The DAmico Valve company is located south of Brisbane, and

manufactures and distributes a range of specialized valves for

industrial use and use as components in other company products.

The company is well$-$established and has operated $80\%$ of its

capacity for the last six years. Sales in the last year amounted to

$$390$ million, an increase of $10\%$ over the previous year. Production

costs, however, were up to $20\%$ over the previous year.

When Sandy DiAmico$,$ the Managing Director and owner began

checking the cause of the increase in production costs, he found

that the major increases were in labour and material costs. He also

uncovered a number of problems:

Delivery schedules were not being kept to

Staff often take off one job to rush through another that was

behind schedule.

Material wastage was increasing because many jobs were

being reworked to meet current order commitments.

Inventory stock was low, even for fast$-$moving lines and

The production line was frequently stopped because the

company was awaiting deliveries from suppliers.

At the next staff meeting, Sandy presented the problem of

increased costs and asked for suggestions on how to reverse

this trend. The production manager expressed the view that

the salespeople kept changing their minds as to which

orders were the most important, while the sales manager

blamed production for delays in delivery and poor quality.

Purchasing was criticized for often not having the raw

materials as required. As he left the meeting feeling that little

had been resolved. Sandy was thinking that maybe some

formalized form of production planning and monitoring

might be the answer.

In groups answer the following questions

$1.$ What types of planning should Sandy DiAmico consider?

$2.$ Which issue should be given special attention in the

planning process?

$3.$ How could Sandy involve the sales, production and

purchasing departments in planning for the same

objectives?