U.S. Stroller: Case Study
Synopsis
U.S. Stroller is a manufacturer and distributor of a line of baby strollers. The company makes three types of strollers in a typical batch production system. Recently, profits are down and competition is entering the market that the company dominates. Proposals have been made to go to a JIT production system or to a Cell approach for production. The purpose of this case is to show how a batch system can be dramatically improved by JIT or Cellular concepts. The case clearly describes the changes that must be made in the production system to achieve the benefits desired. This amounts to a complete change in layout of the production floor and a substantial overhaul of the MRP system. The case nicely ties together some of the material from the text on JIT, GT, EOQ and MRP.
Company background U.S Stroller is a leader in the production and sales of baby strollers in the United States. It is well known for its innovative design and its good distribution system. There 2,000 different sites in the U.S to distribute company products and has been a market leader for over 50 years. At the present time it conquers 40 percent of the market. U.S Stroller started its business in 1934 with the introduction of the regular model which sells at $ 49 retail. In 1955, the company introduced a deluxe model which sells at $ 99 retail and in 1974 it introduced its shopping centre stroller which sells at $ 149. The company is currently selling 106,000 units per year of the three types of strollers with the sales approximated at $ 4.5 million per year. The gross profit is 25% of sales and the net profit for the fiscal year is 2% of sales. Its inventory turnover is at 2.4 times per year and the company has earned a 3% on net assets on an after tax basis and also 8% on owner’s equity.
Problem Statement
Clem Hawkins, Director of Manufacturing of U.S Stroller is tasked by his sister, Judy Hawkins, President of the company to take closer look at the plant and check on and
U.S. Stroller is a manufacturer and distributor of a line of baby strollers. The company makes three types of strollers in a typical batch production system. Recently, profits are down and competition is entering the market that the company dominates. Proposals have been made to go to a JIT production system or to a Cell approach for production. The purpose of this case is to show how a batch system can be dramatically improved by JIT or Cellular concepts. The case clearly describes the changes that must be made in the production system to achieve the benefits desired. This amounts to a complete change in layout of the production floor and a substantial overhaul of the MRP system. The case nicely ties together some of the material from the text on JIT, GT, EOQ and MRP.
Company background U.S Stroller is a leader in the production and sales of baby strollers in the United States. It is well known for its innovative design and its good distribution system. There 2,000 different sites in the U.S to distribute company products and has been a market leader for over 50 years. At the present time it conquers 40 percent of the market. U.S Stroller started its business in 1934 with the introduction of the regular model which sells at $ 49 retail. In 1955, the company introduced a deluxe model which sells at $ 99 retail and in 1974 it introduced its shopping centre stroller which sells at $ 149. The company is currently selling 106,000 units per year of the three types of strollers with the sales approximated at $ 4.5 million per year. The gross profit is 25% of sales and the net profit for the fiscal year is 2% of sales. Its inventory turnover is at 2.4 times per year and the company has earned a 3% on net assets on an after tax basis and also 8% on owner’s equity.
Problem Statement
Clem Hawkins, Director of Manufacturing of U.S Stroller is tasked by his sister, Judy Hawkins, President of the company to take closer look at the plant and check on and