Canapati, Joyce Ann E. Dizon, Avigail R. MGT 409 Operations Management Case 1 Payroll planning, Inc.

Case Background

Payroll Planning, Inc. provides accounting services for small businesses. By the time they receive records from these small businesses, they process it and then they issue checks. Usually, Payroll Planning, Inc. is able to get checks printed on time. In managing their schedule, the company uses EDD or Earliest Due Date scheduling, giving the highest priority to monthly clients. However, because Payroll Planning, Inc. occasionally runs into scheduling difficulties, they wanted to determine if their scheduling strategy is the best or if there are other alternative techniques that would reduce their difficulties by significant amounts. Alternative Courses of Action I. Use Shortest processing Time Scheduling Rule Priority rule that arranges jobs from those with least processing time up to those with the most processing time. Advantage: Disadvantage: Those jobs require long processing time (mostly monthly) will be delayed II. Use longest processing time - Priority those jobs with the most processing time up to those with least processing time Advantage: Those jobs with most processing time (mostly monthly) will be done on time Disadvantage: not all jobs with the most processing time are on the monthly basis. This means that some jobs will be delayed. III. Use Johnsons Rule - Scheduling rule that assigns jobs simultaneously to reduce the processing time. Advantage: All jobs will be done on time, no delays. Disadvantage: it requires the use of two machines to be able to process the jobs simultaneously.

Recommendation We recommend Payroll Planning, Inc. to use alternative 3, the Johnsons Rule. Applying this rule will be the most effective way of scheduling the jobs. Other alternatives will somehow result in the delay of some jobs. Other alternatives will somehow result in the delay of some jobs, but with the Johnsons Rule, all jobs will be done on time.

Total Required Time

Monthly Biweekly Weekly

9 hours 39 minutes 2 hours 49 minutes 12 hours 49 minutes

Required Time Applying Johnsons Rule (2 jobs simultaneously) 4 hours 50 minutes 2 hours 49 minutes 6 hours 25 minutes

Processing Time (with 15 minutes interval)

12am-4:50am 5:05am-7:54am 8:09am-2:34pm

CASE 2: JIT after the Fire Case Background Toyota company, a world renowned motor company depends on Aisin Seki for the source of its crucial brake valves through the Aisin Seki Plant in Kariya, Japan and destroyed most of the machine that is used to manufacture P-valves and most of the P-valves itself. Since Toyota Company maintains JIT practices, their production process would come to rapid halt if these parts were not supplied at the right time. Alternative Courses of Actions I. Search for new suppliers Toyota Company, after the fire may resort to finding a new supplier that can provide the demanded number of valves needed for the current production. Advantage: 1. Opportunity to find a cheaper supplier 2. Can continue with the current flow of production 3. Halting of operations due to lack of supply of valves may be avoided Disadvantage: 1. Quality of materials may not be guaranteed II. Develop/research for an improvise production system that would require an alternative part for the unavailable valve Advantage: 1. Improvised production system may be discovered 2. Reasonably long time of stoppage of production may be reduced Disadvantage: 1. Costly 2. Risky because it is only an improvised technique 3. Lag time for production will still occur III. Do nothing and wait for the supply of Aisin Seki to resume Advantage: 1. Consistency of quality and composition of products 2. Hassle of finding a new supplier is eliminated 3. No addition cost for development of alternative solutions

Disadvantage: 1. 2. 3. 4. Losses would occur Revenues forgone Fixed costs would occur without compensation Stoppage of production for a long period of time

Recommendation Alternative 1 is the best one to be used in this situation since looking for another supplier can prevent the halting that may occur and the lost that can be incurred in both alternatives 2 and 3 may be avoided. Furthermore, searching for a new supplier may open up the opportunities for them to test whether there is a more reliable supplier compared to the previous one.

What does this experience tell you (and Aishi and Toyota) about JIT? The experience tells that the use of Just in Time system can be beneficial for companies since it reduces costs of storage and keeps inventory risk at a minimum. However, during unwanted times or fortuitous events that could happen like calamities, fire or other events that is caused by nature, it can be concluded that JIT can result to crucial situations where the company may forgo revenue due to lack of stock for a given period of time. Furthermore, JIT may be the cause of losses that resulted from mismanagement of production system and time management.