• Case Findings• Problems• Reasons behind the problems• Questions and Answers • Chads Creative Concepts is a company foundedby Chad Thomas that designs and manufactureswood furniture.• The company began by producing custom-madefurniture and within a short duration developed asolid reputation for creative designs and high-quality workmanship.• As company’s reputation grew and salesincreased, the sales force began selling some ofthe pieces to retail furniture outlets, which ledthem into the production of a more standard lineof furniture. • Buyers of standard line furniture were much more pricesensitive and imposed more stringent deliveryrequirements.• Custom designed furniture, however, continued todominate sales, accounting for 60% of volume and 75% ofdollar sales.• Currently, the company operates a single manufacturingfacility where the equipment is mainly general purpose innature for providing flexibility to custom made furniture.
• Both custom and standard furniture compete forprocessing time on the same equipment by the samecraftspeople. • Sales of standard line is increasingsteadily, so it requires more regularscheduling, but custom made furniture is givenpriority because of its higher sales and profitmargins.• Thus, scheduled lots of standard furniturepieces are left sitting around the plant invarious stages of completion. • The holding cost of the company is increasingwith dollars tied up in inventory, both of rawmaterials and work in process.• The company has to rent expensive publicwarehouse to accommodate the inventoryvolume resulting in further increase of holdingcost.• The increased lead times in both segmentshas resulted in longer promised delivery times.
What type of decision must Chad Thomas make daily for his company’s operations to run effectively? Over the long run?The situation that Chad is facing is between the manufacturing andturn over. He needs to focus on decisions onscheduling, inventory, capacity & layout.• He need to make scheduling decision to make sure there is not many raw materials as work in progress status. The standard line manufacturing need to be scheduled properly to avoid this problem.• The standard product’s warehouse is costly. So, he need to reduce inventory by deciding on good supply-chain and implement it.• As both the manufacturing line are well in demand and well increasing as well. So, he need to increase capacity to accommodate demand for both product lines.• He can also separate out the production lines after increasing capacity