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ELF (PTY) LTD - WORKSHOP CASE STUDY ELF (Pty) Ltd, the Electrical, Lighting and Fan Company of Germiston established in 1923, has changed over the years. Currently the company manufactures four ranges of products: Small appliances such as: kettles, toasters and irons Heaters - oil filled and convection type Fans, both ceiling and table / free standing models Electrical plugs and adapters. The lighting side of the business was discontinued in the late 1980s due to competitive pressure from imported products and aggressive marketing from another local supplier. At the same time, small appliances were introduced and five years later, the production of heaters was started. At the company's last strategic planning meeting, a month ago it was decided that in the fan range, ELF would discontinue manufacturing the ceiling range of fans, again due to competitive pressure from the Far East. Production would be phased out over the next three months; production would cover the current demand of 2,000 per month in the next three months only. ELF would still manufacture the table and freestanding models for the time being but there is no reason to expect current figure to increase significantly. In addition, Marketing announced that a deal had been struck with one of the largest retail supermarket chains in the country to stock the small appliances. They will need to supply 6000 each of kettles, irons and toasters by end September to fill the distribution supply chain, after which it is expected to supply at the rate of 2000 of each per month. For Elf to significantly change their capacity in any of their manufacturing departments, the lead time is between three months for the plugs and adapters, up to six months for the heater range. They have sufficient space in their factory to increase production by 50 to 60% without having to build new facilities. The production machinery they use is fairly readily available from local agents and there are plenty of people living in the area with the required skills. The cumulative lead time for raw materials in the plugs and adapter department is no longer than two months and no more than one months stock is held at any one time. The capacity to make products in the plug and adapters family has been determined to be 72,000 units based on the normal product mix. The SOP team has also requested that we reduce inventories in the family group to plus / minus 10,000 by the end of December. We will be concentrating on the plugs and adapter side of the business looking at the priority and capacity planning for the first two major levels of planning in an ERP system, namely: Sales and Operations Planning Master Scheduling The plugs and adapter product group is produced in one section of the plant that consists of: A brass machining area producing the metal components for the range A plastic injection molding section making the plastic components An assembly area putting the product together and packing it for shipment. The plug and adapters product group consists of three products: Three pin plugs Double adapter Two-pin adapter. The three pin plugs, as well as being sold as a product in their own right, are also used in the other plants where they are attached to all the small appliances, heaters, table and free standing fans being produced. Plugs are not included with the ceiling fans. The independent demand for products in the plugs and adapters is fairly consistent throughout the year, but demand for fans and heaters are seasonal in the summer for fans and winter for heaters. The company has organized the labor in the fan and heater department to be multiskilled so they can be moved from one department to the other according to the season. The demand for small appliances is fairly constant, but there is a slight increase in demand during the Christmas period. Manufacturing strategy for the various family groups is as follows: 1 Heaters Chase - Strategy 1 Fans Chase - Strategy - Small Appliances - Level Strategy 1 Plugs / Adapters - Level Strategy The marketing team has prepared aggregate forecasts for fans, small appliances and heaters. These forecasts do not include the recent information in the strategic plan with regards to the deal with the supermarket chain and the phasing out of the ceiling fans The company has just closed it books for the month of June and our job is now to prepare a SOP for the next six months, concentrating on the Plugs and Adapter product family. When Top Management approves the SOP, we will then need to create a Master Production Schedule for the three products in the plugs and adapters product family. The Master Schedules will then need to be confirmed viable using the Rough Cut Capacity Planning process. Time fence policy for the company has been set as follows: 1 Demand Time Fence one month 1 Planning Time Fence four months 1 Planning Horizon six months The manufacturing lead times for the Plugs and Adapter product family are as follows: 1 Three pin plugs one week I Double adapters two weeks 1 Two pin adapters two weeks The customer service level for plugs and adapters has been set at 98%. In order to achieve this level of service it has been decided that statistical safety stock will be calculated and set for the products in the Plugs and Adapters product family. To achieve this, a MAD safety factor of 2.56 will be used (Mean Actual Deviation) MAD = Sum of absolute deviations/ Number of periods Top management has set the Master Schedule Policy that includes a performance measure stating the Master Schedule should be within 95% of the aggregate SOP. At the Master Production Scheduling level, the critical resource to manufacture the products in the Plugs and Adapter product family is the injection-molding department. It has been demonstrated over several months that they only have the capability of processing 70kg of polymer per day and it is assumed that the department works an average of twenty days per month. It is your mission to develop the Master Production Schedule for ELF Company to achieve the goals established in the Sales and Operations Plan. ELF (PTY) LTD - WORKSHOP CASE STUDY ELF (Pty) Ltd, the Electrical, Lighting and Fan Company of Germiston established in 1923, has changed over the years. Currently the company manufactures four ranges of products: Small appliances such as: kettles, toasters and irons Heaters - oil filled and convection type Fans, both ceiling and table / free standing models Electrical plugs and adapters. The lighting side of the business was discontinued in the late 1980s due to competitive pressure from imported products and aggressive marketing from another local supplier. At the same time, small appliances were introduced and five years later, the production of heaters was started. At the company's last strategic planning meeting, a month ago it was decided that in the fan range, ELF would discontinue manufacturing the ceiling range of fans, again due to competitive pressure from the Far East. Production would be phased out over the next three months; production would cover the current demand of 2,000 per month in the next three months only. ELF would still manufacture the table and freestanding models for the time being but there is no reason to expect current figure to increase significantly. In addition, Marketing announced that a deal had been struck with one of the largest retail supermarket chains in the country to stock the small appliances. They will need to supply 6000 each of kettles, irons and toasters by end September to fill the distribution supply chain, after which it is expected to supply at the rate of 2000 of each per month. For Elf to significantly change their capacity in any of their manufacturing departments, the lead time is between three months for the plugs and adapters, up to six months for the heater range. They have sufficient space in their factory to increase production by 50 to 60% without having to build new facilities. The production machinery they use is fairly readily available from local agents and there are plenty of people living in the area with the required skills. The cumulative lead time for raw materials in the plugs and adapter department is no longer than two months and no more than one months stock is held at any one time. The capacity to make products in the plug and adapters family has been determined to be 72,000 units based on the normal product mix. The SOP team has also requested that we reduce inventories in the family group to plus / minus 10,000 by the end of December. We will be concentrating on the plugs and adapter side of the business looking at the priority and capacity planning for the first two major levels of planning in an ERP system, namely: Sales and Operations Planning Master Scheduling The plugs and adapter product group is produced in one section of the plant that consists of: A brass machining area producing the metal components for the range A plastic injection molding section making the plastic components An assembly area putting the product together and packing it for shipment. The plug and adapters product group consists of three products: Three pin plugs Double adapter Two-pin adapter. The three pin plugs, as well as being sold as a product in their own right, are also used in the other plants where they are attached to all the small appliances, heaters, table and free standing fans being produced. Plugs are not included with the ceiling fans. The independent demand for products in the plugs and adapters is fairly consistent throughout the year, but demand for fans and heaters are seasonal in the summer for fans and winter for heaters. The company has organized the labor in the fan and heater department to be multiskilled so they can be moved from one department to the other according to the season. The demand for small appliances is fairly constant, but there is a slight increase in demand during the Christmas period. Manufacturing strategy for the various family groups is as follows: 1 Heaters Chase - Strategy 1 Fans Chase - Strategy - Small Appliances - Level Strategy 1 Plugs / Adapters - Level Strategy The marketing team has prepared aggregate forecasts for fans, small appliances and heaters. These forecasts do not include the recent information in the strategic plan with regards to the deal with the supermarket chain and the phasing out of the ceiling fans The company has just closed it books for the month of June and our job is now to prepare a SOP for the next six months, concentrating on the Plugs and Adapter product family. When Top Management approves the SOP, we will then need to create a Master Production Schedule for the three products in the plugs and adapters product family. The Master Schedules will then need to be confirmed viable using the Rough Cut Capacity Planning process. Time fence policy for the company has been set as follows: 1 Demand Time Fence one month 1 Planning Time Fence four months 1 Planning Horizon six months The manufacturing lead times for the Plugs and Adapter product family are as follows: 1 Three pin plugs one week I Double adapters two weeks 1 Two pin adapters two weeks The customer service level for plugs and adapters has been set at 98%. In order to achieve this level of service it has been decided that statistical safety stock will be calculated and set for the products in the Plugs and Adapters product family. To achieve this, a MAD safety factor of 2.56 will be used (Mean Actual Deviation) MAD = Sum of absolute deviations/ Number of periods Top management has set the Master Schedule Policy that includes a performance measure stating the Master Schedule should be within 95% of the aggregate SOP. At the Master Production Scheduling level, the critical resource to manufacture the products in the Plugs and Adapter product family is the injection-molding department. It has been demonstrated over several months that they only have the capability of processing 70kg of polymer per day and it is assumed that the department works an average of twenty days per month. It is your mission to develop the Master Production Schedule for ELF Company to achieve the goals established in the Sales and Operations Plan