MGT 510 Operations Management Final Project - Acme Tricycle Company

MGT-510 Operations Management

Final Project

This project is designed to demonstrate that many of the concepts we have been studying are tied

together in a single enterprise. For this exercise you are the operations manager for the local Acme

Tricycle Company and will need to put together the plan for 2012.

The following information is applicable to all problems.

The indented BOM for a tricycle is presented below:

A Completed Tricycle

B(1) Frame

C(2) Rear Wheel Assembly

D(1) Rear Wheel

E(1) Rear Tire

F(1) Axle Assembly

G(1) Front Wheel Assembly

H(1) Front Wheel

I(1) Front Tire

J(1) Handle Bar Assembly

K(1) Handle Bar

L(1) Stem

M(2) Hand Grips

N(1) Seat Assembly

O(1) Seat

P(1) Stem

You have the following parts inventory on hand at the beginning of 2012:

A B C D E F G H I J K L M N O P

200 500 250 650 400 450 750 420 375 210 575 600 2500 850 1050 850

Demand for 2011 was:

Month Demand Month Demand

January 1200 July 2300

February 1300 August 1900

March 1000 September 2400

April 1400 October 2700

May 2000 November 3300

June 1700 December 3300

Production time is 0.5 hours per unit (2 units/hr) Assume 20 Workdays per month

Average Labor Cost is $10/hour Shortage Cost is $20 per unit

Overtime Cost is $15/hour Inventory Cost is $5 per unit

Workweek is 5 days, 8 hours per day Hiring Cost is $100, Layoff Cost is $200Due to your contract with the union, you can only hire new workers at the beginning of Quarter 3.

Layoffs can only occur at the end of Quarter 2. Overtime is authorized only in Quarters 2 and 4. You

currently have 10 assembly workers on staff.

Quarter 1 = Jan, Feb, Mar

Quarter 2 = Apr, May, Jun

Quarter 3 = Jul, Aug, Sept

Quarter 4 = Oct, Nov, Dec

The following ordering information is available for Rear Tires:

Cost per order is $12

Annual Holding Cost is $0.50 per unit

Assume 240 work days per year that tires are required

Lead Time – 10 days

Assignment:

Given the information above:

1. Using Least Squares Regression, calculate the demand forecast for each month of 2012 (round each

forecast up to the nearest whole number for ease of calculations).

2. Using your forecast, calculate the quarterly production plan for 2012.

3. Draw the Product Structure Tree for the tricycles.

4. Determine for the month of January 2012 what your net requirements for all BOM components are.

5. Using the actual tricycle demand for 2011 and the Q-Model, calculate the Optimal (Economic) Order

Quantity and Reorder Point for Rear Tires.

6. Design and Diagram a process for assembling the tricycles.