Operations Management Study

ABC Products packages and sells gift boxes of wine by mail. ABC cannot carry any inventory of finished products because of slow inventory turnover and insufficient capitalization. On the plus side, the packaging operation is simple, inventory delivery is rapid and new employees can be trained quickly. ABC is located near a large metropolitan area and new employees are readily available. On the average, each employee can produce 1,000 gift boxes of wine per month. Payroll costs including wages and fringe benefits average BP 1,730 per employee per month. It usually costs about BP 200 to hire a new employee and BP 300 to lay one off. Currently, the

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information, ABC management could then assign tasks A & B to an employee who could do it faster than anyone else, thereby speeding up the process. The same concept could be applied to other aspects of the jobs -- bottle wrapping, labeling, packing, and so on. Critical to the concept of assigning jobs is the sequencing of the work (Daniels, 1997). Sequence Analysis In general, the workflow at ABC starts with the order coming through the door. Some 60 percent of the gift packages ABC send out are membership packages, where a customer has elected to receive packages for a 12-month period. The remaining 40 percent of the orders are first-time customers. These first-time customers are the only ones that are necessary to process at the "head end" of the sequencing structure, and the time element required to process those orders would be considered in a separate sequencing process. Once the order "hits the floor," the following sequence is followed which shows a considerable difference from Figure 1. In this structure, we find: (a) Package Preparation (Steps A & B) has been assigned to one set of employees, (b) Product Selection and Wrapping (steps C and D) has been assigned to a second set of employees, (c) Packing (steps E, F,
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Approximate Word count = 2217
Approximate Pages = 9 (250 words per page)

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