Ice House Toys is a company which consists of five shops and one mail-order business. The mail-order operations are situated in a warehouse in Bristol. This building consists three floors, each 1200 square metres. Every year Ice House Toys send three catalogues with about 300 different toys and games, all manufactured in UK, Europe and the Far East. The major of this catalogues is the Christmas catalogue which is sent to 160,000 customers resulting in 22,600 orders with an average order value of £42. The winter and spring catalogues are sent to 90,000 customers. This results in 6,900 orders with an average order value of £23. The stock for the Christmas sales is ordered by the end of July and received in two phases. 75 percent arrives in the first week of October and filled the stock areas to capacity. The remaining orders come after the first 2,500 orders have been processed in the fourth week of November. In 1999, stock with a resale value of £1.1m was ordered.
The mail-order operation is divided into three stages: recording, assembly and packing and dispatch. Robin Baker, the Managing Director of Ice House Toys, plans three main changes for the mail-order operation. Firstly, he will do an agreement with a company which sells upmarket children’s clothes. This will lead to 30,000 new names and addresses of customers. Secondly, Ice House Toys will spend further £18,000 on advertising because each £1,000 led to 190 additional orders in the past. And the last future change will be the newly created website. On this the user can find detailed description and photographs of each item. The ordering will be easier because you will have a virtual shopping basket and send your order online to the company. The user has not to print the descriptions and codes. In the trial period the customer’s average order value was £60. Ice House Toys think that five per cent of their existing users will use this service.
Index of contents
0 Introduction
1 Planning and control
1.1 General overview
1.2 Capacity constraints
1.3 Extension of the warehouse capacity
1.4 Other methods to overcome capacity constraints
1.5 The new website
2 Long-term capacity planning
3 Alternative purchasing policy
3.1 Just-In-Time in general
3.2 Just-In-Time in Ice House Toys
4 Overtime payment
5 Summary
6 Appendixes
7 Reference list
0 Introductions
Ice House Toys is a company which consists of five shops and one mail-order business. The mail-order operations are situated in a warehouse in Bristol. This building consists three floors, each 1200 square metres.
Every year Ice House Toys send three catalogues with about 300 different toys and games, all manufactured in UK, Europe and the Far East. The major of this catalogues is the Christmas catalogue which is sent to 160,000 customers resulting in 22,600 orders with an average order value of £42. The winter and spring catalogues are sent to 90,000 customers. This results in 6,900 orders with an average order value of £23 (appendix 0). The stock for the Christmas sales is ordered by the end of July and received in two phases. 75 percent arrives in the first week of October and filled the stock areas to capacity. The remaining orders come after the first 2,500 orders have been processed in the fourth week of November. In 1999, stock with a resale value of £1.1m was ordered.
The mail-order operation is divided into three stages: recording, assembly and packing and dispatch (appendix 3).
Robin Baker, the Managing Director of Ice House Toys, plans three main changes for the mail-order operation. Firstly, he will do an agreement with a company which sells upmarket children’s clothes. This will lead to 30,000 new names and addresses of customers. Secondly, Ice House Toys will spend further £18,000 on advertising because each £1,000 led to 190 additional orders in the past. And the last future change will be the newly created website. On this the user can find detailed description and photographs of each item. The ordering will be easier because you will have a virtual shopping basket and send your order online to the company. The user has not to print the descriptions and codes. In the trial period the customer’s average order value was £60. Ice House Toys think that five per cent of their existing users will use this service.
1 Planning and control
1.1 General overview
In this case study of Ice House Toys you have to look at the planning and control in a company. To ensure that the operations runs effectively and produces products and services as it should do is the purpose of the planning and control task. A plan is defined as an intention and the control task have to cope with changes in this plan and correspond to them. The balance between planning and control changes from time to time. In the long-term aspect planning plays the dominating part whereas controlling is an important role in the short term. In different organisation you have to deal with different kinds of planning and control, such as the planning and control of capacity, of the supply chain, of just-in-time or quality. Ice House Toys has a capacity planning and control which is also known as aggregate planning and control. Due to calculations and because of the amount of orders Ice House Toys usually performed on an aggregate level. In the context of operations management capacity describes stocks, which can be expressed in units of flows and measurement. Flows should be expressed in terms of movement.
1.2 Capacity constraints
Mostly you can find some constraints for an organisation’s capacity. Often there are only some parts which work at their limit and these parts are a constraint for the whole operation and company. They are also called bottle-neck parts or stages. Ice House Toys has to deal with warehouse space as a constraint and consequential with the varying number of staff which is required. In this case especially the packing stage is the main constraint in the supply network.
Because of the changes Robin plans the expected order figure will increase from 22,600 in 1999 to 29,020 in 2000 (appendix 1). This means the maximum amount of orders which is expected from customers in any week will be 4,751 (appendix 2). The company is in a position to deal with 3,096 orders in a week as a maximum in a five-day week and 4,334 orders in a seven-day week. Appendix 2 shows in which week Ice House Toys should go for a five-day week and in which one Robin has to hire staff for seven days a week. From the first week in November till the first week in December Ice House Toys must work on weekends. That means if the company will meet its dispatch policy, to deliver within three days of receipt, Ice House Toys has to pay overtime for the weekend work to run the operations.
The company has 600 square metres for the packing (330m²) and dispatch (270m²) department. Considering the expected orders there should be 26 packers (25 are calculated but as they work in pairs 26 are needed) and 12 dispatchers. This would require a space of 897 square metres to process the Christmas business if Robin will maintain the five-day week (appendix 3). If he would go for a seven-day week he also needs more warehouse space but in this case only 11.25 square metres (appendix 4). This varying number of staff and also the different number of working hours meet a chase demand plan. Ice House Toys processes its orders on such a chase demand basis from October to December. There are different methods of adjusting capacity for example working overtime, varying the size of workforce or using part-time staff. In this case the company should hire extra staff from October to December and use part-time staff for the weekends for the seven-day weeks.
1.3 Extension of the warehouse capacity
From the beginning of September 2000 one of the ground floor areas will also be used for the mail-order operations. That means Ice House Toys either can use this space as stock room or for the packing and dispatch department. In consideration of the facts the best solution will be to divide the new 600 square metres in two equal parts. Then there will be further 300 square metres for the packing and dispatch staff which is needed in a five-day week. The other 300 square metres could be used as a further stock room that means Robin now has 2,100 square metres for stock. Inventory, also called stock, is another important point in the company Robin has to deal with.
Mostly there are three main questions for dealing with inventory: How much to order, when to order and which items are the most important.
In this case previous experiences will be consulted to get an idea for the amount and the time for ordering the stock. Ice House Toys gets its stock in two phases. The first arrives in the beginning of October and represents 75 per cent. The remainder is ordered after the first 2,500 orders have been processed.
If you have to deal with these inventory decisions you have to balance two sets of costs: purchasing costs and costs for holding inventory. The company considers stocking of smaller quantities as unacceptable because they would lose the discount and the advantageous terms of payment. In some industries suppliers will grant a quantity discount for large orders and will claim more money for smaller quantities. On the other hand Robin has to look at the storage costs and overheads such as lighting or security costs for the warehouse. There are no figures given in this case so that is not possible to say if there should be any changes in ordering stock because of the new space.
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¡Carge sus propios textos! Gane dinero y un iPhone X. -
¡Carge sus propios textos! Gane dinero y un iPhone X. -
¡Carge sus propios textos! Gane dinero y un iPhone X. -
¡Carge sus propios textos! Gane dinero y un iPhone X. -
¡Carge sus propios textos! Gane dinero y un iPhone X. -
¡Carge sus propios textos! Gane dinero y un iPhone X.