Production and Operations Management at Beau Ties Ltd of Vermont. Beau Ties is experiencing mismatch in supply and demand due to the perceived rapid growth. The insufficient supply of 7,000 units per year leads to two important decision of the company: (1

Authors Avatar

MAPUA INSTITUTE OF TECHNOLOGY

School of Graduate Studies

In

Engineering Management

Production and Operations Management

Beau Ties LTD. of Vermont

Submitted by

Rowell Penaflor

Jolito Ramos

Carla Angelica Santillan

Submitted to:

Professor Robin Owens

June 4, 2011



Executive Summary

Beau Ties is experiencing mismatch in supply and demand due to the perceived rapid growth. The insufficient supply of 7,000 units per year leads to two important decision of the company: (1) Decision on how to increase the production capacity and (2) Decision on how to improve the present ordering system. Decision points will also be discussed in the analysis in coming up with alternatives.

The alternatives discussed in the production capacity is a combination of whether to rent or buy their own facility; whether to produce the target sales volume of 27,000 units or VSS insuficieny of 7,000 units/ and whether or not it is beneficial for the company to mandate overtime during peak seasons.

The alternatives discussed in improving the ordering system will focus on the efficient staffing plan that will attain the target customer waiting time of at most 3 minutes, we will also look into the possibility of lowering this 3 minutes into either 2 or 1 minute.

The strategy that we are recommending is for Beau Tie to rent their own facility and produce the target sales volume of 27,000 which yields to the highest potential savings of $515,345 with overtime starting on the 8th month. And to further improve the ordering system, leasing telephone facility and hiring 2 CRS during peak hours of 10 to11 am will help attain the target of minimizing the customer’s waiting time.


Problem Statements/Key Issues

In line with the goal of meeting the intermediate revenue target of $810,000, mismatch in demand and supply will surely to occur; thus two major concerns are raised to meet the said target. (1) Decision on how to increase the production capacity. (2) Decision on how to improve the present ordering system (Please refer to Appendix A for the How-How Analysis). 

Join now!

Supporting Argument

With the perceived rapid growth, it is clear that Vivian’s Sewing Shop (VSS) production capacity cannot provide Beau Ties target sales volume. The mismatch between the capacity and perceived demand is equivalent to 7,000 bow-ties. (Please refer to Appendix B for the Demand vs. Capacity Computation). This demand is heightened during peak season (October, November, and December) in which 45% of the total sales occur thereby needing an additional of 3,150 during this season. Moreover, having no formal inventory system or any historical data to forecast sales volume also hinders Beau Ties to properly plan production and meet ...

This is a preview of the whole essay