Case Study $$ Ontario Leisure Chairs

The Situation:

Harry Ralph, an entrepreneur from Gravenhurst, Ontario owns a company called Ontario Leisure Chairs that manufactures outdoor lounge chairs commonly referred to as $$Muskoka chairs$.$ These chairs are made from a very high quality composite wood and are considered a premium product in the outdoor furniture market. Each chair retails for $$429$ and is sold fully assembled.

Sales growth has been strong through the pandemic and his sales team has forecasted sales for the next $12$ months to be $8000$ chairs.

Ontario Leisure Chairs operates a seasonal store in Gravenhurst where they sell their chairs during the summer. They ship a majority of their chairs to various outdoor furniture retailers across Canada and the northern parts of the United States. They are currently dealing with three operational issues issue:

$1)$ Some customers have recently been complaining to retail stores about small defects in the chairs. Mr$.$ Ralph is worried that if he doesn$$t figure out the problem it may negatively affect sales especially given the quality expectations that his customers have.

$2)$ Mr$.$ Ralph believes he is wasting money by having too many employees in the production facility. He currently staffs an average of $8$ full$-$time employees in the production facility who share the various tasks. He has been noticing recently that some of the production employees are often sitting around chatting and would like to reduce the number of employees to save money. However, he is worried that if he lays some employees off, Ontario Leisure Chairs might not be able to meet its yearly demand.

$3)$ The sales staff at Ontario Leisure chairs has been pressuring Mr$.$ Ralph to expand the size of his production and storage facilities as they have assured him that they will be able to continue to grow their overall sales. Mr$.$ Ralph also feels this would allow the company to store more inventory of raw materials and finished goods on$-$site if needed but is not sure if an expansion will lead to a positive return on the investment.

Your Task:

You have been hired as a consultant by Mr$.$ Ralph. He has asked for your advice in solving Ontario Leisure Chairs$$s operations and supply chain dilemmas. Mr$.$ Ralph has collected data and done market research but he needs your help doing the analysis and deciding on the best course of action for his company. You will assess the information presented to you and prepare a brief report for Mr$.$ Ralph.

Prior to completing the report you are to complete the following analysis in Excel:

$$ A completed analysis of the defect rate using a process control chart.

$$ A precedent diagram, required cycle time, minimum # of workstations, recommended tasks assigned to workstation, and predicted utilization rate of your recommended system

$$ A decision tree outlining the possible expansion options and associated probabilities and expected values

Once you finish your quantitative analysis, you are to complete a brief report summarizing your findings and recommendations. Your report should be no longer than $1$ page and include:

$-$ A summary of your findings on the cause of the increase in the defect rate, your recommendations of how to solve the issue, and any qualitative factors to be considered

$-$ A $$precedence$$ diagram and a summary$/$explanation of how you calculated the cycle time, assigned workers to tasks, the overall system utilization, and any qualitative factors to be considered

$-$ A summary of your quantitative analysis on the expansions options and any qualitative factors that Mr$.$ Ralph should consider

ANALYSIS and REPORT DUE: Monday, June $17,2024$ at $11$:$59$ pm LATE SUBMISSIONS WILL NOT BE ACCEPTED

Defect$/$Quality Information:

From previous years Mr$.$ Ralph knows that he would expect to see an average of $20$ defects per month through quality inspections with a standard deviation of $6$ defects each month $($YOU DON$$T NEED TO CALCULATE STANDARD DEVIATION$).$ The facility uses an upper control limit and a lower control limit of $2$ standard deviations.

He is not sure if any of the previous months went outside of the control limits but since customers have been complaining he wants to investigate possible causes. Mr$.$ Ralph has identified only $3$ major changes at the plant last year that could have caused any issues:

$1)$ The supplier of composite wood was changed on August $1,2022.$

$2)$ To cut down on inventory costs, the company$$s sales and operations plan was changed to a $$chase$$ strategy where temporary workers are hired during the summer months to meet increased demands.

$3)$ A new production machine was installed February $1,2022.$

Use the data provided to make a process control chart in Excel $($your chart should be set$-$up like the one shown$).$ Use the chart to identify the most likely cause of the defects for Ontario Leisure Chairs and make any recommendations in your report if necessary.