The popularity of Southwestern University’s football program under its new coach, Bo Pitterno, surged in each of the 5 years since his arrival at the Stephenville, Texas, college. With a football stadium close to maxing out at 54,000 seats and a vocal coach pushing for a new stadium, SWU president Joel Wisner faced some difficult decisions. After a phenomenal upset victory over its archrival, the University of Texas, at the homecoming game in the fall, Dr. Wisner was not as happy as one would think. Instead of ecstatic alumni, students, and faculty, all Wisner heard were complaints. “The lines at the concession stands were too long”; “Parking was harder to find and farther away than in the old days” (that is, before the team won regularly); “Seats weren’t comfortable”; “Traffic was backed up halfway to Dallas”; and on and on. “A college president just can’t win”, muttered Wisner to himself.
At his staff meeting the following Monday, Wisner turned to his VP of administration, Leslie Gardner. “I wish you would take care of these football complaints, Leslie”, he said. “See what the real problems are and let me know how you’ve resolved them”. Gardner wasn’t surprised at the request. “I’ve already got a handle on it, Joel”, she replied. “We’ve been randomly surveying 50 fans per game for the past year to see what’s on their minds. It’s all part of my campus-wide TQM effort. Let me tally things up and I’ll get back to you in a week”. When she returned to her office, Gardner pulled out the file her assistant had compiled (see the following table). “There’s a lot of information here”, she thought. Questions:
1. Using at least two different quality tools, analyze the data and present your conclusions.
2. How could the survey have been more useful?
3. What is the next step?
Fan Satisfaction Survey Results (N = 250)
Rochester Manufacturing Corporation (RMC) is considering moving some of its production from traditionally numerically control machines to a flexible machining system (FMS). Its numerical control machines have been operating in a high variety, low volume intermittent manner. Machine utilization, as near as it can be determine, is about 10%. The machine tool sales persons and a consulting firm want to put the machines together in a FMS. They believe that a $3,000,000.00 expenditure on machinery and the transfer machines will handle about 30% of RMC’s work. There will, of course, be a transition and start up cost in addition to this.
The firm has not yet entered all its parts into a comprehensive group technology system, but believes that the 30% is a good estimate of products suitable for the FMS. This 30% should fit very nicely a “family”. A reduction, because of higher utilization, should take place in the number of pieces of machinery. The firm should be able to go from 15 to about 4 machines, and personnel should go from 15 to perhaps as low as 3. Similarly, floor space reduction will go from 20,000 square feet to about 6,000. Throughput of order should also improve with this family of parts being processed in 1 to 2 days rather than 7 to 10 days. Inventory reduction is estimated to yield a one-time $750,000 savings and annual labor savings should be in the neighborhood of $300,000.00. Although the projections all look very positive, an analysis of the project’s return on investment showed it to be between 10% and 15% per year. The company has traditionally had an expectation that projects should yield well over 15% and have payback periods of substantially less than 5 years. Questions:
1. As the production manager for RMC, what would u recommend? And why?
2. Prepare a case by a conservative plant manager for maintaining the status quo until the returns are more obvious
3. Prepare the case for an optimistic sales manager that you should move ahead with the FMS now.
ACM is an electronics component manufacturer that has been located in Singapore since 1991, supplying original equipment manufacturers (OEMs) with quality components. In the past several years, ACM has experienced increasing pressure from other manufacturers located in other countries. In Singapore, while labor remains quite inexpensive, there has been a relatively steady increase in labor costs. In addition, utility costs – most notably water and energy costs – have led the firm to contemplate moving operations elsewhere in Asia in an attempt to make the firm more competitive. ACM remains profitable, but margins have shrunk, and management is interested in ensuring that the firm remains competitive in the medium term to long term against other component manufacturers.
A team of senior management has formed a committee to reach a decision regarding possible relocation. The committee has identified two additional locations as possible candidates for relocation: Hong Kong (People’s Republic of China [PRC]) and Kuching (Malaysia). Hong Kong’s main attractions stem from the fact that since 1997, when its sovereignty was transferred back to the PRC, labor costs have decreased as access to labor has increased. Hong Kong enjoys a large seaport and very good transportation infrastructure, and this is important in moving in raw materials and moving out finished components to customers. Senior management believes that an increasing number of OEMs will move to the PRC in the next several years, as has been the case in the past decade. This will only increase the attractiveness of locating the manufacturing facility in Hong Kong.
Kuching is located in the Malaysian province of Sarawak, on the island of Borneo. It is the fourth-largest city in Malaysia and home to a population of around 650,000. Several points make Kuching attractive to the relocation committee. First, locating here would give access to natural resources and other production inputs. Second, the transportation infrastructure is good, and the city hosts a deep sea port for moving raw materials in and finished good out. That said, the port is not as large or accessible as those of Hong Kong or Singapore, and several committee members have expressed concern about the frequency of ship visits to Kuching. If the port does not receive regular service from container ships, transportation costs to ship components to OEMs will doubtlessly stable and inexpensive in Malaysia.
The committee has contracted the government of Singapore to elicit possible incentives to not relocate to another country. Singapore is offering a five-year exemption on taxes for ACM if the plant remains in Singapore. The government will also assist by partially subsidizing labor, water, and energy costs for five years. Committee members realize that the Singapore plant, which has been operating for years, has already been amortized, and opening a new plant would require additional capital costs. That said, opening a new factory would also provide an opportunity to upgrade production equipment to more productive and energy-efficient alternatives. Questions:
1. What advantages and disadvantages does each potential location offer?
2. What other relevant factors that are not mentioned in this case study might play a role in this decision?
3. Why is transportation infrastructure so important in this decision?
4. This is a long-term, strategic decision; what factors might change in the next 10 to 20 years? How will this influence the decision?
5. Which alternative would you recommend, under which circumstances?”
Henry Coupe, the manager of a metropolitan branch office of the state department of motor vehicles, attempted to perform an analysis of the driver’s license renewal operations. Several steps were to be performed in the process. After examining the license renewal process, he identified the steps and associated times required to perform each step as shown in the following table.
State Automobile License Renewals Process Times
1. Review renewal application for correctness
2. Process and record payment
3. Check file for violations and restrictions
4. Conduct eye test
5. Photograph applicant
6. Issue temporary license
Average Time to Perform (seconds)
Coupe found that each step was assigned to a different person. Each application was a separate process in the sequence shown below. Coupe determined that his office should be prepared to accommodate the maximum demand of processing 120 renewal applicants per hour.
He observed that the work was unevenly divided among the clerks, and the clerk who was responsible for checking violations tended to shortcut her task to keep up with the other clerks. Long lines built up during the maximum demand periods. Coupe also found that the Steps 1 to 4 were handled by general clerks who were each paid $12 per hour. Step 5 was performed by a photographer paid $16 per hour. (Branch offices were charged $10 per hour for each camera to perform photography.) Step 6, issuing temporary licenses, was required by state policy to be handled by uniformed motor vehicle officers. Officers were paid $18 per hour, but could be assigned to any job except photography.
A review of the jobs indicated that Step 1, reviewing the application for correctness, had to be performed before any other step could be taken. Similarly, Step 6, issuing temporary licenses, could not be performed until all the other steps were completed. Henry Coupe was under severe pressure to increase productivity and reduce costs, but he was also told by the regional director of the Department of Motor Vehicles that he had better accommodate the demand for renewals. Otherwise “heads would roll.” Questions:
1. What is the maximum number of applications per hour that can be handled by the present configuration of the process?
2. How many applications can be processed per hour if a second clerk is added to check for violations?
3. If the second clerk could be added anywhere (and not necessarily to check for violations, as in (2)), what is the maximum number of application the process can handle? What is the new configuration?
4. How would you suggest modifying the process in order to accommodate 120 applications per hour? What is the cost per application of this new configuration?