Toy Plus
Operations Management Case Study
ToysPlus, Inc.
Murthy, vice president of manufacturing for ToysPlus, Inc., finished reading the weekly production report for the week ended January 27, 2012. Inventories were up once again, and service levels were lower than expected. Murthy wondered why these problems could not be solved once and for all. Last year he had installed a new IBM production and inventory control system on the company’s mainframe computer. While the system drastically reduced inventories and improved service levels at first, things had gotten worse over the last few months.
Murthy took the report and walked to Asha’s office next door. Asha had received her M.B.A a few years ago from I.I.M. Bangalore and was now in charge of production control for the company. After exchanging the usual greetings, Murthy asked Asha why the latest figures were not better. Asha responded, “Murthy, we continue to get poor forecasts from marketing, and we have to carry more inventory than we would like in order to protect ourselves from unreliable vendor deliveries. The sales promotion that we ran last week on surplus toy trucks did not work as well as we expected.” Murthy interrupted, “Asha we can no longer afford to achieve these kinds of results. You have got to find a solution. I am counting on you to come up with something to improve the situation. Otherwise we may both be out of a job.”
BACKGROUND
ToysPlus is a small, privately held company in the toy industry, with sales of about Rs. 10,05,000 a year. The company was started in 1951, manufacturing an innovative line of plastic toys and trucks that were very durable and low-priced. Over the years it has added several lines of toys and is now making 22 different toys, including games, dolls, toy vehicles, and novelty items. The company has a typical functional organization, as show below.
Finance/Acct, Ramu
Manufacturing, Murthy
Marketing/Sales, Chandran
President, Hameed
Quality Control, Priya
Production
ToysPlus, Inc.
Murthy, vice president of manufacturing for ToysPlus, Inc., finished reading the weekly production report for the week ended January 27, 2012. Inventories were up once again, and service levels were lower than expected. Murthy wondered why these problems could not be solved once and for all. Last year he had installed a new IBM production and inventory control system on the company’s mainframe computer. While the system drastically reduced inventories and improved service levels at first, things had gotten worse over the last few months.
Murthy took the report and walked to Asha’s office next door. Asha had received her M.B.A a few years ago from I.I.M. Bangalore and was now in charge of production control for the company. After exchanging the usual greetings, Murthy asked Asha why the latest figures were not better. Asha responded, “Murthy, we continue to get poor forecasts from marketing, and we have to carry more inventory than we would like in order to protect ourselves from unreliable vendor deliveries. The sales promotion that we ran last week on surplus toy trucks did not work as well as we expected.” Murthy interrupted, “Asha we can no longer afford to achieve these kinds of results. You have got to find a solution. I am counting on you to come up with something to improve the situation. Otherwise we may both be out of a job.”
BACKGROUND
ToysPlus is a small, privately held company in the toy industry, with sales of about Rs. 10,05,000 a year. The company was started in 1951, manufacturing an innovative line of plastic toys and trucks that were very durable and low-priced. Over the years it has added several lines of toys and is now making 22 different toys, including games, dolls, toy vehicles, and novelty items. The company has a typical functional organization, as show below.
Finance/Acct, Ramu
Manufacturing, Murthy
Marketing/Sales, Chandran
President, Hameed
Quality Control, Priya
Production