Reference no: EM131231217 , Length: word count:1500

Group Assignment- Practical Application Project

REQUIREMENTS: Using the following Millennium Furniture Company case study, you need to:

Define Project Scope.

Specify functional and non-functional requirements.

Develop project plan.

Estimate Project Cost and Benefit.

Assess Project Risk.

Specify Project Work Breakdown Structure.

Calculate Project Critical Path.

Millennium Furniture Company Case Study

Millennium Furniture Company is a medium sized company employing approximately 30 people.  It is managed by Alec Green and his son Andrew.

The company is situated in a large factory in the Melbourne suburb of Bayswater.  The company manufactures timber (mainly pine) furniture, which is sold to furniture retailers throughout the Melbourne metropolitan area.  The company purchases raw materials (eg timber, nails, varnish etc) and, with the machinery they have accumulated over the years, manufactures furniture.  Every six months the company sends brochures to a large number of furniture stores in Melbourne.  On the basis of this brochure retail furniture stores contact them and orders are eventually placed for items described in the brochure.  When the orders are received the furniture is manufactured and delivered to the retail furniture shop.  Each individual piece of furniture is stamped with a serial number, which enables Millennium to identify the style, colour and the date of manufacture.  Before work is begun on an order a deposit of at least 10% of the value of the order is required.  When the furniture is delivered the retail store is invoiced for the remaining 90% of the order.  For each payment a receipt is generated.  A record of receipt information needs to be kept for warranty purposes.  When the order is received and the deposit paid a bill of materials is produced listing all the raw materials that will be needed to manufacture the furniture.  A check is made of the available stock on hand to see if there are enough raw materials on hand to manufacture the furniture that has been ordered.  If not orders are placed with the appropriate suppliers.  Orders are placed with suppliers using a written order, which can be faxed.  Once the goods are delivered Millennium are invoiced.  Payment is by cheque. When they receive the cheque most suppliers respond by sending a receipt.  Most of the commercial transactions are processed via a cheque account. ie cheques are received from customers and banked into a cheque account and payment is made to suppliers via the same cheque account.  At the end of each month the bank sends a statement of the account, which usually gives Mr. Green some idea as to the profitability of the company.  But this is not always accurate, as the money needs to be spent before the furniture is sold. So the cheque account statement often gives a pessimistic outlook.

There are two PC computers in use at Millennium.  One is used to store the details of the orders received and one is used to keep track of inventory. i.e. amount of wood, paint, nails etc. in stock.  The payroll data is also kept on the second computer.  Employees clock on and off each day.  At the end of each week Andrew tallies the hours worked which may include overtime and calculates the amount to be paid to each employee.  Each employee is employed under an individual contract, which results in a wide range of pay scales and conditions of employment.  The company facilitates the deduction of superannuation and also contributes to the superannuation fund set up for the employees.  The company is also required to deduct the appropriate amount of tax form the pay of each employee.  The deductions are made according to a scale publicized by the Tax Office.  Pay cheques are written which come out of the same cheque account mentioned previously.

Despite some problems Millennium Furniture Company has been quite successful and is now looking to expand.  Such expansion would required considerable modification to their information system.  Any solution to their existing problems would need to be feasible in view of such expansion.

PROBLEMS

Time between receiving orders and delivering goods is excessive.  Some of the customers are starting to complain and are mentioning other furniture companies with a shorter turn-around

Difficult to get accurate information on the profitability of the company at any particular time.  There can be a considerable delay between when money has been spent (eg on materials) and when money is received (eg from customer).  During that time the company's financial position can look worse than it actually is.

In order to speed up delivery some customers are requesting partial delivery of an order, which means at the end of the month they only make payment on that part of the order they have received.  Many suppliers are also making partial deliveries on orders when they cannot meet the entire order.  This complicates bookwork but can often mean that Millennium can proceed with some aspects of the job and often reduce the turn around time.

These partial payments complicate bookwork and result in an increase in the cost of clerical assistance.

Millennium would like to start making furniture in anticipation of receiving orders to try to make the turn around faster but they are afraid a being caught with a lot of stock they cannot sell.  Data needs to be gathered to enable information to be generated so the right business decision/s can be made.

Payroll generation is extremely time consuming.  There are other sales related tasks in which Andrew would prefer to be involved.

At the end of each financial year a Tax Return is generated.  This is extremely arduous and often involves the employment of extra clerical assistance.  One of the most difficult tasks is determining the depreciation of plant and equipment.

Clerical staff were unhappy when the two computers were purchased and Alec suspects there could be union trouble if new information technology is introduced which may threaten jobs.

Millennium would like to reduce the number of warranty claims that are made.  Many of the faults are due to faulty workmanship.

Occasionally there are errors in the receipt of orders.  These errors can often result in considerable cost to the company.  Eg. if a dining suite is produced which is the wrong colour or style.

NB Extra information relating to Millennium Furniture Company may be added at a later date via an interview with the client ( Lecturer Zijad Pita).

PROCESS DESCRIPTIONS

PROCESS 1

Millennium has a special process for handling debtors. Payment of the remaining 90% of the value of the order is due on delivery.  It is usually not cost effective to return goods to the factory if payment is not made so the in the cases where payment is not submitted to the delivery person an invoice is left and it is expected that payment will be received as soon as possible after delivery.  If payment is not received within a week of delivery a phone call is made to remind the debtor.  If payment is not received within two weeks another invoice is sent and any unprocessed orders are halted.  A search is then made of sales records.  If the debtor is a "regular customer (ie has purchased goods of more than $2000 in value in the past) another more strongly worded letter is sent after 3 weeks.  If they are not regular customers, a letter is sent threatening legal action accompanied by another invoice showing any deposits held as being credited to the account and informing the debtor that subsequent orders have been cancelled.  In either case after 4 weeks a phone call is made asking for the return of the furniture.  If the furniture has not been returned within 1 week of this time then the account is handed over to a debt collection agency.

PROCESS 2

Any orders that are received are held in the orders pending file until the 10% payment is made and has been cleared by the bank.  If the customer is a regular customer and it is a rush order and the materials are on hand then manufacture starts immediately.  If they are not on hand then they are ordered.  If the order has a value of more than $2000 and the customer is not a regular customer and the materials are not in stock then they are ordered to speed the manufacture once the deposit is received.

PROCESS 3

At the end of each week a Work in Progress Report is generated.  Each order currently outstanding is examined.  It is firstly checked to see if it is awaiting the payment of 10% deposit.  If the deposit has not been made and it is more than 4 days since the order was received a phone call is made to remind the customer.  If the deposit has been made it is then determined whether the furniture is currently being manufactured or the company is awaiting the delivery of raw materials.  If it is the latter and the wait has been more than 2 days then a phone call is made to determine why materials have not been delivered.  The report generates two totals.  The total value of orders received where the deposit has not been paid, the total value of orders where the deposit has been paid and the total value of orders for furniture currently being manufactured.

PROCESS 4         

In order to determine the wages paid Andrew uses the following process. He goes through the clock cards of each employee.  He firstly totals the normal hours (ie worked between 9.00am and 5.00 pm).  He then totals the overtime hours and public holiday hours if any.  Hours worked between 6.00 am and 9.00 am and also between 5.00pm and 8.00 pm are paid at an overtime rate of 1.5.  Any hours at a week end are paid double time.  Hours worked on a public holiday attract a $2.00 per hour bonus for normal hours and $3.00 per hour for overtime hours.  He then subtracts the appropriate rate of tax and superannuation from all wages and for some employees deducts union fees.  In order to determine the amount of the withdrawal that needs to be made Andrew calculates the total of the weekly wages and also totals the overtime paid to help determine whether it is necessary to employ more employees.