Assignment 2: FoldRite : A Surge in Demand

1. Assignment 2: FoldRite: A Surge in Demand • The group project requires the students to apply the theories and concepts learnt in class to solve actual SCPC problems (assigned case study). Students are required to form teams of up to a maximum of 5 students per team. Smaller teams are permitted where necessary. • Please prepare a 20-minute PowerPoint presentation addressing these questions for presenting in class as per schedule (Assignment 2 Part A). This presentation will be 30% of your final group assignment grade and will form the basis of class discussion (Assignment 2 Part A). For the remaining 70% please write a report (maximum 2500 words plus appendix) addressing the questions on the FoldRite case.

2. FoldRite:Please develop a capacity plan for FoldRite. What recommendations would you make to Martin Kelsey in Feb. 2010? Which option(s) (or combinations of options) should they pursue to meet the surge in demand? What are their specific quantitative (i.e., financial performance) or qualitative implications? Below some steps that you could use a guideline for your analysis: The steps involved in planning include: • Calculating available skilled and unskilled workers • Determining the labor required to fulfill demand • Determining the total cost of fulfilling demand for each option by adding the cost of: a)Overtime b)Use of subcontractors c)Hiring and training workers d)Cost of design change e)Cost of carrying inventory Additionally, the inventory level and production shortfalls over the 6 month for each option need to be determined to ensure on-time delivery

3. The required format for the layout of the report is as follows: Cover page as per UCD Distance Learning Unit specifications 2) Executive Summary -In a single paragraph, summarise the contents of the entire report. This should be written last when the rest of the report is completed, so that you know what you are summarizing. 3) Introduction to the selected project -Briefly give an introduction to the case you are analysing. -Outline your plan to analyse the case 4) Analysis of the case -Using the theory in the topic, analyse the case -You should devote most of the effort to applying the theory to answer the case study questions. 5) Discussion and Conclusions - In this section, you discuss your answers -- Identify the key learning points in the case and what your group learned from undertaking the assignment. 6) References -All third party material used in the report must be listed using a formal referencing system such as the Harvard system. This must be correctly cited where used in the body of the report.

4. What recommendations would you make to Martin Kelsey in Feb. 2010? Be specific and provide support for your recommendations. These recommendations should be suitable for presentation to upper management at FoldRite. Case Study: FoldRite Furniture Co.: Planning to meet a surge in demand

5. Detailed analysis of financial impact of selecting various options Environment and overview: • FR revenue comes from folding table (42%), stackable chair (34%) and new folding chair (24%) • Large increase in demand is expected over next 6 month • Business is seasonal • March-August period accounts for 59-60% of annual demand for folding tables and stackable chairs, and 70% for folding chairs • FR is strapped for cash due to general credit crunch and is unwilling to produce any significant quantity for inventory

6. Detailed analysis of financial impact of selecting various options Manufacturing Process: • Manufacturing at FR is simple and solely depends on skilled and unskilled, largely interchangeable, labor input • The tasks that generate the components proceed simultaneously: metal fabrication, injection molding of seats for foldable chairs, and laminating and thermal molding of stackable chair cover • Sub-assembly of these components follows • Final assembly takes place on a moving conveyer • All production planning is highly centralized • 2-week inventory of production • WIP inventory are kept at an absolute minimum

7. Detailed analysis of financial impact of selecting various options Analysis of Process and Planning: Assumptions: • Productivity and yields remain the same when the production exceeds planned capacity • Company builds up a standard 2 weeks (8 days) of inventory prior to March • To minimize costs, inventory levels could be allowed to fall somewhat below the target during peak • Level and balanced production for all products • Inventory carrying cost is equal to the cost of financing (1%/month) of finished goods at cost • Average monthly inventory for each product is ½ of the total for the month

8. Detailed analysis of financial impact of selecting various options The steps involved in planning include: • Calculating available skilled and unskilled workers • Determining the labor required to fulfill demand • Determining the total cost of fulfilling demand for each option by adding the cost of: • Overtime • Use of subcontractors • Hiring and training workers • Cost of design change • Cost of carrying inventory Additionally, the inventory level and production shortfalls over the 6 month for each option need to be determined to ensure on-time delivery

9. Step 1&2: Calculating available number of workers & determining required workers

10. Step 3: Examining the options Options: • Overtime • Subcontracting • Hiring • Early hiring strategy • Hiring delayed to April • Hiring & Training • Change in Design • Hire all workers needed starting in March 1, and use overtime for 6 workers in this month • Hire all needed workers in April • Hire unskilled workers to train in March and start extra production in April

12. Results

13. Learning objectives/outcomes • Explore various manufacturing options to deal a projected short term surge in demand • Use simple quantitative/financial models in the decision process • Understand the risks associated with these options • Assess the impact of soft attributes such as workers loyalty, productivity, etc.