Case study: Mecha Wire Works - Maximum 3000 words. The story Mecha Wire Works, a Queensland Firm, is a medium-sized producer of wire windings used in making electrical transformers. Carlos Alvarez, the production control manager, described the windings to Jon Smith, the new management trainee, as being of standardized design. Jon’s tour of the plant followed the manufacturing sequence for the windings: drawing, extrusion, winding, inspection and packaging. After inspection, good product is packaged and sent to finished product storage; defective product is stored separately until it can be reworked. Vivian Napoli, Mecha’s general manager, stopped by Jon’s office and asked him to attend a staff meeting. “Let’s get started with the business at hand”, Vivian said, opening the meeting. “Ron studied operations management, so I think he can help us with a problem we have been discussing for a long time without resolution.” Vivian turned to Joseph Lowes, the production control manager. “Joseph, why don’t you describe the problem we are facing?” “Well,” Joseph said, “business is very good right now. We are booking more orders than we can fill. We will have some new equipment on line within the next several months, which will take care of our capacity problem. But that won’t help us next month. I have located some retired employees who used to work in the drawing department, and I’m going to bring them in as temporary employees next month to increase capacity there. Because we are planning to refinance some of our long-term debt, Vivian wants our profit to look as good as possible next month. I’m having a hard time figuring out which orders to run and which to back-order so that I can make the bottom line look as good as possible. Can you help me with this?” Jon was surprised and apprehensive to receive such an important task so early in his career. Recording quickly, he said “Give me your data and let me work with it for a couple of days”. Data 1. Next month orders Product Units ordered Products Unites ordered W0075C 1400 W0033C 250 W0005X 1510 W0007X 1116 Note: Vivian Napoli has given her word to a key customer that we will manufacture 600 units of product W007X and 150 units of product W0075C for him next month. 2. Standard cost Product Material Labor Overhead Selling Price W0075C $33.00 $9.90 $23.10 $100.00 W0033C $25.00 $7.50 $17.50 $80.00 W0005X $35.00 $10.50 $24.50 $130.00 W0007X $75.00 $11.25 $64.75 $175.00 3. Selected operating data Average output per month 2,400units Average machine utilization 63% Average percentage of production sent to Rework Department 5% (mostlyfromWindingDepartment) Average number of rejected units awaiting rework 850(mostlyfromWindingDepartment) 4. Plant capacity (hours) Drawing Extrusion Winding Packaging 4,000 4,200 2,000 2,300 Note: Inspection capacity is not a problem: we can work overtime as necessary to accommodate any schedule. 5. Bill of labour (hours/unit) Product Drawing Extrusion Winding Packaging W0075C 1.0 1.0 1.0 1.0 W0033C 2.0 1.0 3.0 0.0 W0005X 0.0 4.0 0.0 3.0 W0007X 1.0 1.0 0.0 2.0 Questions 1. What is the problem? What recommendations should Jon Smith make, with what justifications? Provide a detailed analysis. 2. Discuss the sensitivity analysis. 3. Discuss the need for temporary workers in the drawing department. Note: Marking Criteria: You are required to demonstrate the following knowledge and skills in this assessment task: Problem formulation and preparatory work (10%): - Demonstrate the use of linear programming model to solve a real world supply chain problem; - Articulate the problem at an appropriate level of detail, considering key variables, objectives and assumptions (if any) etc. Model building (30%): - Set all relevant parameters required to ensure fidelity of the modelling exercise - Demonstrate the use of computer software to get necessary output Analysis approach (30%): - Discuss and formulate the scenarios relevant for answering different questions - Demonstrate the interpretation of computer output to answer different questions Articulation and justification of Recommendations (20%): - Present comprehensive and actionable recommendations with adequate justifications to address the key issues/problems identified - Demonstrate the use of managerial report effectively to convey your results to senior managers Report structure and presentation standard (10%): - Demonstrate a professional presentation standard with a suitable report structure, content, language and evidence supporting claims for action (recommendations).