Create a cause and effect diagram for the following case:

Case Study Eastern Gear,Inc.: Job Shop Eastern Gear, Inc., in Philadelphia, Pennsylvania, is a manufacturer of custom-made gears ranging in weight from a few ounces to over 50 pounds. The gears are made of different metals, depending on the customer's requirements. Over the past year, 40 different types of steel and brass alloys have been used as raw materials. See Exhibit 1 for details. be necessary to stop production and wait for new raw materials or for the design to be clarified. The custom- er's prints submitted with the order do not always con- tain the tolerances or finishes required during machining. As a result, the customer is contacted directly when the information is needed. After the order is received, one copy is sent to the Eastern Gear sells its products primarily to engineer production supervisor, Joe Irvine, and the second copy ing research and development laboratories or very small s se to Sam Smith, the controller. Upon receipt of the manufacturers. As a result, the number of gears in most customer's order, Smith places a purchase order for the orders is small; rarely is exactly the same gear ordered raw materials required. These materials often take from more than once. The distribution of order sizes for one to two weeks to arrive, depending on the supplier March 2016 is shown in Exhibit 2. and the type of material ordered. Recently, the president of Eastern Gear decided to accept a few larger orders for 100 gears or more. reviews the order and places it on file until the raw mate- Although lower prices were accepted on these orders, rial arrives. The customer order is then routed through they helped pay the overhead. It was found that the th shop along with the materials. In the past, the pro- large orders caused many of the small orders to wait for duction process for most gears has taken about two a long time before being processed. As a result, some weeks after receipt of raw materials. Recently this pro- deliveries of small orders were late. After receiving the customer order, the supervisor duction time has increased to four weeks. Irvine expressed concern about the bottlenecks that appear in the production process. One week the bottle- neck may be in one machine center, and the next week it is in another. These bottlenecks make it difficult to get the orders out on time. ORDER ENTRY When a customer wishes to order a gear, the order is taken by James Lord, sales manager and marketing vice president. The customer specifies the type of gear desired by submitting a blueprint or sketch. The quantity of gears required and the type of material are also spec- ified by the customer. On occasion, the customer's engi- neer will call up after the order has been placed and request a change in the design. In these cases, it may EXHIBIT 2 Sales, March 2016. Total $ Value Order Size Number of Orders 80 53 69 32 82 47 of Orders $ 3,200 4,250 8,163 4,800 16,392 15,987 26,871 13,172 31,555 23,682 21,600 32,000 18,693 12,500 14,068 9,652 35,600 20,000 $312,185 EXHIBIT1 Raw materials. 2015 Usage $(000) 36 Type of Material 10 10 20 25 30 40 50 100 42 27 43 110 10 75 30 53 $522 400 700 1,000 All Others Total 578 This case was prepared as a basis for class discussion, not to illustrate either effective or ineffective handling of an administrative PHYSICAL LAYOUT AND MATERIALS FLOW Eastern Gear utilizes a standard job shop layout, as shown in Exhibit 3. Each work center has a common set of machines or processes. The materials flow from one work center to another, depending on the operations machines are in another work center. While this layout facilitates development of worker skills and training, it results in a jumbled flow of products through the shop. There is constant interference of the orders being pro- cessed in the shop. The typical order spends 90 percent of its time waiting in line for a machine to become avail- A typical order will take the following path. First, the able. Only 10 percent of the time is actually spent pro- raw material, a gear blank, is sent to the milling work cessing the order on a machine. As a result, it takesa center. Here the teeth are cut into the edge of the gear relatively long time (four weeks) for an order to make its according to the customer's specifications. Next, the wy through the shop. gear blanks are sent to the drilling work center, where one or more holes may be drilled in the gear. The gear is special work flow is utilized for different order sizes. As then sent to a grinding center, where a finish is put ona matter of fact, large orders are helping to keep the the gear teeth and the surface of the gear. Next, the shop at full capacity. gear may be sent to heat-treating if this operation is required by the customer. After the batch of gears is completed, they are inspected by the next available worker and shipped to the customer. Large and small orders are processed together No COMPANY BACKGROUND Business nas been booming at Eastem Gear. For the first two years the company lost money, but over the last several months a small profit has been made. Sales are up by 100 percent in the last quarter. See Exhibit 4 for In Exhibit 3, note how the machines are grouped by similar type on the shop floor. For example, all drills are located together in one work center, and all milling h sales are increasing rapidly, a recent mar ket survey has indicated that sales can be expanded even more in the next few years. According to the mar ket survey, sales will be $5 million in calendar year 2016 if the current delivery lead time of five to six weeks is maintained. If total delivery lead time can be reduced to the former three to four weeks, sales could be expanded EXHIBIT 3 Layout. to $5.5 million instead of $5 million and Because of increased delivery lead times, the com- pany has recently added an expediter, Matt Williams. Each morning Williams reviews the work in progress in the shop and selects those orders that appear to be behind schedule. Each order that is behind receives a red tag, indicating that it should be treated on a rush basis. At the present time, about 20 percent of the orders have rush tags on them. Williams also spends his EXHIBIT 4 Financial data. 0 costs All figures is thousands of dolls EXHIBIT 5 Organization chart. President, Roger Rhodes Sales Manager, James Lord Controller Sam Smith Sam Bartholomew time looking for past-due raw materials and lost orders as well as explaining late orders to customers. directly to Rhodes for approval. If the order is accepted, the raw materials are rush-ordered and received the The organization chart for the company is shown in next day. After receipt of the raw materials, the order is Exhibit 5. Roger Rhodes is the president and founder of rushed through production in four days. This is accom- Eastern Gear. He handles contacts with some of the plished by Fred Dirkson, a trusted employee, who hand- large customers, arranges the financing needed by the carries the rush orders through all operations. About company, and sits in on the weekly production meeting 10 percent of the orders are handled on a rush basis. During these meetings, scheduling problems, employee problems, and other production problems are discussed. highly ski led or semiskilled. The milling machine operators, The workforce consists of 50 employees, who are The company engineer is Sam Bartholomew. His r example, are highly skilled and require at least two responsibilities include design of the company's prod- years of vocational-technical training plus several months of ucts, procurement and maintenance of equipment, and on thob training. Within the last quarter, 10 new ?mploya overseeing of the supervisor, Joe Irvine. Bartholomew ees have been added to the workforce. The empk ees are also attends the weekly production meetings, and he ot unionized, and good labor relations exist. The work- spends about 10 hours a week on the factory floor talk orce is managed using a family-type approach. ing with individual workers. The company is currently experiencing about a 6 quality. In 75 percent of the cases, the returned orders have failed to undergo one or more operations or the operations have been improperly done. For example, in one returned order, all the gears were missing a hole Occasionally, the company will receive rush orders from its customers. In this case, the order is referred