Reference no: EM133447359

Question: Mike & Bike is a bicycle workshop in Toronto that assembles bikes for customers of online suppliers as well as major retailers like Walmart and Canadian Tire. The company founder and owner is Mike Tylor, who started this business in a small bike repair store before he expanded his operation to what it is today. With a reputation for stellar craftsmanship amongst professional cyclists, his shop also does major repairs to damaged racing bikes.

Most of the store's activity is in the assembly of newly purchased bikes. Operating all year round, except two weeks around Christmas, the shop assembles a wide variety of bicycles that can be classified into three types (1 - Men's Bikes, 2 - Ladies' Bikes, and 3 - Children's Bikes). A smaller portion of the shop operations involves repair services for racing bikes (or adding special parts to enhance their performance). While Mike is satisfied with his shop revenue, he sometimes gets upset about the backlog of orders and about running out of parts especially for repair services. Assembly jobs usually come with all the required parts in the package, but occasionally some universal parts like hexagon nuts are missing so he keeps an inventory of these parts. To resolve these problems and improve his operation, Mr. Tylor has hired you as consultants to examine the shop's operations and offer recommended solutions. Last week you visited his workshop and held a meeting in his office where he provided the following operational details.

"I am very picky about delivering scratch free finished jobs, so all jobs come in our own crates and when finished go out in the same crates." Mike continued "Upon arrival, the crates are inspected by our receivers to make sure they are all good. On average, this is done in about 10 minutes. After that jobs would be divided into two categories, a) assembly and b) repair. All assembly jobs will go through three processes (Frame/Wheel, Top Mount and Adjustment). Now let's walk through the shop and see them done in action." said Mike. During your tour of assembly operations, you noted that in "Frame/Wheel" station pedals and crank were mounted on the frame first. Next cassettes and freewheels were added to the back wheel before it is mounted on the frame and finally the front wheel was installed on the frame. On average the entire Frame/Wheel station was completed in 12 minutes. During the "Top Mount" process, the handle and seat were
installed first and then brake and gear shift cables were routed and connected to the brake pad modules and to the front and back wheel rims.

You noted top mounting was completed in 10, 8 and 6 minutes for Men's, Women's, and Children's bikes respectively. You also observed that all three bikes went through an adjustment station where the chain was installed with the correct tightness and the gap between the brake pads and the wheels rims were adjusted for ease of application and grip. These activities were completed on average in 5 minutes.

During your tour of Repair Department, you noted the module that needed repair was dismantled and disassembled first in 10 minutes. Then the repairability of the module was examined to determine whether the module could be repaired without replacing parts or if it needed to be replaced with a new module. You were told that repairing without replacing parts could be done in 10 minutes and the repairs with replaced parts could be done in 5 minutes. Repaired modules were then reinstalled in 15 minutes and the repaired jobs were sent for final checking.

At the end of your tour Mike told you that they ensure all the assembly and repair jobs are carefully checked for quality before they are released to the customer. "On average we spent about 10 minutes on each bike to make sure the brakes are working properly, seats are steady, gears shift easily, and the tire shafts are centered, and all joints are torqued to spec." You asked him how many of each job order they receive. Mike said the number of orders changes at different times of the year, but he estimated that 70% of his business is in assembly jobs and 30% in repair jobs. You asked about the break down of assembly jobs and he said Ladies' and Children's assembly each form 30% and the rest goes to Men's bike assembly.

Mike then invited you back to his office, offered you coffee and asked his foreman, Tom Moberlaw, to join in. After coffee he said "I am content with my business, but I am concerned that occasionally we might take more jobs than we can finish and that bothers me. I don't know, perhaps it would be helpful to have a process map of our operation to figure what gives us headaches and what needs to be done about it. I also would very much like to know the shop's effective capacity per labour hour for assembly orders. I really don't know the average capacity of the store in terms of customers per labour hour for assembly and repair jobs. Tom here has some challenges with inventory so I will let him share them with you". "Sometimes we run out of parts particularly for repair jobs" Tom uttered while showing a
part he held in his hand, "take this spacer for instance, we use about 20 of every week for repairing the cogs in broken freewheels. As they need to be oil-treated, our suppliers require a week to deliver our order, but while we are waiting for the order to come in, we receive new jobs or have jobs cancelled and that alters our need by 5 spacers. Mike presses us not to fall behind more than 5% of our finished jobs but we often come short of this goal, and it is driving me crazy! Currently we place an order every three weeks and orders are shipped to us via Purolator which charges us $60 per order. We keep these parts in an oil container that we purchase once a year for $10. I need to know if I am ordering the right quantity and at the right time. If you could help me with this, then I would learn what to do for other parts as well!"

Leaving Mike and Tom, you promised them to write a report that would address their concerns and provide solutions.

1. Detail an Inventory and Ordering Analysis

2. Discussion of results.