FINANCIAL ANALYSIS

[Name of the Institute]

Financial Analysis

Introduction

The Space age furniture company manufactures the cabinets and tables in order to hold the portable televisions and microwave ovens. The following paper explores the ways through which the company will become more efficient in the time and also manufacture these parts involving over time hours. In order to achieve this, I will look at the operation, the tradeoff between the cost for the overtime of inventory, the ways through which the management can track the job status and also can offer any suggestions that are regarding this issue.

Discussion

Back Ground

In the process of the manufacturing most of the process follows the same assembly and production operations. The two products are however Gimini TV stands and microwave stand in which part number 3079 is required for machining a special lathe. This lathe is run into the process by a machi9nist who is well trained for the piece of the equipment. Ed Szewzak is one machinist who operates this specific lathe along with the machines in the shop. In present the Ed Szewzak is working for forty hours a week, a week includes 5 days and shift of eight hours, (8*5=40 hours). Ed also works overtime because of the work load in order to produce the part of 3079; he has also frequently been involved for working over time because of completing the necessary parts on time (Inderfurth, 2007)

Since the operation management of Space age furniture has taken this matter seriously and he has also considered that the machinist Ed Szewzak is becoming increasing dissatisfied because of the overtime he has been working in order to produce the part of 3079. It has become important for management is order to find the solution because of Ed Szewzak has remained most loyal and reliable employee for the Space Age furniture. It is also a difficult task for the manager to find other machinist with such expertise like Ed Szewzak. The only option for the production manager of Coral is that he has to look into the process in order to manufacture the parts and also to be more effective and efficient in order to decrease the over time that has been incurred form the Ed Szewzak (Inderfurth, 2009)

There may be some alternatives that can be attempted by coral in order to address such problem. If the Coral investigates in order to find the alternatives for maintaining small amount of inventories in order to ensure that there might be the enough parts that can cover the customers' orders (Buzacott, 2004).

Input

All user input cells are shaded

Annual Demand

 

1,000

Ordering Cost

 

 

£0.75

Output

Unit Cost

 

 

£2.00

EOQ

61.24

Unit holding cost per week (two options)

 

Cycle time

 

(i) in £s per year

 

£0.25

(in months)

0.7

(ii) as % of unit cost

 

20.0%

Total cost

£2,024

Unit holding cost per year

£0.40

 

Monthly

Order

Ending

Cost per

Month

Demand

Quantity

Inventory

Period

1

600

1000

400

£2,014

2

400

1000

1000

£2,034

3

700

1000

1300

£2,044

4

500

1000

1800

£2,061

5

400

1000

2400

£2,081

6

600

1000

2800

£2,094

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual demand =

3,200

£12,328

= Annual cost

Objective: Minimize surplus stock =

9,700

Coral by using the Material requirement plan strategy can have the following results.

The MRP Output Table

1

Gemni

 

 

 

Lead Time =

1

 

Week Number

Overdue

1

2

3

4

5

6

Master Production Schedule

 

600

400

700

500

400

600

Scheduled Receipts

600

0

0

0

0

0

0

On Hand

 

0

0

0

0

0

0

Net Requirements

 

600

400

700

500

400

600

Planned Order Receipts

 

600

400

700

500

400

600

Planned Order Releases

600

400

700

500

400

600

0

 

 

 

 

 

 

 

 

2

Saturn

 

 

 

Lead Time =

1

 

Week Number

Overdue

1

2

3

4

5

6

Gross Requirements

 

300

400

400

600

300

300

Scheduled Receipts

300

0

0

0

0

0

0

On Hand

 

0

0

0

0

0

0

Net Requirements

 

300

400

400

600

300

300

Planned Order Receipts

 

300

400

400

600

300

300

Planned Order ...