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Analyze the problem below and use it to answer the question. Smog Co. Manufacturing Challenge Smog Co is a small Jamaican manufacturer of electronics for
Analyze the problem below and use it to answer the question. Smog Co. Manufacturing Challenge Smog Co is a small Jamaican manufacturer of electronics for general consumption. Smog produces a range of products such as radios, toasters, hair dryer's blenders, and irons. Production of one of the company's number one selling products the Microwave 3000 has been organized into a flow process made to minimize delays during the manufacturing process. Microwave 3000 products are made in batches and sent to Smog Co. finished goods warehouse on a first-in, first-out basis. Smog Co.'s 'big three' customers are Singer, Courts, and Appliance Traders Limited, who are responsible for three-quarters of the company's sales and order the same things in similar quantities one week in advance of delivery. With a production lead time of three weeks, Smog Co. uses a demand forecast to schedule production and make sure that finished goods stocks will be available to meet predicted demand. However, consistent demand from the 'big three' customers has caused Smog Co to experience various challenges, including that a key machine needed for manufacturing constantly breaks down and spare parts take a long time to source. Inventory levels fluctuate consistently with no safety stock policies implemented to provide cover against demand spikes in the future. Also, other finished goods manufactured by Smog Co are now selling slowly, resulting in surplus stock and limited storage availability. Over the last financial quarter, the 'big three' customers have started to use a number of new strategies to compete against each other. Singer and then Courts had announced that they would be reducing their order lead time for its products from one week to two working days. At the same time, they are all looking for a 5 % cost reduction on the products ordered from Smog, and demanding overall quality improvements. Provide applicable recommendations which can be implemented by the Smog Co to address the reviewed problem. 25 marks
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