Joseph runs a water tank manufacturing operation called The Tank Company. The tanks are durable, can handle accidental freezing and can store liquids in food$-$safe certified plastics. It$$s a very busy operation and was recently on the cover of Operations Management magazine.

Joseph's production manager is Dina and has been asked to build a capacity plan either as a level, chase or mixed plan. Joseph made it clear that he wants the lowest cost per unit.

"The lowest cost is always boss" he would tell his staff when he did his morning $7$:$55$ am production meeting with his production teams. The staff were tired of Joseph's dad$-$type jokes, but they did understand the direction they were being given" KEEP COSTS AS LOW AS POSSIBLE". They also understood that Joseph was extremely cautious about quality. Joseph, although passionate about production and meeting timelines, Joseph was extremely sensitive to quality issues that arose occasionally. His true focus was on quality product, but he wanted to control production costs as this is what his bosses focused on$.$

Dina consults the production team, and they tell her they work best, and plan best, when they have a consistent workflow of regular activities. $($This sounds like one of her classes from her IBM$1000$ college course.$)$

Later that day she approached the sales manager Caroline, and asked her about the customer$$s needs. She told them she would have a delivery plan by the end of the day.

Although the production team told Caroline to break the order into monthly batches of the same amount, and they would meet the requirements, Caroline protested with the argument $,$ "Why don$$t we just build what we need and use our flexible manufacturing resources to do it$?$ Wouldn$$t that be better?? $$ She asked....

Just then Joseph over heard their conversation discussing the production plan. After hearing the discussion, he told them both $($Caroline and Dina$)$ I need to see the lowest cost option to produce these tanks. "But I don$$t$\text{'}$ want to lose any sales through lack of inventory! Perhaps we should have about $500$ or so as opening stock and see if that keeps the plan in balance. I think it will. I think...." Joseph concluded.

The sales team developed the forecast as requested. Starting in January and ready to be shipped at each month end the delivery plan was as follows:

Month Volume Month Volume Month Volume Month Volume

Jan $407$ April $575$ July $475$ Oct $400$

Feb $425$ May $525$ Aug $450$ Nov $325$

Mar $500$ June $500$ Sept $500$ Dec $294$

The production team we also provided with the core planning values or production assumptions about making these tanks.

Planning Values

Cost to Build $$1,000$ each tank

Inventory Start $500$

Starting$/$End Workforce $10$

Worker Hours per Month $160$

Hours per unit $10$

Hiring Cost $$1,000($includes training$)$

Layoff Cost $$500($includes separation costs$)$

Monthly Holding cost$/$unit $$18($for storage, capital costs, depreciation, insurance$)$

Your challenge:

This can be completed in Word, Excel, PowerPoint if you choose.

$1$ Who are the main characters and what does each person do in the above case. Explain what the objective is in each planning type $($Level or Chase$).$

$2$ Develop both a chase and level plan, and to optimize the resources as you need them, Determine which is the lower cost option.

$3$ Dina felt they could reduce costs more. How could they achieve reduced costs in the plan$/$assumptions$?$ Could the team come up with a better solution. Hint: Remember the types of inventory that companys$$ can hold and why.

You may even Challenge assumptions if you can justify doing so$.$ Make sure you provide a good reason.

This case is brand new and there are no resources to research from previous studies. Any plagiarism will be dealt with severely as per the college policies.

The grading rubric will evaluate your ability to work as a group. It will value well presented and reasoned answers. Be clear, concise and credible with all your statements. Answer each question fully.

The objective is to provide the lowest cost solution and still build all of these very reputable tanks.