Textbook:
Heizer, J., Render, B., & Munson, C. (2016). Operations Management (12th Edition). Pearson Education (US). https://online.vitalsource.com/books/9780134163567
Please read the Case Studies listed below (located in the textbook) and complete the Discussion questions following each case.
Chp. 14 – MRP at Wheeled Coach
Chp. 15 – Scheduling at Hard Rock Cafe
Video Case 1
MRP at Wheeled Coach
Wheeled Coach, the world’s largest manufacturer of ambulances, builds thousands of different and constantly changing configurations of its products. The custom nature of its business means lots of options and special designs—and a potential scheduling and inventory nightmare. Wheeled Coach addressed such problems, and succeeded in solving a lot of them, with an MRP system (described in the Global Company Profile that opens this chapter). As with most MRP installations, however, solving one set of problems uncovers a new set. One of the new issues that had to be addressed by plant manager Lynn Whalen was newly discovered excess inventory. Managers discovered a substantial amount of inventory that was not called for in any finished products. Excess inventory was evident because of the new level of inventory accuracy required by the MRP system. The other reason was a new series of inventory reports generated by the IBM MAPICS MRP system purchased by Wheeled Coach. One of those reports indicates where items are used and is known as the “Where Used” report. Interestingly, many inventory items were not called out on bills of material (BOMs) for any current products. In some cases, the reason some parts were in the stockroom remained a mystery. The discovery of this excess inventory led to renewed efforts to ensure that the BOMs were accurate. With substantial work, BOM accuracy increased and the number of engineering change notices (ECNs) decreased. Similarly, purchase-order accuracy, with regard to both part numbers and quantities ordered, was improved. Additionally, receiving department and stockroom accuracy went up, all helping to maintain schedule, costs, and ultimately, shipping dates and quality. Eventually, Lynn Whalen concluded that the residual amounts of excess inventory were the result, at least in part, of rapid changes in ambulance design and technology. Another source was customer changes made after specifications had been determined and materials ordered. This latter excess occurs because, even though Wheeled Coach’s own throughput time is only 17 days, many of the items that it purchases require much longer lead times.
Discussion Questions*
Why is accurate inventory such an important issue at Wheeled Coach?
Why does Wheeled Coach have excess inventory, and what kind of a plan would you suggest for dealing with it?
Be specific in your suggestions for reducing inventory and how to implement them.
Video Case 2
Scheduling at Hard Rock Cafe
Whether it’s scheduling nurses at Mayo Clinic, pilots at Southwest Airlines, classrooms at UCLA, or servers at a Hard Rock Cafe, it’s clear that good scheduling is important. Proper schedules use an organization’s assets (1) more effectively, by serving customers promptly, and (2) more efficiently, by lowering costs. Hard Rock Cafe at Universal Studios, Orlando, is the world’s largest restaurant, with 1,100 seats on two main levels. With typical turnover of employees in the restaurant industry at 80% to 100% per year, Hard Rock General Manager Ken Hoffman takes scheduling very seriously. Hoffman wants his 160 servers to be effective, but he also wants to treat them fairly. He has done so with scheduling software and flexibility that has increased productivity while contributing to turnover that is half the industry average. His goal is to find the fine balance that gives employees financially productive daily work shifts while setting the schedule tight enough so as to not overstaff between lunch and dinner.
The weekly schedule begins with a sales forecast. “First, we examine last year’s sales at the cafe for the same day of the week,” says Hoffman. “Then we adjust our forecast for this year based on a variety of closely watched factors. For example, we call the Orlando Convention Bureau every week to see what major groups will be in town. Then we send two researchers out to check on the occupancy of nearby hotels. We watch closely to see what concerts are scheduled at Hard Rock Live—the 3,000-seat concert stage next door. From the forecast, we calculate how many people we need to have on duty each day for the kitchen, the bar, as hosts, and for table service.”
Once Hard Rock determines the number of staff needed, servers submit request forms, which are fed into the software’s linear programming mathematical model. Individuals are given priority rankings from 1 to 9, based on their seniority and how important they are to fill each day’s schedule. Schedules are then posted by day and by workstation. Trades are handled between employees, who understand the value of each specific shift and station. Hard Rock employees like the system, as does the general manager, since sales per labor-hour are rising and turnover is dropping.
Discussion Questions*
Name and justify several factors that Hoffman could use in forecasting weekly sales.
What can be done to lower turnover in large restaurants?
Why is seniority important in scheduling servers?
How does the schedule impact productivity?