Contents

Q1. What is the standard labor time for an order of 1 board? 8 boards? 200 boards? ............................... 1 Q2. How is Donner doing? What problems do you see? Why do these problems exist? .............................. 3 Q3. What specific actions do you recommend Plummer take to address these problems? ......................... 7 APPENDIX ...................................................................................................................................................... A Labor Time for 1 Board Machine Processing .......................................................................................... I Labor Time for 1 Board Manual Processing ........................................................................................... II Labor Time for 8 Boards Machine Processing ....................................................................................... III Labor Time for 8 Boards Manual Processing ........................................................................................ IV Labor Time for 8 Boards Manual Drilling and CNC Router Profiling ...................................................... V Labor Time for 8 Boards CNC Drilling and Punch Press Profiling .......................................................... VI Labor Time for 200 Boards Machine Processing.................................................................................. VII Labor Time for 200 Boards Manual Processing .................................................................................. VIII Labor Time for 200 Boards Manual Drilling and CNC Router Profiling ................................................. IX Labor Time for 200 Boards CNC Drilling and Punch Press Profiling ....................................................... X

Donner Company
Q1. What is the standard labor time for an order of 1 board? 8 boards? 200 boards?
Two operations, drilling and profiling can be either done manually or using CNC machines. Setup times and run times are different for manual and machine operations. From the data given, it can be observed that the run time required for the machine processing is lesser than that required for manual processing. However, machine setup times are greater than the setup times required for manual processing. Therefore, as the number of boards to be processed increases, machine processing time decreases relative to manual processing time, notwithstanding the relatively higher machine setup times. In order to ascertain the shortest time required to process boards, we calculate the minimum number of boards, B at which it is optimal to employ machine processing.

Drill:

For orders with less than 6 boards, it is optimal to use manual drilling.

Profile:

For orders with less than 200 boards, it is optimal to use punch press. Assuming that machine and manual processes can be employed independently for drilling and profiling operations, the optimal (shortest) processing times are achieved when following processing combinations are used: Number of Boards <6 6 200 > 200 Drill Manual Profile Punch Press

CNC Drill Punch Press CNC Drill CNC Router

The above combinations are verified by calculating the processing times using the setup and run times given in Standard Process Flow. The calculations are shown in the Appendix. It can be observed from the

Donner Company
processing time calculations for 200 boards, using CNC Drill with CNC Router or Punch Press results in same processing time. Optimal Processing Time (Hours) 6.39 10.25 30.67

Number of Boards 1 8 200

Donner Company
Q2. How is Donner doing? What problems do you see? Why do these problems exist?
Donners annual sales have been growing steadily over the years from 1985. The accumulated sales figure for 1987 has reached $595,000, which is more than the total sales for year 1986. Donner has ensured that its employees have sufficient skill to handle all the processes; this provides Donner flexibility in improving utilization. Period Sep 1987 Aug 1987 Jul 1987 Jan to Jul 1987 1986 1985 Net Sales Equivalent Monthly Sales $ 124.80 $ 144.40 $ 85.70 $ 327.90 $ 404.50 $ 246.00 $ 124.80 $ 144.40 $ 85.70 $ 54.65 $ 33.71 $ 20.50

Equivalent Monthly Sales

$160.00 $140.00 $120.00

Sales ($)

$100.00 $80.00 $60.00 $40.00 $20.00 $Sep 1987 Aug 1987 Jul 1987 Jan to Jul 1987 1986 1985

Period

Donner Company
Problems at Donner and their probable reasons: Productivity 1. Problem: Reason: i. ii. iii. iv. Poor labor utilization From Exhibit 2

Total labor spent in the month of September87 is 1531.7 hours Total no. of working days in September87 is 21 days Total man hours available in September87 is 3696 (21 days x 22 workers x 8 hours/day) Hence labor utilization = 1531.7 hours/3696 = 41.44% a. Labor hours spent on returned units is currently not accounted in the above calculation b. Transit time between tasks are not accounted for in the above calculation

2. Problem: Reason:

Improved process methods could not be implemented Mr. Plummer claims that new and improved methods cannot be implemented

because he assumes that the current labor capacity is fully utilized. However the above computed labor utilization does not endorse his claims

3. Problem: Reason:

Delayed job scheduling Mr. Flaherty, on receiving new customer orders, waits for several days before

making his scheduling decision and this can ripple through the manufacturing process causing further delays

4. Problem: Reason:

Delay due to raw material procurement Since there is no material inventory, the shop floor department does not start

work until the raw materials are procured. The purchasing agent also introduces delays in looking out for a low cost vendor and this adds 2-3 days delay. In Made to Order (MTO), emergency raw material procurement reduces bargaining power.

5. Problem: Reason:

Delay due to resource bottleneck (CNC Machine) Donner has to go for manual drilling operation even in case of more than 100

Printed Circuit Board (PCB) order size as the CNC machine is completely utilized in the month of

Donner Company
September. CNC utilization is 160 hrs for September which is close to 100% (8 hrs x 21 days = 168hrs).

6. Problem: Reason:

Bottleneck in utilization of floor space Floor space is completely utilized; therefore, no addition of machines is possible

7. Problem: Reason: another

Delay due to transit between different process stages Floor plan is not optimized for minimal transit time from one process location to

Quality 1. Problem: Reason: Informal and insufficient inspection The employees are made to inspect items/units through the manufacturing

chain. This practice is ineffective in catching defects and results in loss of productive labor hours.

2. Problem: Reason:

Increased percentage of defects and return of units from 1% to 3% Low quality inspection, several missed operations in the manufacturing process,

and adding 8 new people in the month of August who may be involved in quality checks.

3. Problem: Reason:

Quality standards not defined Customer driven quality checks rather than company imposed quality standards.

Donner should ensure that it maintains high standards and benchmarks for quality.

Delivery 1. Problem: Reason: Delayed delivery to customers Shipments are stacked towards the end of month causing delayed delivery to

customers. This claim is confirmed from Exhibit 5 where most of the shipments happen towards the last 5 days of September.

Donner Company

Strategy/Policy 1. Problem: board market Reason: From Exhibit 2, 4, and 5 we can deduce that the majority of sales for September Mr. Searby and Mr. Plummer believe in targeting low volume, special circuit

is from few large volume orders for which the CNC machine is the optimal choice of operation

2. Problem: Reason:

Shop floor policy on CNC usage The higher productivity of CNC machine over manual drilling warrants its usage

at 6 boards rather than the stated 100 board policy. These calculations have been mentioned as part of question 1.

Donner Company
Q3. What specific actions do you recommend Plummer take to address these problems?
Specific actions have been suggested as part of Donners goal to reach $3 Million sales by 1989. This target can be achieved with production of approximately 11,500 boards per month. Calculations: Current production: 5761 Boards Current sales: $124,800 For $3 Million per year we require monthly average sales of $250K ($3 Million/12 months). This amounts to an average monthly production volume of 11500 boards. 1. Donner should rethink its strategy and go for large volume orders to maximize its economies of scale i. As can be interpreted from Exhibit 2, 4, and 5, Donners majority share of revenue is from large volume orders ii. Small volume orders are ineffective because they use manual labor and create a bottleneck in the manufacturing process iii. For small volume orders, the CNC setup time is relatively large compared to the total drilling process time iv. Shop floor policy must be modified to use CNC Drill for order size of greater than 6 boards

2. Capacity expansion i. Add CNC machines: CNC resolves the bottleneck at the drilling process and increases efficiency. The machine occupies just 25 sq ft. As per Exhibit 1, ( ( ) )

Donner Company
In the absence of CNC Drill, 4,825 x 0.08 x 500 = 193,000 minutes of manual labor would have to be introduced in place of 4,825 x 0.004 x 500 = 9,650 minutes. The associated cost increase would have been $26,680 ($8.73 x 183,350/60). Therefore, $26,680 is the potential monthly cost savings realized by employing CNC machine instead of manual labor. ii. Add floor space: Purchase of new machine and future expansion requires additional space as the present floor space is completely utilized iii. Add electroplating machine: The electroplating machine becomes the bottleneck when attempting to achieve the 11,500 board target. This can be resolved by adding a new machine.

3. Improve floor plan:

Currently lot of time is spent in shifting units between process

locations. This could be minimized with an optimal floor plan that is compatible with the process flow.

4. Division of Labor specialization i. When the employees are specialized to handle individual process components (like fabrication, image transfer, etc.), a. efficiency and quality improves b. mentoring and monitoring reduces ii. Inspection should be developed as a specialization since the current process is inefficient

5. Scheduled shipment i. Do not hold finished goods until the end of month, instead ship as soon as produced

6. Build up raw material inventory i. Since the volume of business increases, this has to be supplemented with a raw material inventory to avoid unnecessary procurement delays ii. Reduce the cost of procurement

Donner Company

7. Improved job scheduling i. Shop floor supervisor should start job scheduling as soon as he/she gets the make order as opposed to waiting until raw materials arrive

8. Define quality standards and process checklists i. Implement industry acceptable quality standards in order to reduces production returns from customers

Donner Company
Analysis of 1,000 board order processing: Donner Company currently promises delivery in three weeks for orders less than 1,000 boards and five weeks for orders more than 1,000 boards. Analyzing processing times, assuming sequential processing, 13.64 days are required to process an order of 1,000 boards. Accounting for factor of safety and shipment time, a promise of 3-week delivery, is reasonable. However, assuming that parallel processing can be adopted, the processing time can be brought down to 7.34 days and a promise of 10 day delivery can be made to the customers. It should be noted, however, that parallel processing requires additional manpower and machinery capacity. Operation PREPARATION Artwork Generation Inspect & Shear Punch Tooling Holes IMAGE TRANSFER Drill Manual CNC Drill Metallization Dry Film Photoresist 1. Panel Prep 2. Laminate & Expose 3. Develop Electroplate Strip DFPR Etch & Tin Strip FABRICATION Soldermask Solder Dip Profile Punch Press CNC Router Inspect, Test, Pack TOTAL Setup Run Orders Board Sequential Mins Hours 29 82.5 72.5 0.48 1.38 1.21 Setup By Racks Mins Hours 29 10 10 0.48 0.17 0.17

29 20 10

0 0.5 0.5

1 1 1

1000 1000 1000

29 20 10

240 10 5 20 20 25 5 10

0.004 0.75 0.2 2 0.2 8.5 0.2 0.2

1 1 1 1 1 1 1 1

1000 1000 1000 1000 1000 1000 1000 1000

2240 103.75 30 270 45 1087.5 30 35

37.33 1.73 0.50 4.50 0.75 18.13 0.50 0.58

240 10 5 20 20 25 5 10

320 15 4 40 4 170 4 4

5.33 0.25 0.07 0.67 0.07 2.83 0.07 0.07

45 30

1.5 0.5

1 1

1000 1000

232.5 92.5

3.88 1.54

45 30

30 10

0.50 0.17

150 45

0.5 1.5

1 1

1000 1000

650 1545 Hours Days

10.83 25.75 109.09 13.64

150 45

80 240 Hours Days

1.33 4.00 58.75 7.34

10

Donner Company

APPENDIX

Donner Company
Labor Time for 1 Board Machine Processing
Operation PREPARATION Artwork Generation Inspect & Shear Punch Tooling Holes IMAGE TRANSFER Drill Manual CNC Drill Metallization Dry Film Photoresist 1. Panel Prep 2. Laminate & Expose 3. Develop Electroplate Strip DFPR Etch & Tin Strip FABRICATION Soldermask Solder Dip Profile Punch Press CNC Router Inspect, Test, Pack TOTAL Setup 1 Board Run Orders Boards Total Mins Hours 29.00 20.06 10.06 0.48 0.33 0.17

29 20 10

0 0.5 0.5

1 1 1

1 1 1

240 10 5 20 20 25 5 10

0.004 0.75 0.2 2 0.2 8.5 0.2 0.2

1 1 1 1 1 1 1 1

1 1 1 1 1 1 1 1

242.00 10.09 5.03 20.25 20.03 26.06 5.03 10.03

4.03 0.17 0.08 0.34 0.33 0.43 0.08 0.17

45 30

1.5 0.5

1 1

1 1

45.19 30.06

0.75 0.50

150 45

0.5 1.5

1 1

1 1

150.50 46.50 Hours Days

2.51 0.78 11.16 1.40

Donner Company
Labor Time for 1 Board Manual Processing
Operation PREPARATION Artwork Generation Inspect & Shear Punch Tooling Holes IMAGE TRANSFER Drill Manual CNC Drill Metallization Dry Film Photoresist 1. Panel Prep 2. Laminate & Expose 3. Develop Electroplate Strip DFPR Etch & Tin Strip FABRICATION Soldermask Solder Dip Profile Punch Press CNC Router Inspect, Test, Pack TOTAL Setup 1 Board Run Orders Boards Total Mins Hours 1 1 1 29.00 20.06 10.06 0.48 0.33 0.17

29 20 10

0 0.5 0.5

1 1 1

15 10 5 20 20 25 5 10

0.08 0.75 0.2 2 0.2 8.5 0.2 0.2

1 1 1 1 1 1 1 1

1 1 1 1 1 1 1 1

55.00 10.09 5.03 20.25 20.03 26.06 5.03 10.03

0.92 0.17 0.08 0.34 0.33 0.43 0.08 0.17

45 30 50 45

1.5 0.5 1 1.5

1 1 1 1

1 1 1 1

45.19 30.06 51.00 46.50 Hours Days

0.75 0.50 0.85 0.78 6.39 0.80

II

Donner Company
Labor Time for 8 Boards Machine Processing
Operation PREPARATION Artwork Generation Inspect & Shear Punch Tooling Holes IMAGE TRANSFER Drill Manual CNC Drill Metallization Dry Film Photoresist 1. Panel Prep 2. Laminate & Expose 3. Develop Electroplate Strip DFPR Etch & Tin Strip FABRICATION Soldermask Solder Dip Profile Punch Press CNC Router Inspect, Test, Pack TOTAL Setup 8 Boards Run Orders Boards Total Mins Hours 29.00 20.50 10.50 0.48 0.34 0.18

29 20 10

0 0.5 0.5

1 1 1

8 8 8

240 10 5 20 20 25 5 10

0.004 0.75 0.2 2 0.2 8.5 0.2 0.2

1 1 1 1 1 1 1 1

8 8 8 8 8 8 8 8

256.00 10.75 5.20 22.00 20.20 33.50 5.20 10.20

4.27 0.18 0.09 0.37 0.34 0.56 0.09 0.17

45 30

1.5 0.5

1 1

8 8

46.50 30.50

0.78 0.51

150 45

0.5 1.5

1 1

8 8

154.00 57.00 Hours Days

2.57 0.95 11.85 1.48

III

Donner Company
Labor Time for 8 Boards Manual Processing
Operation PREPARATION Artwork Generation Inspect & Shear Punch Tooling Holes IMAGE TRANSFER Drill Manual CNC Drill Metallization Dry Film Photoresist 1. Panel Prep 2. Laminate & Expose 3. Develop Electroplate Strip DFPR Etch & Tin Strip FABRICATION Soldermask Solder Dip Profile Punch Press CNC Router Inspect, Test, Pack TOTAL Setup 8 Boards Run Orders Boards Total Mins Hours 29.00 20.50 10.50 0.48 0.34 0.18

29 20 10

0 0.5 0.5

1 1 1

8 8 8

15 0.08 10 0.75 5 20 20 25 5 10 0.2 2 0.2 8.5 0.2 0.2

1 1 1 1 1 1 1 1

8 8 8 8 8 8 8 8

335.00 10.75 5.20 22.00 20.20 33.50 5.20 10.20

5.58 0.18 0.09 0.37 0.34 0.56 0.09 0.17

45 30 50 45

1.5 0.5 1 1.5

1 1 1 1

8 8 8 8

46.50 30.50 58.00 57.00 Hours Days

0.78 0.51 0.97 0.95 11.57 1.45

IV

Donner Company
Labor Time for 8 Boards Manual Drilling and CNC Router Profiling
Operation PREPARATION Artwork Generation Inspect & Shear Punch Tooling Holes IMAGE TRANSFER Drill Manual CNC Drill Metallization Dry Film Photoresist 1. Panel Prep 2. Laminate & Expose 3. Develop Electroplate Strip DFPR Etch & Tin Strip FABRICATION Soldermask Solder Dip Profile Punch Press CNC Router Inspect, Test, Pack TOTAL Setup 8 Boards Run Orders Boards Total Mins Hours 29.00 20.50 10.50 0.48 0.34 0.18

29 20 10

0 0.5 0.5

1 1 1

8 8 8

15 0.08 10 0.75 5 20 20 25 5 10 0.2 2 0.2 8.5 0.2 0.2

1 1 1 1 1 1 1 1

8 8 8 8 8 8 8 8

335.00 10.75 5.20 22.00 20.20 33.50 5.20 10.20

5.58 0.18 0.09 0.37 0.34 0.56 0.09 0.17

45 30

1.5 0.5

1 1

8 8

46.50 30.50

0.78 0.51

150 45

0.5 1.5

1 1

8 8

154.00 57.00 Hours Days

2.57 0.95 13.17 1.65

Donner Company
Labor Time for 8 Boards CNC Drilling and Punch Press Profiling
Operation PREPARATION Artwork Generation Inspect & Shear Punch Tooling Holes IMAGE TRANSFER Drill Manual CNC Drill Metallization Dry Film Photoresist 1. Panel Prep 2. Laminate & Expose 3. Develop Electroplate Strip DFPR Etch & Tin Strip FABRICATION Soldermask Solder Dip Profile Punch Press CNC Router Inspect, Test, Pack TOTAL Setup 8 Boards Run Orders Boards Total Mins Hours 29.00 20.50 10.50 0.48 0.34 0.18

29 20 10

0 0.5 0.5

1 1 1

8 8 8

240 10 5 20 20 25 5 10

0.004 0.75 0.2 2 0.2 8.5 0.2 0.2

1 1 1 1 1 1 1 1

8 8 8 8 8 8 8 8

256.00 10.75 5.20 22.00 20.20 33.50 5.20 10.20

4.27 0.18 0.09 0.37 0.34 0.56 0.09 0.17

45 30 50 45

1.5 0.5 1 1.5

1 1 1 1

8 8 8 8

46.50 30.50 58.00 57.00 Hours Days

0.78 0.51 0.97 0.95 10.25 1.28

VI

Donner Company
Labor Time for 200 Boards Machine Processing
Operation PREPARATION Artwork Generation Inspect & Shear Punch Tooling Holes IMAGE TRANSFER Drill Manual CNC Drill Metallization Dry Film Photoresist 1. Panel Prep 2. Laminate & Expose 3. Develop Electroplate Strip DFPR Etch & Tin Strip FABRICATION Soldermask Solder Dip Profile Punch Press CNC Router Inspect, Test, Pack TOTAL 200 Boards Setup Run Orders Boards Total Mins Hours 29.00 32.50 22.50 0.48 0.54 0.38

29 20 10

0 0.5 0.5

1 1 1

200 200 200

240 10 5 20 20 25 5 10

0.004 0.75 0.2 2 0.2 8.5 0.2 0.2

1 1 1 1 1 1 1 1

200 200 200 200 200 200 200 200

640.00 28.75 10.00 70.00 25.00 237.50 10.00 15.00

10.67 0.48 0.17 1.17 0.42 3.96 0.17 0.25

45 30

1.5 0.5

1 1

200 200

82.50 42.50

1.38 0.71

150 45

0.5 1.5

1 1

200 200

250.00 345.00 Hours Days

4.17 5.75 30.67 3.83

VII

Donner Company
Labor Time for 200 Boards Manual Processing
Operation PREPARATION Artwork Generation Inspect & Shear Punch Tooling Holes IMAGE TRANSFER Drill Manual CNC Drill Metallization Dry Film Photoresist 1. Panel Prep 2. Laminate & Expose 3. Develop Electroplate Strip DFPR Etch & Tin Strip FABRICATION Soldermask Solder Dip Profile Punch Press CNC Router Inspect, Test, Pack TOTAL 200 Boards Setup Run Orders Boards Total Mins Hours 29.00 32.50 22.50 0.48 0.54 0.38

29 20 10

0 0.5 0.5

1 1 1

200 200 200

15 0.08 10 0.75 5 20 20 25 5 10 0.2 2 0.2 8.5 0.2 0.2

1 1 1 1 1 1 1 1

200 200 200 200 200 200 200 200

8015.00 28.75 10.00 70.00 25.00 237.50 10.00 15.00

133.58 0.48 0.17 1.17 0.42 3.96 0.17 0.25

45 30 50 45

1.5 0.5 1 1.5

1 1 1 1

200 200 200 200

82.50 42.50 250.00 345.00 Hours Days

1.38 0.71 4.17 5.75 153.59 19.20

VIII

Donner Company
Labor Time for 200 Boards Manual Drilling and CNC Router Profiling
Operation PREPARATION Artwork Generation Inspect & Shear Punch Tooling Holes IMAGE TRANSFER Drill Manual CNC Drill Metallization Dry Film Photoresist 1. Panel Prep 2. Laminate & Expose 3. Develop Electroplate Strip DFPR Etch & Tin Strip FABRICATION Soldermask Solder Dip Profile Punch Press CNC Router Inspect, Test, Pack TOTAL Setup 8 Boards Run Orders Boards Total Mins Hours 29.00 32.50 22.50 0.48 0.54 0.38

29 20 10

0 0.5 0.5

1 1 1

200 200 200

15 0.08 10 0.75 5 20 20 25 5 10 0.2 2 0.2 8.5 0.2 0.2

1 1 1 1 1 1 1 1

200 200 200 200 200 200 200 200

8015.00 28.75 10.00 70.00 25.00 237.50 10.00 15.00

133.58 0.48 0.17 1.17 0.42 3.96 0.17 0.25

45 30

1.5 0.5

1 1

200 200

82.50 42.50

1.38 0.71

150 45

0.5 1.5

1 1

200 200

250.00 345.00 Hours Days

4.17 5.75 153.59 19.20

IX

Donner Company
Labor Time for 200 Boards CNC Drilling and Punch Press Profiling
Operation PREPARATION Artwork Generation Inspect & Shear Punch Tooling Holes IMAGE TRANSFER Drill Manual CNC Drill Metallization Dry Film Photoresist 1. Panel Prep 2. Laminate & Expose 3. Develop Electroplate Strip DFPR Etch & Tin Strip FABRICATION Soldermask Solder Dip Profile Punch Press CNC Router Inspect, Test, Pack TOTAL Setup 8 Boards Run Orders Boards Total Mins Hours 29.00 32.50 22.50 0.48 0.54 0.38

29 20 10

0 0.5 0.5

1 1 1

200 200 200

240 10 5 20 20 25 5 10

0.004 0.75 0.2 2 0.2 8.5 0.2 0.2

1 1 1 1 1 1 1 1

200 200 200 200 200 200 200 200

640.00 28.75 10.00 70.00 25.00 237.50 10.00 15.00

10.67 0.48 0.17 1.17 0.42 3.96 0.17 0.25

45 30 50 45

1.5 0.5 1 1.5

1 1 1 1

200 200 200 200

82.50 42.50 250.00 345.00 Hours Days

1.38 0.71 4.17 5.75 30.67 3.83