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 dif- ferent types of steel and brass alloys have been used as raw materials. See Exhibit 1 for details. Eastern Gear sells its products primarily to engi- ceipt of the customer's order, Smith places a pur- neering research and development laboratories or very small manufacturers. As a result, the number of gears in most orders is small; rarely is exactly the same gear ordered more than once. The distribution of order sizes for March 2012 is shown in Exhibit 2. Recently, the president of Eastern Gear decided to accept a few larger orders for 100 gears or more. Although lower prices were accepted on these or- ders, they helped pay the overhead. It was found that the large orders caused many of the small or- ders to wait for a long time before being processed. As a result, some deliveries of small orders were late. be clarified. The customer's prints submitted with the order do not always contain 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 production supervisor, Joe Irvine, and the second copy is sent to Sam Smith, the controller. Upon re- chase order for the raw materials required. These materials often take from one to two weeks to ar- rive, depending on the supplier and the type of ma- terial ordered. After receiving the customer order, the supervisor reviews the order and places it on file until the raw material arrives. The customer order is then routed through the shop along with the materials. In the past, the production process for most gears has taken about two weeks after receipt of raw materi- als. Recently this production time has increased to four weeks. Irvine expressed concern about the bottlenecks that appear in the production process. One week the bottleneck may be in one machine center, and the next week it is in another. These bottlenecks make it 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 difficult to get the orders out on time. gear desired by submitting a blueprint or sketch. The quantity of gears required and the type of material are also specified by the customer. On occasion, the customer's engineer will call up after the order has been placed and request a change in the design. In these cases, it may be necessary to stop production and wait for new raw materials or for the design to EXHIBIT 2 Sales, March 2012. Total S Value of Orders Order Size Number 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 80 53 69 32 82 47 64 22 42 EXHIBIT 1 Raw materials. 3. 2011 Usage S(000) $ 36 10 15 5. 8. 10 15 20 Type of Material B 43 25 27 110 30 40 50 100 200 400 700 18 F 18 22 G 32 10 H. 75 2 40 60 1 2 K 30 All Others 1,000 53 $522 Total 578 This case was prepared as a basis for class discussion, not to illustrate either effective or ineffective handling of an administrative situation.