Question

Operations Management at Travel Luggage Company

The Travel Luggage Company “LugPro” designs and manufactures several different styles of soft- and hardcover luggage, briefcases, hanging bags, and purses. Their best-selling item is a line of hardcover luggage called the Trotter. It is produced in a basic five-stage assembly process that can accommodate several different outer coverings and colors. The assembly process includes constructing a heavy-duty plastic and metal frame; attaching the outer covering; joining the top and bottom and attaching the hinge mechanism; attaching the latches, lock, and handle; and doing the finishing work, including the luggage lining. Several hundred new pieces of luggage of particular shape and color are initiated through the assembly process each week in the company’s two factories. Travel Luggage Company also runs its own logistics operations to serve their customers in their 200 outlets all around Middle East.

1- Answer shortly the following questions:

a) Name three main functions, which are found in every organization, in Travel Luggage Company.

b) What constitutes operations in Travel Luggage Company? Name at least three activities?

c) Describe the inputs and outputs of Travel Luggage Company’s manufacturing operations.

d) Name and explain at least three differences between Travel Luggage Company’s operations and a bank’s operations?

2- The Travel Luggage Company has production facilities in two locations. Average monthly cost data and output levels are as follows.

	Dubai	Abu Dhabi
Finished Goods	120000	150000
Work In Process	5000	8000
Labor Cost	30000	38000
Material Cost	25000	30000
Energy Cost	1000	1500
Logistics Cost	3000	4000
Rent Cost	1000	1500

a. Which factory has the highest labor single factor productivity?

b. Which factory has the highest total factor productivity?

c. Which factory has the highest multifactor productivity measure for finished goods to labor and material?

3- Travel Luggage Company wants to add a new line of luggage that targets business travelers to their product portfolio.

a) List the major stages of the design process and explain two of these stages shortly.

b) Explain what the functional design would include.

4- Travel Luggage Company tries to decide which type of production process to use for the new line of luggage. They consider using batch production or mass production. Compare these two types of processes and discuss their advantage and disadvantages.

5- Travel Luggage Company is trying to determine how best to produce its newest product. The new luggage line could be produced in-house using either batch production or mass production. Cost data are given below.

	Fixed Cost	Variable Cost	Selling Price
Batch Production	$100,000	$80	$150
Mass Production	$400,000	$20	$150

a) Compute the break-even point for each process.

b) Compute the point of indifference between batch and mass production.

c) How the company should schedule these processes?

Answer 1

luggage1.a) 3 main functions are: design, manufacture and selling travel luggage bags like soft and hard cover luggage, hanging bags, briefcases and purses.

1.b) The operations in travel luggage company mainly includes constructing heavy duty plastic and metal frame, attaching outer covering, joining top and bottom, and attaching hinge mechanism, attaching lock, latches and hinges, and doing the finishing work including lining.

1.c) Input of travel luggage are: new pieces of luggage of specific shapes and colours. Output in the travel luggage company are soft and hard cover luggage, hanging bags, briefcases and purses.

1.d) Difference between Bank operations and Travel luggage company operations:

- Travel luggage operations is manufacturing operations where the products are produced which can be held, seen and sold physically. Bank operations are service operations - where the products are intangile

- Main cost of manufacturing operations is raw material, whereas the main cost in bank operations is employees.

- There are no inventories in the bank operations, where there are major inventories in manufacturing

Q2: a) Abu Dhabi: 38000

2. b) Abu Dhabi: 38000 + 30000 + 1500 = 69500

2. c) Abu Dhabi: 38000 + 30000 = 69500

Q3: The major process of the design are as -

1. constructing a heavy-duty plastic and metal frame

2. attaching the outer covering;

3. joining the top and bottom and attaching the hinge mechanism;

4. attaching the latches, lock, and handle

5. doing the finishing work, including the luggage lining.

Functional design - Lightest and strong baggage should be in consideration in functional design as the airline industry are changing their rule on baggage weight policy. Four wheel is the other important consideration to be kept as the new travellar would like to have such at their travel bag. Different colour and design also attracts few customers.

Q4 Difference between Batch production and mass production - Batch production includes production of same type of goods in a huge quantity, on the other hand, mass production involves production of variety of goods at the same time.

Batch production advantage and disadvantage - It can help in produce the same goods in a larger quantity and can involve lesser cost as the product would be similar. It may not able to produce different variety of goods.

Batch production advantage and disadvantage - Mass production can help in producing different variety of products but it can involve huge cost in establishing this facility.

5. a) Break even point for batch production - fixed cost / contribution = 100,000/70= 1428.57 qty, Break even point for mass production - fixed cost / contribution = 400,000/130= 3076.92 qty.

b) Point of indifference = differential fixed cost/differential variable cost per unit = 300000/60 = 5000 qty.

c) Batch production - Create and schedule batches, assign order to batches, edit the batch content and schedule additional operations. Mass production - work out the raw material requirement as per demand, develop master production schedule proposal, understanding the capacity to meet MPS, if its workable, then evaluate it with resources use, inventory management and so.