Operations Essay

1542 Words May 19th, 2016 7 Pages


The ABC Company was a family owned, conservatively managed company. For over forty years the company enjoyed slow, steady growth in reaching its current employment level of just over 200. All expansions were financed entirely out of earnings. As the company grew, its operating procedures were periodically re-examined and modified to cope with the complex problems that accompany growth. The company developed, manufactured, and sold metering and flow control devices used in the chemical industry. Recently, as a result of declining profits, management was considering the advisability of installing a more formal system for controlling its cost of
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On odd sizes of expensive alloys, the exact amount would be purchased even down to the inch. Standard nuts, bolts, studs, pipe fittings, and similar items were usually bought in standard commercial lot quantities, but even here the quantities did not greatly exceed immediate requirements, and frequently even these items were bought by the piece. Moulded plastics and special fittings or stampings were sometimes bought in excess of immediate needs, especially when costs of small lot procurement were prohibitive. The supply manager did not alter the quantities shown on the make-and-buy sheet without discussion with the superintendent.

When materials began to come in, they were checked off the make-and-buy sheet and taken to the storeroom, to the operations floor, or, if they were finished parts, to assembly.

Little attempt was made to schedule work to the shop, and the machine shop foreman was free to work on any manufacturing orders on which materials had been received. It was up to him to keep his staff and machines busy and to meet the estimated completion dates. As parts were completed, they moved on to assembly, where they were placed in a box with other parts accumulated against that order. When all parts were completed, assembly could take place. Finished units were placed in stock in the shipping room or were shipped out immediately against orders.

Completion of the lot was not posted to the sales and

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