Instruction:
Executive Summary
Company Background
Main Issue
Assumptions
Problem Statement
Internal Analysis
External Analysis
Alternative Courses of Action
Advantages
Disadvantages
Recommendation and Plan of Action
Conclusion
Case Study:
Operations Operations MGMT-6081 - SCM MGMT-6081 - SCM | Majestic Bicycle Company that option. Using this approach a final bicycle would never be produced except to a specific order from a specific customer. The Majestic Bicycle Company makes and sells high-quality bicycles sold primarily to larger North American retail outlets, but also to some wholesalers who sell bicycles to smaller retail shops. They have several models, with most of the models having several options available which when ordered by their customers can be mixed for a large number of possible designs. As an example, a bicycle can be made in a number of . Colours Saddle Type (Seat) Speed Settings (number of gears) Tire Types Wheel Types Brake Types/Style Handle Bar Styles In addition there are several other options available that can be ordered as well, these are Headlights and Taillight's Water Bootle Carriers Baskets Kickstands The cumulative lead time to obtain or make all the parts for the bicycle was 20 weeks, so that is what Majestic used as their planning time fence. This is important to know since in many parts of North America bicycle sales were seasonal. Bicycle shops in the northern part of the continent sold very few bicycles in the winter, but in the spring the demand was very high. The bicycle shops did not like to keep a lot of inventory of finished bicycles because of the cost and the fact they did not know from year to year which type of options might be popular. The bicycle shops tended to wait as long as possible to place an order, but then were very sensitive that the order would be delivered in a timely manner. When a customer wanted to buy a bicycle, they did not want to wait, especially since the season was short in some parts of the country and continent The following charts show the forecast for one bicycle model, hybrid heavy-duty bicycle, existing customer confirmed orders, existing inventory and master production schedule quantities for common parts and a few options for the next twelve weeks. The forecasts for options are computed as follows: The 18-speed gear option was historically selected for this model bicycle 70% of the time. Since the forecast for this model bicycle for the first week is 50, the forecast for the gear options could be calculated as 35 (70% of 50). The historical percentage of demand for the straight handlebars was 30%, and historically 20% of the orders included the head and tail light set. To understand the orders, for example, the first week there were orders for 56 of this bicycle model and 37 of those orders wanted the 18-speed option, 16 of those orders wanted the straight handlebars, and two of the orders wanted the head and tail light set. This data was taken from the late winter/early spring time frame, when demand for the bicycles was starting to grow as bicycle shops started to prepare for their heavy sales period. Chart 1: Common Parts (Frame etc.) - Existing Inventory = 40 Week 6 1 2 3 4 5 89 10 11 12 In such an environment, it is clearly difficult to know how much inventory to carry or produce for each of the options listed above. Several years ago, the company decided that it would be difficult to produce a master schedule for each combination of all the options, so they decided against doing so. If they did create a master schedule for all possibilities, they would have to create literally thousands of master schedules as they would need one for each type of bicycle that is possible to make, and for some of the combinations possible, some may never be ordered. They decided instead to make master schedule for each of the options for a bicycle model and another master schedule for the common parts for an individual model. As an example of the common components, for a particular bicycle would be a frame, the common connectors (most are common, such as nuts and bolts). The common part forecast would be based on the total number of bicycles of a model type that they planned to sell in a given period, which would allow them to calculate a forecast for each of the options based on the historical percentage of model sales that requested Forecast 50 55 60 62 65 65 68 75 75 75 80 85 Customer Orders 56 52 45 33 70 50 35 60 20 20 0 Operations Operations MGMT-6081 - SCM MGMT-6081 - SCM Master Production 200 Schedule 200 200 200 Chart 2: 18-gear option - Existing Inventory = 25 Customer 2 12 Orders 1 0 0 Master Production 30 30 30 30 30 30 Schedule You have been asked to create Master Schedules by taking the information provided in Charts 1-4 and project the inventory and Available To Promise (ATP) components Master Schedule 1: Common Parts (Frame etc.) - Existing Inventory = 40 Week 1 23 4 5 | 6 | 7 | 8 | 9 10 11 12 Week 9 10 11 12 Forecast 35 39 42 44 46 46 48 49 53 53 56 60 Customer Orders 37 38 40 33 50 20 25 40 5 5 0 0 Forecast 50 85 Master Production Schedule 55 60 62 65 65 68 70 75 75 80 52 45 70 50 35 60 20 150 150 150 150 Customer Orders 56 33 20 0 0 Chart 3: Straight Handlebars - Existing Inventory = 20 Week . 8 9 10 11 12 Projected Inventory Master Production Schedule Available Promise 200 200 200 200 Forecast 15 17 18 19 20 20 21 21 23 23 24 26 16 18 20 15 22 15 20 5 8 0 0 Customer Orders Master Production Schedule Master Schedule 2: 18-Gear option - Existing Inventory = 25 60 60 60 60 Week 6 7 1 2 3 4 5 89 10 11 12 Chart 4: Head and Taillight Set - Existing Inventory = 5 Forecast 35 39 42 44 46 46 48 49 53 53 56 60 Week 6 7 48 49 53 50 20 25 40 5 1 23 5 8 9 10 11 12 Customer Orders 37 38 40 33 50 5 0 0 Forecast 10 11 12 13 13 19 14 14 15 15 16 17 Projected Inventory Operations Operations MGMT-6081 - SCM MGMT-6081 - SCM 150 150 150 150 30 30 30 30 30 30 Master Production Schedule Available Promise Master Production Schedule Available Promise Once you have completed the Master Schedules examine the following orders for the bicycle model and determine what specific information you will need to provide each customer. Master Schedule 3: Straight Handlebars - Existing Inventory = 20 Week 6 1 2 3 4 5 8 9 10 11 12 1. A customer is asking about an order of 32 bicycles for week 3. All 32 are 18- speed, 12 have straight handlebars and 14 have the head and taillight set. Use the discrete calculation for your ATP calculation. Forecast 15 17 18 19 20 20 21 21 23 23 24 26 Customer Orders 16 18 20 5 15 22 15 20 5 8 0 0 Projected Inventory Master Production Schedule Available To Promise 2. A customer is asking about an order of 60 bicycles for week 6. Fifty of them are to be 18-speed, 12 are to have straight handlebars and 5 are to have the head and taillight set. Show both the discrete and cumulation ATP calculation. 3. Majestic Bicycles, while completing this evaluation discovered that a major competitor has had to shut down production for the next quarter due a burst water pipe causing a major flood in their plant that damaged production equipment and started a small fire. Majestic management fully expect that many of the competition's customers will turn to them to fill their orders during this critical time for them. In fact, one of the competitor's customers had already inquired about an order of 250 of the bicycle model for delivery in week 5. Show both the discrete and cumulation ATP calculation. 60 60 60 60 Master Schedule 4: Head and Taillight Set - Existing Inventory = 5 Majestic Management wondered what actions they should take based on the information related to the competitor and the inquiry form one of the competitor's customers. Management has asked your team to come up with an action plan, but they will want specific details on how to handle the situation at hand. 3 4 5 Week 6 8 9 10 11 12 Forecast 10 11 12 13 13 13 | 14 14 15 15 16 17 Customer Orders 2 12 10 8 15 9 7 11 2 1 0 0 Projected Inventory Operations Operations MGMT-6081 - SCM MGMT-6081 - SCM | Majestic Bicycle Company that option. Using this approach a final bicycle would never be produced except to a specific order from a specific customer. The Majestic Bicycle Company makes and sells high-quality bicycles sold primarily to larger North American retail outlets, but also to some wholesalers who sell bicycles to smaller retail shops. They have several models, with most of the models having several options available which when ordered by their customers can be mixed for a large number of possible designs. As an example, a bicycle can be made in a number of . Colours Saddle Type (Seat) Speed Settings (number of gears) Tire Types Wheel Types Brake Types/Style Handle Bar Styles In addition there are several other options available that can be ordered as well, these are Headlights and Taillight's Water Bootle Carriers Baskets Kickstands The cumulative lead time to obtain or make all the parts for the bicycle was 20 weeks, so that is what Majestic used as their planning time fence. This is important to know since in many parts of North America bicycle sales were seasonal. Bicycle shops in the northern part of the continent sold very few bicycles in the winter, but in the spring the demand was very high. The bicycle shops did not like to keep a lot of inventory of finished bicycles because of the cost and the fact they did not know from year to year which type of options might be popular. The bicycle shops tended to wait as long as possible to place an order, but then were very sensitive that the order would be delivered in a timely manner. When a customer wanted to buy a bicycle, they did not want to wait, especially since the season was short in some parts of the country and continent The following charts show the forecast for one bicycle model, hybrid heavy-duty bicycle, existing customer confirmed orders, existing inventory and master production schedule quantities for common parts and a few options for the next twelve weeks. The forecasts for options are computed as follows: The 18-speed gear option was historically selected for this model bicycle 70% of the time. Since the forecast for this model bicycle for the first week is 50, the forecast for the gear options could be calculated as 35 (70% of 50). The historical percentage of demand for the straight handlebars was 30%, and historically 20% of the orders included the head and tail light set. To understand the orders, for example, the first week there were orders for 56 of this bicycle model and 37 of those orders wanted the 18-speed option, 16 of those orders wanted the straight handlebars, and two of the orders wanted the head and tail light set. This data was taken from the late winter/early spring time frame, when demand for the bicycles was starting to grow as bicycle shops started to prepare for their heavy sales period. Chart 1: Common Parts (Frame etc.) - Existing Inventory = 40 Week 6 1 2 3 4 5 89 10 11 12 In such an environment, it is clearly difficult to know how much inventory to carry or produce for each of the options listed above. Several years ago, the company decided that it would be difficult to produce a master schedule for each combination of all the options, so they decided against doing so. If they did create a master schedule for all possibilities, they would have to create literally thousands of master schedules as they would need one for each type of bicycle that is possible to make, and for some of the combinations possible, some may never be ordered. They decided instead to make master schedule for each of the options for a bicycle model and another master schedule for the common parts for an individual model. As an example of the common components, for a particular bicycle would be a frame, the common connectors (most are common, such as nuts and bolts). The common part forecast would be based on the total number of bicycles of a model type that they planned to sell in a given period, which would allow them to calculate a forecast for each of the options based on the historical percentage of model sales that requested Forecast 50 55 60 62 65 65 68 75 75 75 80 85 Customer Orders 56 52 45 33 70 50 35 60 20 20 0 Operations Operations MGMT-6081 - SCM MGMT-6081 - SCM Master Production 200 Schedule 200 200 200 Chart 2: 18-gear option - Existing Inventory = 25 Customer 2 12 Orders 1 0 0 Master Production 30 30 30 30 30 30 Schedule You have been asked to create Master Schedules by taking the information provided in Charts 1-4 and project the inventory and Available To Promise (ATP) components Master Schedule 1: Common Parts (Frame etc.) - Existing Inventory = 40 Week 1 23 4 5 | 6 | 7 | 8 | 9 10 11 12 Week 9 10 11 12 Forecast 35 39 42 44 46 46 48 49 53 53 56 60 Customer Orders 37 38 40 33 50 20 25 40 5 5 0 0 Forecast 50 85 Master Production Schedule 55 60 62 65 65 68 70 75 75 80 52 45 70 50 35 60 20 150 150 150 150 Customer Orders 56 33 20 0 0 Chart 3: Straight Handlebars - Existing Inventory = 20 Week . 8 9 10 11 12 Projected Inventory Master Production Schedule Available Promise 200 200 200 200 Forecast 15 17 18 19 20 20 21 21 23 23 24 26 16 18 20 15 22 15 20 5 8 0 0 Customer Orders Master Production Schedule Master Schedule 2: 18-Gear option - Existing Inventory = 25 60 60 60 60 Week 6 7 1 2 3 4 5 89 10 11 12 Chart 4: Head and Taillight Set - Existing Inventory = 5 Forecast 35 39 42 44 46 46 48 49 53 53 56 60 Week 6 7 48 49 53 50 20 25 40 5 1 23 5 8 9 10 11 12 Customer Orders 37 38 40 33 50 5 0 0 Forecast 10 11 12 13 13 19 14 14 15 15 16 17 Projected Inventory Operations Operations MGMT-6081 - SCM MGMT-6081 - SCM 150 150 150 150 30 30 30 30 30 30 Master Production Schedule Available Promise Master Production Schedule Available Promise Once you have completed the Master Schedules examine the following orders for the bicycle model and determine what specific information you will need to provide each customer. Master Schedule 3: Straight Handlebars - Existing Inventory = 20 Week 6 1 2 3 4 5 8 9 10 11 12 1. A customer is asking about an order of 32 bicycles for week 3. All 32 are 18- speed, 12 have straight handlebars and 14 have the head and taillight set. Use the discrete calculation for your ATP calculation. Forecast 15 17 18 19 20 20 21 21 23 23 24 26 Customer Orders 16 18 20 5 15 22 15 20 5 8 0 0 Projected Inventory Master Production Schedule Available To Promise 2. A customer is asking about an order of 60 bicycles for week 6. Fifty of them are to be 18-speed, 12 are to have straight handlebars and 5 are to have the head and taillight set. Show both the discrete and cumulation ATP calculation. 3. Majestic Bicycles, while completing this evaluation discovered that a major competitor has had to shut down production for the next quarter due a burst water pipe causing a major flood in their plant that damaged production equipment and started a small fire. Majestic management fully expect that many of the competition's customers will turn to them to fill their orders during this critical time for them. In fact, one of the competitor's customers had already inquired about an order of 250 of the bicycle model for delivery in week 5. Show both the discrete and cumulation ATP calculation. 60 60 60 60 Master Schedule 4: Head and Taillight Set - Existing Inventory = 5 Majestic Management wondered what actions they should take based on the information related to the competitor and the inquiry form one of the competitor's customers. Management has asked your team to come up with an action plan, but they will want specific details on how to handle the situation at hand. 3 4 5 Week 6 8 9 10 11 12 Forecast 10 11 12 13 13 13 | 14 14 15 15 16 17 Customer Orders 2 12 10 8 15 9 7 11 2 1 0 0 Projected Inventory
