Case Study Space Age

Additionally, Coral is right in his concerns about removing the problem causing Ed such dissatisfaction with his job. According to Levin (2001), employee loyalty and satisfaction is more than just the effect of retention. A disgruntled employee will begin to minimalize his or her work performance and will begin to spread negativity through an organization until whole organizational morale begin to diminish. However, a loyal employee will commit to the overall success of an organization. Although continued overtime for Ed is an option that Space Age can pursue, it is a bad choice considering the basics of organizational management and organization behavior. One option is for Space Age to reduce the minimum number of subassemblies per run.
If this figure was dropped from 1000 to 600, based on the master schedule, Space age could still meet demands on a continuous basis. Additionally, they could keep Ed happy because he is currently meeting this production requirement without overtime. This would also save Space Age over $3,500 per month in overtime costs. It would also reduce current inventory storage costs. Currently parts are being produced and placed in storage because of the minimum subassembly requirements. It is currently estimated that storage cost per week for each Gemini is $1.25, each Saturn is $1.50, each subassembly is $0.75, and each part no. 3079 is $0.25. Table 1 is the master schedule for the next six weeks. Table 2 is a breakdown of storage costs for the next six weeks based on the master schedule. Table 2 does not reflect storage during the first week. This is because, according to the information provided, there is no inventory brought forward into the first week. Additionally, Table 2 reflects storage beginning at the second week or at the end of the first week’s production run. The assumption is made that storage will occur until the assembly of 1000 subassemblies can be completed. At this point, the components should be released to the shipping department. If Space Age adopts a smoothing plan, they could lower production costs and satisfy both Ed and their customer demand. Smoothing can develop and implement a constant in weekly production. Smoothing will make the production quantities uniform across the next six weeks (Vonderembse & White, 2013). However, roughly the same amount of required production will still occur over the next six week period. This is based on average the weekly demand for products over the next six week period. Table 3 shows how smoothing can be applied.
As reflected in Table 2, storage of inventory can quickly become expensive. As a reference, we can see the six week storage costs for finished Gemini products alone totaled $4000. The total for storing finished products of both models was $7,450. Overtime costs for Ed, during this same six week period would be just over $5,200. At first glance, it seems Ed’s overtime is the better financial option. However, if Space Age only stores subassemblies, the cost would be just over $4,000 during the same six week period, making this a better option than storing complete finished products and a better choice than paying Ed overtime wages. Regardless of the option chosen, Space Age needs to implement an aggregate plan. An aggregate plan, according to Vonderembse & White (2013), is a medium-range operations plan for approximating the allocation of resources to meet projected customer demand. Considering an aggregate plan, Space Age needs to consider how machines Ed is overseeing. According to information provided, the specialized lathe that produces part no. 3079 is only one is a series of machines that Ed oversees. There is a possibility that Ed could supervise one more machine. If so,
then Ed’s production of 1200 parts (no. 3079) could be doubled to 2400 per week. Considering that Ed is roughly being (currently) paid an additional $45,000 per year in overtime alone, Space Age should consider if Ed is capable of supervising another machine, and if so a cost analysis for adding an additional machine should be conducted. Also, the machine shop capacity should be considered to determine if there is currently adequate floor space for an additional machine. This would need to be considered when conducting a costs analysis. Flow-shop scheduling can allow Space Age to continuous monitor production and production schedules. Flow-shop scheduling can establish more efficiency in production may ensuring proper sequencing of production steps (Huawei, Yuanwei, Jinping, & Tao, 2013). This creates a work atmosphere where production is continuous without slack or down time. Additionally, printing universal product codes (UPC) labels to be attached to each part and each subassembly, and then scanned would provide an accurate account of on-hand inventory. These labels would also need to be scanned again when they go out for shipment. This would work in the same manner a point of sale (POS) laser scanner system. In addition to satisfying current schedules, keeping Ed content, and fulfilling customer demands, there are many things that Space Age can do to that would be beneficial for the company as a whole and would add value for the customer. There is a misconceived notion that adding value costs money. This is simply not true. Somethings that add value may cost an organization money, but others will not. Space Age should ensure that there is a direct communication line between their organization and the customer. Customer service should be polite, prompt, and easily assessable. Good advertising can create a need or desire for a product, but it can also add social or physiological appeal and value to the product. This falls in line with Maslow’s hierarchy of needs (Yalch & Brand, 1996). Maintaining prompt deadlines and good customer service can help a company build a strong track record and a strong reputation in the market, as well as the loyalty of a strong customer base. Many companies from all walks of industry have now established websites and social media pages. These areas catch only quickly and help to quickly expand an organization’s customer base. They also provide an avenue for the customer to provide immediate feedback and recommendations for product improvement. Other options include ensuring the ease of assembly for the customer and providing product guarantees and warrantees. When a manufacturer stands behind their product it greatly helps the company build a strong reputation in the market. Additionally, providing customer surveys with warrantee cards can help improve product quality as well as improving customer satisfaction. One of the best things that Space Age can do to add value for the business as well as the customer is to establish a strong customer relationship management (CRM) program. A CRM program can be defined as a program consisting of all things that meet the customer’s needs and develop customer satisfaction. According to Kubina & Lendel (2012), “CRM unites the potential of information technologies and relationship marketing strategies to deliver profitable, long-term relationships” (p. 57). Current CRM programs, create a union between production operations, marketing, sales, the consumer, and new technology.
According to Kubina & Lendel (2012), CRM programs are highly effective when they utilize up-to-date technology, and make it through the first 12 months of the CRM development phase. According to a survey conducted by Adamska & Minarova (2014), representing the machinery industry, the services industry, and the trade industry, 40% stated CRM programs established stronger working relationships between with customers, 32% stated customer management showed enhanced improvements through CRM, and 17% stated that CRM established robust confidence between companies and their customers. These results can be seen in Table 4. When examining alternative for Space Age or any manufacturing organization, it is important to understand the type of production processing. According to Mungani & Visser (2013), “Various production methods are used in industry to manufacture or produce a variety of products needed by industry and consumers. The nature of a product determines which production method is most suitable or cost-effective” (p. 1). When comparing the different types of production processing, we should consider various alternatives. The first alternative is
job shop processing. Job shop processing is different from the other alternative. In job shop processing, a part will move through various channels before completion. Different products will have different routes through the process before completion. Job shop processing will often deal with smaller numbers of products, including specialized or custom production products. This is a much more difficult process to schedule efficiently and jobs with less priority may often miss deadlines. Another type of processing is batch processing. In batch processing, the production process from individual products is not sufficient to fully utilize facility resources. However, individual batches may follow the continuous flow process. Batch processing is frequently used in the production of small volumes of a product. In this type of processing, there is down time due to change over of product lines and the setup time needed to conduct these changeovers. According to Vonderembse & White (2013), batch processing companies have to produce multiple different products in order to reach economies of scale. This type of processing is commonly use in the manufacture of pharmaceutical products. In continuous flow processing, manufacturing centers on a common set of steps (Vonderembse & White, 2013). Therefore, products follow identical production and assembly steps. A continuous flow process is normally used when producing large volumes of the same product line. Automotive manufacturing is a common example of continuous flow or assembly line processing. These are not all inclusive of production processes. Some companies may use a blend of more than one process through their production cycles. According to Khurana (1999), the global color picture tube industry uses a hybrid of production processes including continuous flow and assembly line processes. Khurana (1999) further explains that production process are much more complex than ever before, partly due to innovations in technology, and that there is a gap between process identification in real world practice and scholarly theory. Although it may be difficult to clearly identify the type of processing that Space Age is using, they appear to be using continuous flow processing. All unit are basically following the same production process. The only deviation is that parts or components will split at the subassembly step and then continue as two different products through similar production steps. Space Age needs to consider the value that Ed brings to the company and the dependence the company has on Ed. Realistically, the cost of Ed’s overtime could potentially be more than measurable at this point if the company loses Ed or if he begins bringing down employee morale.