Operations Management



Operations Management

The Realco Breadmaster Case

When developing a master production schedule, it helps businesses to predict whether or not their production meet demands. Businesses can have a surplus of product and lose money that deals with the holding cost. They can fall short of their demands and in the process all their customers could experience delays in receiving their product. The Realco Breadmaster Company has been introduced to a new breadmaker which is expected to help Realco increase their product sales. Questioning the cost and efficiency of the new breadmaker, owner, Johnny Chang, wants to develop an MPS (Womack and Roos, 2008).

After developing an MPS for Realco, its visible Realco will be able to meet their customer's demands based on the eight weeks of promised shipments provided. But after the eighth week, they will have a large amount of product leftover. Johnny Chang, , also mentioned that the starting inventory of 7,000 breadmakers was too high, so if they ended week eight with 51,650 the company should be on alert that they are over-producing. End the end they haven't overpromised since they were able to meet their.

“Nearly all orders can be filled within two weeks, so we promise them three weeks. That gives us a cushion, just in case.” (Bozarth & Handfield, 2008 pg. 513). The advantage for Jones' view is that their customers will ultimately receive their product as promised; therefore the company will have a good reputation. The only disadvantage that I see to the Jones' view is that the customers my think they are receiving their order late and the time frame is too long (Kouvelis, 2009).

The formal master scheduling, rather than overproducing, manufacturers would be able to produce a suitable amount of breadmakers and ship them in a timelier manner. When dealing with a business, customers are always right and should never be refused a product due to the product not being there. If such things comes and the product that they desire is unavailable, they should go about correcting that and accepting an order, in the process telling the customers that their might be a delay with their order. If a company chooses to accept an order, knowing they may fail to fulfill the order, they can lose customers by appearing unreliable and dishonest. Master scheduling would prevent companies from promising customers an absent product and would ensure that each customer will have their product delivered.

If Realco were to produce twenty thousand breadmakers a week as opposed to forty thousand every other week, average inventory levels would drop weekly. Though average inventory levels would decrease weekly, after the eighth week, inventory levels would still be high. In a situation like this, Realco must make a decision. Based on the information provided, Chang would need to decide whether he would want to carry a high amount of inventory and lower weekly production, which would fill orders quicker and lower production costs or whether to keep the inventory low and lower the amount of breadmakers ...