3. What are the key issues in this case? Be sure to classify them as much as possible as symptoms versus core causes. Be sure to keep in mind the constraints as defined by the type of customer and the internal conditions. Once you have analyzed and classified the issues, develop a comprehensive solution for MasterChip that can deal more effectively with their situation.

Sally Jackson, production manager of the MasterChip Electronics Company, was having another frustrating day. The final assembly area was woefully behind schedule, and several large orders were several days, and some several weeks, behind the promised delivery date. Customers were not happy and were giving lots of angry messages to the sales force. At the same time, some of the work areas in the early portions of the production process apparently did not have enough work. Sally viewed this as an equally important issue, since she could think of only two possible solutions—either let the people stand around and do nothing or have them work ahead on some of the components even though no order existed for those components. Working ahead was risky because their products competed in a market where customers could demand a lot of options for a basic product, and some of those options had highly variable demand (one option, for example, could go for months with no demand and then all at once have a very large demand as one customer ordered a large number of a product with that option). That was not likely to change since most of their customers were large retail chain stores. Letting people stand around was also bad, since she was evaluated on labor efficiency and utilization, and a worker not working would make those numbers look very bad.

She would like to be able to send some of the workers home for a day or part of a day, but the local union agreement prohibited that. She also liked to think about the possibility of using some of those workers to help out in another area (final assembly, in this current situation), but the union agreement also had specific work classifications for each worker, and those could not be violated. Even if that were possible, she knew it could be a problem since most of the production workers in the area with little work knew almost nothing about how the final assembly area worked, and that could generate lots of quality problems.