Shuzworld is a company dealing in footwear. The company was found in 1965 with its first stores in Nebraska and Omaha. The company later expanded and set up branches in the Midwest and Far West. In the 1980s, Shuzworld became a nationwide retailer. All this while, the original name of the company was Crown Shoes but changed to the present name Shuzworld in 1995. The founder of the company was called Edward Crownin shield. The Crownin shield family controls the company with Edward as the president, Chief Executive Officer and the chairman at the same time. The Vice President in charge of strategic planning is Edward’s daughter Cynthia. Shuzworld markets sneakers, sandals, boots and shoes. The company produces adventure footwear, children’s and women’s rubber boots and work boots (Tseng, 2007).
In the last fiscal year, the company’s sales were at $675 million while the operating earnings totaled to $11.3 million. Shuzworld Company has one corporate e-commerce site and several other catalogs. The company has a total of 50 stores nationwide, 20 of them situated in malls and the rest stand-alone. It has three dominant warehouses that accept dispatched products directly and other regional warehouses that are smaller in size and serving the retail stores. Shuzworld controls three manufacturing plants in china. This means that the firm produces the shoes they have only specialized on. The major manufacturing plant is in Shanghai and the two in Fuzhou and Hangzhou both appearing in the coastal region of China.
A. Developing the Distribution Patterns
The Shuzworld Company is facing a challenge of increased demand of customers. At the moment the three distribution destinations namely; Shanghai, Shuzworld Hangzhou and Shuzworld Fuzhou requires more products. Therefore there’s need to increase the efficiency of the three machines which currently there production rates are 0.84, 0.94 and 0.99 respectively. The Company has either to upgrade this three machines by going to the market and getting the newly invented machines that are up to task. For the speedy delivery to be met, the machines at the plants have to be reliable (Tseng, 2007).Another alternative is purchasing another set of machines since the three machines are interdependent. The decision tool applied in this problem is the multivariate analysis. According to Dieter Handel who is the quality manager at the Shanghai plant, the following are the reliability levels of each machine; machine 1 is 0.84, machine 2, 0.94 while machine 3 is 0.99.By purchasing another set of machines the production rate of machine one will be 1.68, machine two will be 1.88 while the third machine will be 1.98. This will increase production and incase of machine breakdown there will be enough products in in the dummy (place for keeping products that are exceeding demand) to serve for the time being before they are repaired. To avoid machine breakdown, there should be someone to keep watch of the machines while they are working. By observing this, the company will increase its production to 2600 instead of the current 1300.
By using the method of transportation, the optimal cost is $13,400 on the excel spreadsheet. Shanghai transports 1500 units to the second warehouse. Shuzworld H would send 1,800 units to warehouse 3 and 800 units to warehouse 1. Shuzworld F would ship a total of 2,200 units to warehouse and 1,500 to a dummy destination. There is no cost associated with the dummy destination because the units are not being shipped (Tseng, 2007).When theres high demand as its in the present case the goods stored at the dummy will be used to cover the demand. The purchased set of machine for shoe production should be positioned at Shuzworld F and H which are situated along the coastline of China. This will increase their production and make it easy to be shipped.
Reasons for Choosing Multivariate Analysis Tool
Multivariate analysis has been used in solving problem A, above since it is helpful when multiple elements can be changed in tandem to improve a specific goal. The problem was coming up with a distribution pattern that will meet the availability and the demand constrains. The multivariate tool allows the user to save time because if it is conducted well, there will be no other tools and tests made concerning the same problem (Ward & Dagger, 2007). This tool has proved to be the best because most of the companies that have applied it appropriately have gotten positive results. This shows that from the evidence, the multivariate tool is the best. Applying the multivariate tool, the Shuzworld Company will be able to cater for the availability and the supply problems all at once. By considering the logistics, the tool will help us to come up with a way of balancing the cost that the company incurs in transportation and channels it into production. The production is given more attention to meet the target of the units produced. Once the supply is out, the transportation will be organized only that this time things will change. The transportation routes, the units transported to each warehouse and the number of trucks to do the supplying will vary (Tse & Wilton, 1988).
B. Analyzing the Reliability of the Computer-Driven Shoe Machines
On completion of manufacturing a single shoe it has to pass through the three machines. The machines are interdependent hence if one fails then the whole process fails altogether. The table below shows the reliability of the three machines in the Shanghai manufacturing plant in China.
Machine | Reliability |
One | 0.84 |
Two | 0.94 |
Three | 0.99 |
The reliability of the machines is based on the raw materials from the research. The possible reason for constant breakdown of machine one is weak machinery parts that are not able to refine the raw materials properly. Its parts needs to be replaced with more strong ones that can withstand the hard materials used for shoe making. The reason why the third machine isn’t prone to repair as the first machine is because by the time the materials reach it they are already light enough as compared to when they are brought in. According to research conducted, it shows that the plant technician is always repairing the same part of the machine every time it breaks down. To avoid this, the mechanical team needs to be sent to the labs to determine the sort of effect the raw materials have on the machine (Ward & Dagger, 2007). The findings of the mechanical bench will enable the Shuzworld to get the best remedy to the machine reliability. This whole process may cost the company but it is worth the trouble because the supplies will equivalently be produced to the demands without the obvious production problems. In the mean time, before that is done, the company shall not stop its normal duties hence the first machine should have a back-up at all times. If one fails, the other should pick up and keep the process running as the faulty one is repaired. The reliability of machine 2 is at stake too; if possible, the machine needs to get a backup too. The reliability tool in POM is used to calculate the system’s reliability. From the current data, it is emergent that the reliability is .7568 /75.7% (Tse & Wilton, 1988).
B1. Ways of Increasing the Reliability of Machines
There are several ways of increasing a machines reliability and to start with is training the manpower in the company. The employees should be in a position to identify the potential problems before they arise and even rectify minimal ones. The plant should organize programs that offer training to the employees mostly on the critical equipment. The Management team of Shuzworld Company should start off these programs as soon as possible. There is a high probability that machine one is operated by less trained employees and therefore they are not conversant with it. They may operate erroneously leading to the common malfunctioning. Another way of improving the reliability of the machines in the Shuzworld Company is frequent lubrication of the machines to reduceheat produced due to friction. This will lead to the machines running efficiently and effectively with a long-term service. There use though costly but will reduce the maintenance cost which is high than this method of prevention. The company’s quality manager needs to consult the equipment vendor on the issue of preventive maintenance measures. This helps the company to stick to the manufacturer’s instructions of using the machine.
The machines should be connected to a monitor house which will be monitoring the working of all the machines and detect any problem as soon as any arises or even before.This will make their machinery more automatic. This will bring in automation which will provide solutions to the problems being faced.For instance, a sequencer sends signals to several compressors to coordinate the demand to improve the efficiency and extend the life of the equipment. The company should conduct consistent maintenance and cleaning (Tse & Wilton, 1988). A well scheduled maintenance and cleaning program minimizes the wear and tear of the equipment. The employees have to be mobilized and trained on how to conduct cleaning around machines.
2. Computer Generated Output
2A Decision Analysis Tool
This is the best decision analysis tool since the rate at which the machines will be malfunctioning is high. This will make the machines more reliable enough to maintain a steady output. The demand of the products is gradually increasing thus the supply of the products has to go up to meet this need and this decision supply will address that problem. The recommendations of increasing the reliability of the machines have been clearly selected (Ward & Dagger, 2007). The decision tool has considered all the possible errors that might emerge in the company. The multilateral decision tool majors on different aspects all leading towards the same goal. In this decision tool there are very many recommendations that can be offered to handle the same problem, which is the reliability of the machinery.
C. Optimum number of Shoelaces to be ordered
Currently, Shuzworld Company is stuck with a higher inventory of shoelaces than it needs. When products are not being purchased at a higher speed or in bulk then the company is likely to have high costs on inventory. This cost is regarded high because the sales are not as expected. The Shuzworld Company uses 300,000 pairs of shoelaces annually. The cost estimated when an order is made is $125 while the cost of keeping them in the inventory is 10 cents for each pair. From the records, it is clear the company is using a lot of money on the inventory. Matrix analysis tool should be used in decision making in order to get the optimum number of shoelaces that have to be ordered for Shuzworld Company. This tool will enable the company to consider a number of facts while coming up with the solution to the problem (Tse & Wilton, 1988). The cost ascribed to purchasing the shoelaces and the qualities of the laces are the first major considerations. The number of the shoelaces should be reduced to 200,000 annually.
C1 Economic Order Quantity
The economic inventory order is an inventory-correlated equation that regulates the maximum order amount that a company should hold in its portfolio when given demand rate and the cost of production. The equation functions to lower the costs of variable inventory. The equation is as shown:
EOQ= 2SDPI
S stands for the setup cost, D for demand rate, P stands for production cost while I stand for interest rate.
The company has had a target of getting 300,000 shoelaces annually with a cost of $125 serving as the setup cost. The demand rate is very low and that is why the company is at the verge of minimizing the total number of shoelaces in the inventory each year. The production rate is still high but the demand rate is low. That is the reason why the company will incur a high cost on the inventory. When that is happening, it is difficult to get a good interest rate (Ward & Dagger, 2007).
2. Computer Generated Output
2a. Reasons for Choosing Decision Matrix Analysis
Decision matrix analysis tool is the best since it addresses the state of the company which is spending a lot of capital on inventing which is causing it a great loss. To look at the problem and ways of reducing the optimum number of shoelaces taken by the company each year, this tool is helpful. In this tool there are several factors that are considered all at once to come up with a better inventory cost (Tseng, 2007). These factors include reliability, cost, payment options, location and quality. A table is drawn to detail these factors. This tool helps one to choose between different options where one needs to take into consideration diverse factors. The tool has enabled the company to get the favorable number of shoelaces in a year and to avoid getting the high costs on inventory. This tool is the simplest in the list of multiple criteria decision analysis.
D One- cashier and two- cashier Waiting Line Systems
Due to the expansion of Shuzworld Company, there’s a plan of opening retail stores in major shopping malls in the country (Tse & Wilton, 1988).The big question now is, should they use a two cashier line waiting system or one cashier line waiting system. Due to the high demand of the products it’s better to use the latter since one cashier will be slow. People easily get irritated if services are conducted slowly. In case of a cashier falling sick while working then it means the whole process will be paralyzed. This will lead to inconveniences. A two cashier line waiting system is most appropriate since its fast and it address this issues since if one cashier fails the other will continue to serve the customers. Cynthia, the strategic planning manager said that the company is aspiring to have a boutique that is full of the company’s best-selling products and the lines that are most profitable. As a way of dealing with competition, the company is trying to get the best service at any time of the day. She gave an example of a person who is out of office during lunch break and wants to purchase something. Cynthia says that there must be attendants in the store and who are ready to serve at any given time. The best modus operandi according to the management of the company is having a few salespeople and one permanent cashier (Tseng, 2007). A pilot team came up with several questions that had to be asked to get the best way of staffing the additional stalls.
The number of customers in the system depends on the interest of the customers and the speed at which the cashiers can serve people. If the cashier is fast enough, the number of customers waiting will be low. The average time that the customer will spend in the system while being served depends on the amount of goods purchased and the speed of the cashier (Ward & Dagger, 2007). The number of customers waiting in the queue to be served will depend on the time, the units of each customer and the speed of the cashier. When the stores are too busy, the number of customers in the queue will definitely be high. In stores that are busy every other time, a two-cashier waiting line system is applicable. This doubles the speed at which the customers are being served. From the high demand of the company’s products, the probability of lacking customers in the stalls is so low. I would recommend a two-cashier waiting line system since it is much faster and makes the customer experience to go up (Ward & Dagger, 2007).
D1 Appropriate Decision Analysis Tool
While considering the one-cashier and two-cashier waiting lines systems, the decision tree is the best analysis tool to use. The two-cashier system is recommended because the major aim of the system is offering the best customer experience (Tse & Wilton, 1988). Good customer experience calls for more customers and at the end of it there comes bounty profits to the company. From the decision tree, the idea is wholly embraced if it appears to be productive. A company manufacturing products that are on high demand needs to cater for their customers well. They do that by offering good services and at times after-sale services such as transport are provided. A convenient pay procedure is a service that customers value. If a customer will queue for longer hours, some will start looking for alternatives (Tseng, 2007).
2a. Reasons for Choosing Decision Tree Analysis Tool
Decision trees openly show any asymmetrical in the decision problem structure. They show arithmetical and functional facts for each node on conforming branches. The immediate realization of profit marks the end of the tree when there is no response. Other events are not realized, for example recital and income and the credit limit verdict never get to be made (Ward & Dagger, 2007).
Conclusion
Several measures can be taken to improve the cost and value of an object but that choice has to work out exemplarily. One may choose to recondition, buy new equipment or even outsource production to a vendor (Tse & Wilton, 1988). Recondition is the act of trying to modify what you already have to come up with a better product. The Shuzworld Company wanted to produce the sneakers but at an affordable yet valuable price. The problem with reconditioning is that some of the features of the previous product shall be found to the other. The company has thought of buying new equipment to produce the product (Tseng, 2007). This can serve as a good idea but the equipment may be costly and end up bringing the company down. However, if the company is in a position to purchase new equipment, that would be the best idea. The last option would be outsourcing the production to a vendor in China. This would be a bad idea since the company will be trying to prove that they are unable to produce the product. The operational data ascribed to Shuzworld is poor, with many gaps. There is inconsistency in the data since not all elements are defined and understood well. The existence of products with conflicting names has been a problem in the company. The employer who is not conversant with the products may find it difficult to cite the differences. Inconsistency may be seen in the way the information has been presented (Petitti, 2000).
References
Petitti, D. (2000). Meta-analysis, decision analysis, and cost-effectiveness analysis. New York: Oxford University Press.
Tse, D. K., & Wilton, P. C. (1988). “Models of consumer satisfaction formation: An extension”,Journal of Marketing Research, vol.25, pp.204-212.
Tseng, Y.M. (2007). “The Impacts of Relationship Marketing Tactics on Relationship Quality in Service Industry”, The Business Review, Cambridge, vol. 7, no. 2, pp. 310-314.
Ward, T. & Dagger, T.S. (2007). “The complexity of relationship marketing for service customers”, The Journal of Services Marketing, vol. 21, no. 4, pp. 281-290.
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