Introduction to operations and supply chain management

Assignment Help Business Law and Ethics

Reference no: EM13232231

Case 1: Gulf Creative Ideas

Gulf Creative Ideas designs and manufactures wood furniture. Founded by Abdullah Al-Kuary in Qatar, the company began by producing traditional gulf-style custom-made wooden furniture. The company developed a solid reputation for creative designs and high-quality workmanships. Sales eventually encompassed the entire Gulf region. Along with the growth came additional opportunities. Traditionally, the company focused entirely on custom-made furniture, with the customer specifying the kind of wood from which the piece would be made. As the company's reputation grew and sales increased, the sales force began selling some of the more popular pieces to retail furniture outlets. This move into retail outlets led Gulf Creative Ideas into the production of a more standard line of furniture. Buyers of this line were much more price-sensitive and imposed more stringent delivery requirements than did client of the custom lime. Custom-designed furniture, however, continued to dominate sales, accounting for 60 percent of volume and 75 percent of sales. Currently, the company operates a single manufacturing process, where both custom furniture and standard furniture are manufactured. The equipment is mainly general purpose in nature to provide the flexibility needed for producing pieces of furniture. The layout puts together saws in one section of the facility, lathes in another, and so on. The quality of the finished product reflects the quality of the wood chosen and the craftsmanship of individual workers. Both custom and standard furniture compete for processing time on the same equipment by the same craftspeople.

During the past few months, sales of the standard line steadily increased, leading to more regular scheduling of this product line. However, when scheduling trade-off had to be made, custom furniture was always given priority because of its higher sales and profit margins. Thus, scheduled lots of standard furniture pieces were left sitting around the plan in various stages of completion.

As he reviews the progress of Gulf Creative Ideas, Abdullah is pleased to note that the company has grown. Sales of custom-furniture remain strong, and sales of standard pieces are steadily increasing.

However, finance and accounting indicate that profits are not what they should be. Costs associated with the standard line are rising. A lot of money is being tied up in inventory, both in raw materials and work-in-process. Expensive public warehouse space has to be rented to accommodate the inventory volume. Abdullah also is concerned with increased lead times for both custom and standard orders, which are causing longer promised delivery times. Capacity is being pushed, and no space is left in the plant for expansion. Abdullah begins a careful assessment of the overall impact that the new standard line is having on his manufacturing process.

Questions:

1. How related is this case to each of the following chapters: (you answer should either "not related" or a brief explanation, not exceeding two lines, showing how it is related):

a. Introduction to Operations and Supply Chain Management

b. Operations and Supply Chain Strategies

c. Managing Quality

d. Managing Projects

e. Process Choice and Layout Decisions in Manufacturing and Services

2. From finance and accounting perspective, the sales are increasing but the profits are not. Why?

3. When scheduling trade-off had to be made, custom furniture was always given priority because of its higher sales and profit margins. Do you agree with this decision? Explain.

4. Explain (in no more than five lines) the problem faced by Gulf Creative Ideas from an Operations Management point of view. Use the knowledge you acquired in this course and not the words of the case.

5. Based on your answer to the previous question, what do you recommend to Abdullah.

Reference no: EM13232231

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