has four performance indicators (1. Quality of work; 2. Quantity of work; 3. Politeness; 4. Integrity) with a 6 point scale ranging from 6 = (outstanding/best) to 0 = (problematic/poor). Employees will receive a corresponding performance bonus on top of their base pay depending on the rating. If they receive a rating of 1 on all four indicators (= 4) they will receive a 4% bonus and so on (a rating of 0 on the rating scale for all items will, of course, result in a 0% bonus) with a maximum of a 24% bonus pay. Nora can, of course, not observe all employees permanently and, therefore, usually simply looks at the subordinate’s work behavior and work outcome one week before the performance evaluations are due. Nora considers this as a “random sample” for evaluating work behavior and outcome. However, Nora’s subordinates are all aware of the fact that their performance is only monitored that particular week. Nora usually gives all employees scores between 4-5 (4= very good and 5 = excellent) in order to not upset anyone. Nora feels confident that this is fair since all subordinates demonstrated actually very good/excellent work in that particular week. Yet, there are significant differences in performances throughout the year. There are two subordinates in the team, who are actually outperforming any others in the company on all of the indicators!
But Anton has also to deal with another problem: one his subordinates, Carl, has been caught being involved in a scheme of fraudulent sales with a kick-back scheme. Anton is fuming since this particular team member had received a great reference from his previous supervisor - even highlighting the very high moral standard. Fact is that Carl was involved in some illegal schemes even at his previous employer as Anton found out later. The supervisor who provided the excellent reference only did not learn about those activities only since he omitted the regular auditing duties since he was too busy. Anton reports this fact to Ms. Monahan who decides that it is now payback time. Ms. Monahan is aware of the fact that the fraudulent subordinate’s wife is expecting soon to give birth to a child. Ms. Monahan instructs the HRM department specifically to wait to inform Carl about his immediate dismissal on the day when the birth of the new child has been confirmed to make him feel miserable. Of course, as is the practice at Home Builders, a short video clip will be created and screened on the video monitors of the company while Carl will be pictured being escorted outside of the premises by security personnel.
Question: Identify all the HRM issues and carefully analyze them while using relevant concepts and theories you have been familiarized with and suggest how Home Builders could have avoided the various problems.
In: Operations Management
Analyze means 1) identify the issue or problem 2) State the rule(s) and any exceptions if applicable 3) discuss the facts with the rules, and 4) conclude
Harvey is riding his bicycle, no-handed, and at a very fast speed down a park path. Trish, a jogger, accompanied by her dog, Rover on a leash is approaching Harvey from the other direction. Because he knows that he is bigger and faster on his bike, Harvey expects Trish to move out of his way. Unfortunately, Trish does not and as Harvey passes Trish, he side-swipes her knocking her to the ground and injuring her. Rover is inadvertently released when Trish falls, and he runs off into the road. Monty is driving carefully down the road. Seeing Rover running into his path and wanting to avoid hitting him, Monty swerves driving off the road and onto the sidewalk, damaging his wheel alignment when he jumps the curb. Grandma Jenkins is babysitting young Elvis, her grandson. Elvis happens to be playing hopscotch on the sidewalk across the street from the park. Fortunately, Monty's veering car stops far short of Elvis, and all is well for the tot (except for anxiety he suffered when he looked up and saw Monty's car heading straight for him). Unfortunately, Grandma Jenkins, observing the car veering off the road and heading straight toward her grandson, suffers a heart attack.
Analyze the following questions based on Negligence - (how far does Harvey's liability go? support)
Is Harvey liable for the injuries suffered by Trish and the loss of Rover? (Note: Rover is not dead, just lost) Is Harvey liable for the damage to Monty's car?
Is Harvey liable for the anxiety that Elvis suffered?
Is Harvey liable for Grandma Jenkins' heart attack?
In: Operations Management
As Jupiter industries expands its MENA locations, what international staffing strategy model (or combination of models) would you suggest and why? What type of international assignee compensation plan would you suggest for Bremen expat employees appointed to 3-year assignments in Egypt and Morocco? Explain. What type of international assignee compensation plan would you suggest for Bremen expat employees appointed to 3-year assignments in Saudi Arabia and Jordan? Explain.
difference between international strategies ?
In: Operations Management
Identify one website that is exceptionally user- friendly and another that is not. What are the factors that make for a satisfying user experience in the first instance and a frustrating one in the second? Specify recommendations for improvements in the second website.
In: Operations Management
Question text
Scenario: The HR director of Sealy Flooring, Ann, approached the
customer service manager, Earl regarding a complaint a female
employee made against Earl's favourite employee, Billy. Ann
detailed that the female employee is uncomfortable with Billy's
touchiness. Earl explained that he knows Billy and his wife well
and that Billy is devoted to his marriage. Earl says that the
female employee has misunderstood Billy's niceness. Earl tells Ann
that the issue is not as dramatic as she is making it and that he
will talk with Billy. Two weeks have passed since Ann brought the
situation to Earl's attention. Earl can't find the way to approach
Billy about the complaint so he has not told Billy about the
concern.
Did Earl demonstrate characteristics of effective problem-solving
and decision making? Select all that apply.
Select one:
a. Yes, Earl put aside his personal feelings, bias, and prejudice
b. Yes, Earl remained neutral
c. Yes, Earl gathered all the information
d. No, Earl did not make assumptions
e. No, Earl was emotionally attached
f. No, Earl was self-serving
Question text
Scenario: Paul has been tasked with purchasing a new accounting
software for the firm. He has his choices narrowed to two options,
but the products are so much alike that he cannot decide. He called
consulted three colleagues that he knows from the National
Accounting Association for advice. After talking with his friends,
Paul is ready to make his purchase.
Did Paul demonstrate characteristics of effective problem-solving
and decision making? Select all that apply.
Select one or more:
a. Yes, Paul put aside personal feelings, bias, and prejudice
b. Yes, Paul gathered all the information
c. Yes, Paul analyzed the information
d. Yes, Paul accepted input from others
e. No, Paul was indecisive
Question text
Scenario: Jennifer has plans to go hear a band with two friends.
An hour before she was to meet her friends, Andy, a male friend
that Jennifer has a crush on called and invited her out for the
evening. Jennifer knows her friends are expecting her and they will
be upset if she cancels, but Andy is so handsome, and she has been
wanting to go out with him for a long time. Her friends will get
over it. She calls her friends and tells them she is not feeling
well and can't make it through the concert. She meets Andy for
dinner.
Did Jennifer demonstrate characteristics of effective
problem-solving and decision making? Select all that apply.
Select one:
a. Yes, Jennifer aside personal feelings, bias, and prejudice
b. Yes, Jennifer considered all the possible solutions
c. Yes, Jennifer was accountable for the decision
d. No, Jennifer was self-serving
e. No, Jennifer was indecisive
In: Operations Management
question1
An order 360 tormes of hi-gloss paper must process sequentially
through the coater and the super-calender. The entire lot is
completed through the coater before it is moved over the
super-calender for processing. the coater take 1 hour and 15
minutes to set up amd coats at a rate of 15 tonnes/ hour. the
second operation, the super calender processess the paper at 10
tonnes/hour and has a set up time of 2 hours. Wait time between the
coater and super-calender is 3 hours. There's a 20-minute wait time
after the super calender and 40 mimutes to transfer the completed
order to the warehouse.
the facility just returned from a week long shut down so there is
no WIP or queue at the coater or super cylinder.
when will the order be put in the warehouse ?
See se
10 tonnesi hour
calender tor processine he coate takes 1 our aned 15 minutes to set up The second oper abion. Ihe superalender pnocesses the ppr a
order to the waretoum.
The facity ust retuned from a week lorng shutdown so
theres ns WP or queve at the coaner r super calender
When mil the order be put inte the warehouse?
-the production manager has decided to overlap the coater and super
calender schedule with the following changes -
- the parent of lot of 300 tonnes will be split in half into two
subiots
-wait time between the coater and super-calender have been
eliminated
-The time from the super-calender to the warehouse has been
eliminated
-The move times remains the same
Set up on the super-calender cant start until the 1 subiot arrive
at the station.
what is the cycle time of the overlapped operation? what time, if any is saved?
question2
Be-sweet sugar company manufactures cane sugar in vancouver.
Be-sweet supplies their products all over canada, primary thrpugh a
distribution center in a montreal which is 4813 km away. the
vancouver refinery ships full truckloads of sugar into the montreal
distribution center at $40/cwt. the distribution operation
internally charges $12/cwt in labour, handling and insurance for
all loads recieved from vancouver. a customer in saskatoon orders
less than a truckload quantity and has tradition been serviced from
the montreal distribution center at rate of $25/cwt. the corporate
logistics groups has recieved an RFQ from a trucling firm that
indicates that they will 1578 km at $105/cwt to fullfill the
saskatoon order.
1-deteine the distance from vancouver where the shipping cost is
indifferent?
2- determine the kost cost effective way for be-sweet sugar company
to supply the saskatoon customer?
3- what is the short ton cost of shipping a full truck load of
sugar from vancouver to montreal?
In: Operations Management
Case 4: Basma (formerly, Patricia) a recent convert to Islam, alleges that she was terminated from her job as a metal punch operator in a large metal fabrication plant because of her religion (Islam). Shortly after her conversion, she notified her supervisor, Ken, that her new faith requires her to dress according to hijab, "the correct standard of modesty." She also stated that this meant she could no longer wear pants, as required by the factory’s dress code. She further requested religious accommodation by being permitted to wear the jibaab (long and loose-fit coat or garment worn by some Moslem women) while at work.
Ken responded that this could not be done as OHSA and other safety regulations precluded anyone from working around the machinery in loose clothing. Basma, then said asked Ken if he could transfer her to another job. Ken told the only other jobs in the plant where industrial hoist and gantry crane operator and programmer/analyst. Ken informed her that since she possessed no programming skills, that she was not qualified for the programmer/analyst job. He then asked her if she could operate an industrial hoist/gantry crane, she responded that she could not.
When Basma showed up for work the next day in a jibaab, Ken told her to go home and return in the appropriate work attire. When she refused, she was terminated.
Basma immediately filed a complaint with the EEOC for religious accommodation. Her employer is a Title VII employer, but management contends that the dress code is essential to the safe and efficient operation of the mill, and the company has evidence that the dress code was imposed following several accidents in which loose shirts worn by employees were caught in the same type of mill machinery that Basma operates.
a. Can Basma establish a prima facie case for religious accommodation? Why? (5 points)
b. Has Ken violated Title VII? Why or why not? (4 points)
c. Given the above scenario, is there a reasonable religious accommodation for Basma? If so, what? (2 points)
In: Operations Management
Critical Thinking:-Leadership
The answering should be from your own words or any scientific references.
Question(s):
1. Describe directive leadership and supportive leadership, Explain their importance.
2. How organizations are benefitted from supportive leadership ? Give an example of such organization which you might have come across.
In: Operations Management
Case 3: Tupelo Chemical, a manufacturer of industrial chemicals operating in Tupelo, MS for the past 7 years. Tupelo Chemical employed 14 fulltime employees and 26 part-time employees when it announced two vacancies in its emergency maintenance operation. Tupelo Chemical has a rule that members of its emergency maintenance crews could not be single parents of young children, because child care responsibilities often interfere with work responsibilities. Four candidates of the 17 who applied meet the minimum qualifications for the job. Fred, a white male is not married and has no children. Marcus, an African-American male has a wife and a two-year old son. The two remaining candidates who applied for an opening, Bill and Mary, also have pre-school aged children. Both have four years prior experience in emergency maintenance at other companies, and both have exceptional performance evaluations. Bill was recently divorced and Mary was recently widowed.
Bill the father of a three-year-old daughter requested an exception to the company's policy by producing an affidavit that both his sister and his mother stated that they would handle any child care problems that might arise.
Mary, a single mother of a four-year-old son, also requested that she be granted an exception to policy based on an affidavit that her female roommate also agreed to handle any childcare problems that might arise. Her request was denied. On February 22, 2019, it was announced that the two vacant positions would be filled by Fred and Marcus. Neither Mary nor Bill was given a job offer. After brooding over the fact that the two vacant positions were filled by equally qualified men, Mary filed a complaint with the EEOC on September 4, 2019.
a. Can the CP establish a prima facie case under Title VII, and, if so, on what grounds (which protected class was unlawfully discriminated against)? (2 pts) Why or why not? (3 pts)
b. Based only on the information provided, who will prevail--the respondent or the complaining party? Why? (4 pts)
In: Operations Management
Reflect upon the course Fundraising for non-profit organization and provide a brief summary of the topics/concepts that you found most interesting and relevant to your career. Does any of the material need to be addressed more thoroughly or clarified?
List references.
In: Operations Management
Northcutt Bikes: the Service Department
Introduction
Several years ago, Jan Northcutt, owner of Northcutt Bikes, recognized the need to organize a separate department to deal with service parts for the bikes her company makes. Because the competitive strength of her company was developed around customer responsiveness and flexibility, she felt that creating a separate department focused exclusively on aftermarket service was critical in meeting that mission.
When she established the department, she named Ann Hill, one of her best clerical workers at the time, to establish and man-age the department. At first, the department occupied only a corner of the production warehouse, but now it has grown to occupy its own 100,000-square-foot warehouse. The service business has also grown significantly, and it now represents over 15% of the total revenue of Northcutt Bikes. The exclusive mission of the service department is to provide parts (tires, seats, chains, etc.) to the many retail businesses that sell and service Northcutt Bikes.
While Ann has turned out to be a very effective manager (and now holds the title of Director of Aftermarket Service), she still lacks a basic understanding of materials management. To help her develop a more effective materials management program, she hired Mike Alexander, a recent graduate of an outstanding business management program at North Carolina State University, to fill the newly created position of Materials Manager of Aftermarket Service.
The Current Situation
During the interview process, Mike got the impression that there was a lot of opportunity for improvement at Northcutt Bikes. It was only after he selected his starting date and re-quested some information that he started to see the full extent of the challenges that lay ahead. His first day on the job really opened his eyes. One of the first items he had requested was a status report on inventory history and shipped orders. In response, the following note was on his desk the first day from the warehouse supervisor, Art Demming:
We could not compile the history you requested, as we keep no such records. There’s just too much stuff in here to keep a close eye on it all. Rest assured, however, that we think the inventory positions on file are accurate, as we just completed our physical count of inventory last week. I was able to track down a demand history for a couple of our items, and that is attached to this memo. Welcome to the job!
Mike decided to investigate further. Although the records were indeed difficult to track down and compile, by the end of his second week, he had obtained a fairly good picture of the situation, based on an investigation of 100 parts selected at ran-dom. He learned, for example, that although there was an aver-age of over 70 days’ worth of inventory (annual sales/average inventory), the fill rate for customer orders was less than 80%, meaning that only 80% of the items requested were in inventory; the remaining orders were backordered. Unfortunately, the majority of customers viewed service parts as generic and would take their business elsewhere when parts were not avail-able from Northcutt Bikes.
What really hurt was when those businesses sometimes canceled their entire order for parts and placed it with another parts supplier. The obvious conclusion was that while there was plenty of inventory overall, the timing and quantities were misplaced. Increasing the inventory did not appear to be the answer, not only because a large amount was already being held but also because the space in the warehouse (built less than two years ago) had increased from being 45% utilized just after they moved in to its present utilization of over 95%.
Mike decided to start his analysis and development of solutions on the two items for which Art had already provided demand history. He felt that if he could analyze and correct any problems with those two parts, he could expand the analysis to most of the others. The two items on which he had history and concentrated his initial analysis were the FB378 Fender Bracket and the GS131 Gear Sprocket. Northcutt Bikes purchases the FB378 from a Brazilian source. The lead time has remained constant, at three weeks, and the estimated cost of a purchase order for these parts is given at $35 per order. Currently Northcutt Bikes uses an order lot size of 120 for the FB378 and buys the items for $5 apiece.
The GS131 part, on the other hand, is a newer prod-uct only recently being offered. A machine shop in Nashville, Tennessee, produces the part for Northcutt Bikes, and it gives Northcutt Bikes a fairly reliable six -week lead time. The cost of placing an order with the machine shop is only about $15, and currently Northcutt Bikes orders 850 parts at a time. Northcutt Bikes buys the item for $10.75.
Following is the demand information that Art gave to Mike on his first day for the FB378 and the GS131:
|
FB378 |
GS131 |
||||
|
Actual |
Actual |
||||
|
Week |
Forecast |
Demand |
Forecast |
Demand |
|
|
1 |
30 |
34 |
|||
|
2 |
32 |
44 |
|||
|
3 |
35 |
33 |
|||
|
4 |
34 |
39 |
|||
|
5 |
35 |
48 |
|||
|
6 |
38 |
30 |
|||
|
7 |
36 |
26 |
|||
|
8 |
33 |
45 |
|||
|
9 |
37 |
33 |
|||
|
10 |
37 |
30 |
|||
|
11 |
36 |
47 |
10 |
16 |
|
|
12 |
37 |
40 |
18 |
27 |
|
|
13 |
38 |
31 |
30 |
35 |
|
|
14 |
36 |
38 |
42 |
52 |
|
|
15 |
36 |
32 |
55 |
51 |
|
|
16 |
35 |
49 |
54 |
44 |
|
|
17 |
37 |
24 |
52 |
57 |
|
|
18 |
35 |
41 |
53 |
59 |
|
|
19 |
37 |
34 |
53 |
46 |
|
|
20 |
36 |
24 |
52 |
62 |
|
|
21 |
34 |
52 |
53 |
51 |
|
|
22 |
36 |
41 |
53 |
60 |
|
|
23 |
37 |
30 |
54 |
46 |
|
|
24 |
36 |
37 |
53 |
58 |
|
|
25 |
36 |
31 |
54 |
42 |
|
|
26 |
35 |
45 |
53 |
57 |
|
|
27 |
36 |
53 |
|||
Mike realized he also needed input from Ann about her perspective on the business. She indicated that she felt strongly that with better management, Northcutt Bikes should be able to use the existing warehouse for years to come, even with the anticipated growth in business. Currently, however, she views the situation as a crisis because “we’re bursting at the seams with inventory. It’s costing us a lot of profit, yet our service level is very poor, at less than 80%. I’d like to see us maintain a 95% or better service level without back orders, yet we need to be able to do that with a net reduction in total inventory. What do you think, Mike? Can we do better?”
Questions
1.Use the available data to develop inventory policies (order quantities and reorder points) for the FB378 and GS131. Assume that the holding cost is 20% of unit price.
2.Compare the inventory costs associated with your suggested order quantities with those of the current order quantities. What can you conclude?
3.Do you think the lost customer sales should be included as a cost of inventory? How would such an inclusion impact the ordering policies you established in question 1?
In: Operations Management
In: Operations Management