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Chads Creative
Concepts

Group 1: Sirine Al-Tayech, Lujia Tang,

Lin Lu, Ola El Ali, Bashar Haddad

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Agenda

Company Background

Problems

Impact on Financial Structure

Short-run Decisions

Long-run Decisions

Sales & Marketing Responsibilities

Recommendations

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Company Background

Designer and manufacturer of custom made wooden

furniture for wood cabins.

Solid reputation for creative designs and high quality.

Recent move into standard furniture production for

retail outlets.

Custom furniture dominates the sales mix, accounting

for 60% of volume and 70% of sales dollars.

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Problems

Both custom and standard furniture are competing for

processing time on the same equipment and same craftspeople which is placing a strain on capacity.

Sales of standard line are increasing which is leading to

trade-off problems between custom and standard furniture
production.

The general purpose machinery appropriate for custom

furniture is being used for the standard line as well.

Trade-off problems have led to increased inventory holding

costs for in-process standard furniture pieces.

These resource strains have led to increased lead and

delivery time for customers of both lines.

+Problems: Conflicting Process

Structure

High

Project Process

Custom furniture: high

customization, unique products,
more time consuming, lower
volume, general purpose
machinery.

Variety

Batch Process

Low

Line Process
standard furniture: high
volumes, mass production,
standardized products,
automation production
process.
Low

Volume

Continuous
Continuous
Flow
Flow
Process
Process
High

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Impact on Financial Structure

Sales of custom furniture remain strong, and sales of

standard furniture are increasing.

Standard line is not as profitable as it could be,

because costs are rising due to money being tied up in
inventory, and work-in-process, and public warehouse
expenses.

Thus, the lower profitability of the standard line is

leading to decreased scheduling of standard production
despite increased demand.

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Henzers 10 critical decision
area for OM

1. Good and service design

Management

8.Inventory

2.Quality Management

3. Process and capacity design

Decision

4. Location

5.Layout design

6.Human Recourses and Job Design

7.Supply Chain Management

9. Scheduling
10.Maintenance

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Short-run decisions
1.

Layout Decision

Chad has to make decision on deigning a proper

and efficient layout of the manufacturing process
and equipment configuration, to make the
manufacturing functions smooth and efficient.
2.

Job scheduling

Chad needs to make decision about production

scheduling on how much to produce for both
custom and standard furniture.

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Short-run decisions
3.

Inventory management

Chad needs to make decision about daily raw

materials allocation and replenishment, to
control the inventory level.
4.Supply

chain management- shipping

scheduling

Planning and organizing the shipments to end

customers.

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Long-run decisions
Process

and capacity design

Chad needs to make decision on acquiring the

equipment for producing standard pieces to
retail furniture store.
Human

resource and job design

Chad needs to make decision on reorganizing

the craftspeople to perform different tasks
based on their capabilities.

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Long-run decisions
Supply

chain management- outsourcing or

buy
Chad needs to make decisions on outsourcing
non-core activities to others.

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Lead time
Lead-time refers to the period between
placement of an order and the delivery of the
product.

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Sales & Marketing
Responsibilities

The sales and marketing activity affects operation

through Timely Delivery.

Usuall
y
Chad

Sales & Marketing running

slow
Production running fast

Steadily Increasing of sale

of standard pieces
Limited production of
standard pieces

Storage Cost

Ineffective
Operation

Therefore, it is not the problem of sales and marketing

but just a less effective operation which Chad should
be aware of and work to solve it.

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Recommendations

Increase labor productivity by hiring more workers or

asking current workers to work overtime and enlarging
business capacity

Give both custom and standard lines same priority in

order to decrease WIP

Relocate warehouse to reduce costs

Invest in technology to improve productivity