1.0 Introduction Eastern gear Inc. is a manufacturer of custom made gears ranging in weight from a few ounces to over 50 pounds. The gears are made of different metals depending on the customer’s requirements. Eastern gear sells its products primarily to engineering research and development laboratories or very small manufacturers. The president of Eastern Gear decided to accept a few larger orders for 100 gears or more. Although lower prices were accepted on these orders, they helped pay the overhead. It was found that the large orders caused many of the small orders to wait for a long time before being processed. As a result some deliveries of small orders were late. Roger Rhodes had faced many problems and the major problem is not having an efficient production line. The current production process is inefficient and disorganized. After consideration of several alternatives, we have found some major problems that occur in Eastern Gear Inc. The problem that have been analyse is the problem in term of raw materials, production flows, factory layout, poor quality control checks, unproductive way to rush orders and others The problems come from the process design that is inefficient. They also are lacking an organized quality control program. This has resulted in the doubling of production times and a six percent return rate on orders. As the president, he needs to take a responsible by doing actions to solve all the problems that occurred. The actions that should be properly working and give an efficient results. So Roger Rhodes as a President Rhodes should take many actions to have a good operation management for Eastern Gear and also need to think the ways for maintain Eastern Gear’s level of productivity. 2.0 Issues/Problems Arises 2.1 Major Problems Being Faced By Eastern Gear. Based on case Eastern Gear, Inc. there are some major problems that occur in the company. All of the problems involved actually have the great impact directly to the production and manufacturing process in the company. First problem that have been analyse is the shortage of raw materials. Shortage of raw materials becoming a norm for various industries especially manufacturing. Raw material shortage increasingly retards the expansion of production. This implies their continuing survival in a competitive market and meeting customer demand and satisfaction. Eastern Gear Inc. occur this problem because they only depends on to 1 or 2 suppliers. This is because, when they order raw materials from supplier, it will take about one or two weeks for material to be ready at the factory. The lack number of supplier will lead to increasing number of production time. The supplier will assume that Eastern Gear Inc. only depend on them to supply raw material, so that they will delayed the time of delivering the raw material. Even, Eastern Gear Inc. frequently order different types of metal (depends on the customer requirement), it is not big matter is they have enough supplier to supply the raw material that need by them. Eastern should take immediate action to overcome especially when dealing with exact customer order. Second problem that have been identify in Eastern Gear Inc. is problem in production process. Bottlenecks are the one problem that occurs during production process. Bottlenecks can happen in in one week to one machine, and the next week to other

machine. The bottlenecks can make the orders will difficult to get out on time. Bottleneck shiftiness can be inflicted by many factors and random events, such as order arrival time, material shortage, priority variation and others. Bottlenecks location usually shifts along and makes the whole production system unstable and inefficient. Too much time is spent in the production process waiting for a machine to become available. This problem occur at the Great Eastern Inc. because, recently the president of Eastern Gear decided to accept a few larger orders for 100 gears or more. Although lower prices were accepted on these orders, they helped pay the overhead. It was found that the large orders caused many of the small orders to wait for a long time before being processed. As a result some deliveries of small orders were late. Besides that, they also are lacking an organized quality control program. The doubling production times and poor quality of gear that produce by Eastern Gear Inc. have resulted 6 % return rate. The 6% return rate is cause by the operation have been improperly done. Production management should be done influence greatly production performance. Third problem that have been identified is poor layout results in a jumbled flow of production through the shop. Tools are not centralized and equipment is organized by type instead of being placed in proper production order. This will cause an efficient in production line. The Eastern Gear Inc. operates as a job shop style and this is inefficient to produce the gear on time. There are too many desks to cross to get material ordered and products rushed. There is a lot of wasted time with WIP sitting at work stations. The process design of the shop is inefficient. The management needs to realize that how many products have been produce with the wrong kind of setup. The Great Eastern should turn part of their shop into a focus factory to put the rush orders and the large orders that are helping business. Besides that, the facility layout does not offer much in terms of a smooth flow of the products to each centre, a new design should be created in order to lessen the time between each work centre. Due to the poor process flow, there are bottlenecks arising in different areas at different times. The process design is a job shop and needs to change to reduce the amount of excess inventory, increase quality control and overall flow of the shop. The last problem that have been analysed that occur in Eastern Gear Inc. is top management. The management does not have smooth organisation. There are connecting between one department and another. For example, the president of Great Eastern Inc. also have task to take large order from other company. The improper organization will make the management does not run smoothly and the problem that arise in the company hard to solute efficiently. The Eastern Gear Inc. case shows how operations strategy and process design affect constraints within an organization. The operations turn to increased attention to priority orders and the addition of a new position to accomplish this in the organizations hierarchy. The improperly organization process in Eastern Gear Inc. also make them don’t have set up any company policy especially regarding with customer’s order. The policies not being agreed upon with customers ahead of time.

Any changes after production time results in a waste of the previous efforts and raw materials, and has caused an increase in non-value added cost. In addition, agreements should be made with customers to make sure their prints have the tolerances or finishes required by Eastern Gear’s machining. 2.2 Actions that Rhodes should take to solve the problems. Rhodes should take many actions to solve his problems. He realized that he now has too many products to produce with wrongly kind of setup. He had faced many problems in term of raw materials, production flows, factory layout, poor quality control checks, unproductive way to rush orders and others. So that he needs to take actions to maintain Eastern Gear’s level of productivity. First, Rhodes needs to keep raw materials on hand of typical metal used. He should analyze its maximum capacity and make changes accordingly so that they were able to maintain a 3-4 week delivery time prior to the introduction of larger orders. Rhodes also should find a new supplier and make a good relation with them by doing an agreement. This will affect the deliveries of raw materials. Second, Rhodes also needs to stop accepting large orders at discounted prices to help cover overhead, doing this will not cover overhead and should only be done if it is facing bankruptcy. Accepting the large orders causes some of the small orders to wait for processing and in-turn are late. Besides, Eastern Gear needs to assess their process in obtaining customer orders, a more thorough purchase order must be created to prevent the delay in contacting the customer regarding tolerances or finishes. Checks and balances in the completion of the order must be done to prevent calls coming in mid-production that result in the aborting of the production in order to develop a changed order. This will also lessen waste of raw materials. Third, the process design of Eastern Gear is a job shop which offering a plethora of different metals. Rhodes should assess which metals are the most cost-effective and rid the inventory of the rest. So that Rhodes should identify if they can start to reorganize to a more assemble-to-order which would drastically lower the throughput time. It also appears that Eastern Gear could reduce costs and setup time and improve production by only accepting orders that are greater than 10, this way the shop won’t be constantly retooling machines and they will have less working in process. Rhodes should make multiple assembly lines rather than having stations. He could also leave one assembly line for rush orders. Rhodes also needs to address the amount of labour he has. There is way too much to justify the amount of downtime in between running machines. Besides, Rhodes can implement Total Quality Management which control checks on quality of their productions throughout assembly lines. Fourth, the order entry system needs to be more efficient. A customer is able to request a change in design after the order has already been placed, it may be necessary to stop production on these orders and wait for the new raw materials or for the new design to be clarified. They do not have a process that charges back the variance on these orders. They need to input a system where if the customer wants a design change, they have to pay for it. Also, the customer’s prints submitted with the order do not always contain the tolerances required during machining. This is a discipline issue within the organization that needs to be eliminated. The customer must sign off on the tolerances before the order begins processing.

Fifth, Eastern Gear needs to change the layout of the shop. The facility layout does not offer much in terms of a smooth flow of the products to each centre, a new design should be created in order to lessen the time between each work centre. Due to the poor process flow, there are bottlenecks arising in different areas at different times, a process flow analysis must be created in order to identify what is causing the bottlenecks and how to decrease them from occurring, this will result in a more streamlined process. In Exhibit 1, note how the layout should be done. Receiving dock Shipping dock Receiving and raw materials storage Milling machines Drilling Finishing and grinding centre Shipping and finished goods storage Tool crib Lunch room Heat treating Receiving dock Shipping dock Receiving and raw materials storage Milling machines Drilling Finishing and grinding centre Shipping and finished goods storage Tool crib Lunch room Heat treating EXHIBIT 1: Layout Lastly, the sales group is not part of the business, there is no direct link between them and manufacturing. Therefore, no one is paying attention to the order size. This needs to be corrected by putting a direct line of communication between sales and manufacturing. And also, Rhodes as the president shouldn’t do a lot of works. He should monitor his employees by giving an advice and makes a decision on their operations and management. Rhodes needs to appoint an assistant to help his job in handles contact with customers, arranges financing and others. Furthermore, Rhodes should create departments to have a proper direct line of communication among employees. For example, Rhodes should design a new organizational chart which consist of departments likes Sales and Marketing, Production, Human Resources and Finance. This all departments will have their own job descriptions and should be properly communicate among them. The new organization chart for Eastern Gear is shown in Exhibit 2. President Sales & Marketing

Production Human Resource Finance Vice President Expediter Engineer Foremen President Sales & Marketing Production Human Resource Finance Vice President Expediter Engineer Foremen

EXHIBIT 2: Organization Chart In conclusion, Rhodes should take many actions to have a good operation management for Eastern Gear. The problems come from the process design that is inefficient. They also are lacking an organized quality control program. This has resulted in the doubling of production times and a six percent return rate on orders. As the president, he needs to take a responsible by doing actions to solve all the problems that occurred. The actions that should be properly working and give an efficient results. 2.3 Case Be Related to Operations Strategy

According to Slack and Lewis, operation strategy is the total pattern of decisions which shape the long-term capabilities of any type of operations and their contribution to the overall strategy through the reconciliation of market requirements with operations resources. Eastern Gear has an ultimate goal to deliver goods especially gear to their customers but the process like designing, manufacturing and then finally being delivered are the driving forces for the company's success. All these of works processes define a bigger purpose, the operations for that particular organization. The more effective of these processes or operations would be the more productive and profitable the business would be. So, operations strategy relates to products, process, methods, operating resources, quality, costs, lead times and scheduling. Based on this Eastern Gear, Inc. case study, it can be related to operation strategy in the context of supply chain management. Eastern Gear should have the good of supply chain management where Eastern Gear should work more closely with suppliers to coordinate shipments, reduce lead times and reduce supply chain inventories can reduce the size and frequency of stock outs while lowering inventory carrying costs. From this case, we know that Eastern Gear is ineffective and inefficient of their supply chain management. For example, the materials that Eastern Gear ordered often take one

two weeks to arrive, depending on the supplier and the type of materials ordered. In this situation, Eastern Gear can hire another supplier or build an agreement with the exits supplier to specify the time that supplier should meet for each order. This can avoid the supplier from taking much time to send materials. If supplier can reduce their time it would reduce the timing for Eastern Gear for their production process for gears and also can avoid the bottlenecks from appear in the production process. In this situation, there are no distributors in their supply chain. The materials will pass directly to Eastern Gear which is the manufacturer. In producing gear, Eastern Gear need to adopt the new layout in order to make sure the materials flow from one work centre to another in an effective way. Here, if Eastern Gear had improved their supply chain management they can distribute or deliver the gear that has been ordered to customer in the right time. So, it will decrease their delivery time, their customer will satisfy for the services and it directly makes a chance for the same customer to order their product again in the future. Below is the picture of the supply chain management that had been implemented by Eastern Gear, Inc.: As a result, this supply chain can managing the movement of raw materials into an organization, certain aspects of the internal processing of materials into finished goods, and the movement of finished goods out of the organization and toward the endconsumer. The effect is to increase satisfying customer demand, while reducing management control of daily logistics operations. Then, supply chain management can improve trust and collaboration among supply chain partners, thus improving inventory visibility and the velocity of inventory movement. Other than that, the case also can be related to operations strategy in the context of their flexibility. According to Wikipedia, a flexible manufacturing system (FMS) is a manufacturing system in which there is some amount of flexibility that allows the system to react in the case of changes, whether predicted or unpredicted. In the context of engineering design one can define flexibility as the ability of a system to respond to potential internal or external changes affecting its value delivery, in a timely and costeffective manner. Eastern Gear had the flexibility when the customer’s engineer call up after the order has been placed and request a change in the design. Here, Eastern Gear has the ability to respond to changes. Changes here relate to alterations in design features of product or volume demanded by customers. From the case also, we can say that the company did not have flexibility in their machine which means that a machine cannot perform for the different operation types. By referring to the physical layout, the machines are group by similar type on the shop floor and it only can perform the same operation according to their group. Besides that, Eastern Gear also not flexible in their production. This is because, when the decided to accept a few larger orders for 100 product of gears or more this large orders caused many of the small orders to wait for a long time before being processed and it made some deliveries of small orders were late. Other than that, Eastern Gear also has low in material handling flexibility. It can be seen when the layout results in a jumbled flow of products through the shop. Then, there is interference of the orders being processed and only 10 percent of the time is actually spent processing the order. Large and small orders are processed

together and no special work flow is utilized for different order sizes. This show to us that Eastern Gear is not flexible in their processing of products. Next, Eastern Gear case is related to operations strategy from their product and service design. Eastern Gear is a manufacturer of custom made gears. Product and service design are very important factors to customer satisfaction. Company need to continually satisfy their customers to be successful in the marketplace. They are able to do this by improving current products or by designing new ones. The design consists of research, design, production, life cycle, safety in use, reliability, maintainability, regulatory and legal issues. Organizations also need to look at "sustainability" when designing their product or service. Based on this case, the customer have their choice in specifies the type of gear desired by submitting a blueprint or sketch. Quantity of gears that and type of material required also specified by the customer. There are some processes that need to undergo in designing the gear. First, the raw material a gear blank is sent to the milling work centre where the centre will cut the teeth onto the edge of the gear according to the customer’s specifications. Then, it been sent to drilling work centre where one or more holes may be drilled and at grinding centre a finish is put on the gear teeth and the surface of gear. Finally, it may be sent to heat-treating if it required by customers and then it will be shipped to customers. From this situation, Eastern Gear, Inc. had implemented their operation strategy of product and service design. The other reason we can say that this case be related to operations strategy by looking at the organization chart especially looking at the managers and workers. By referring to Operation Management Book, it says that the managers and workers are the people at the heart and soul of an organization, and if they are competent and motivated, they can provide a distinct competitive edge by their skills and the ideas they create. So, if we go through the case we know that Eastern Gear has the good of workforce. For example, 50 employees are highly skilled or semiskilled. The milling machine operators for example are highly skilled and require at least two years of vocational technical training plus several months of on the job training. From here, we can say that Eastern Gear had implemented their operation strategy by hiring the highly skilled of employees and operators. Then, Eastern Gear, Inc. have been added 10 new employees to their workforce in order to produce a good quality of their products and services to customers. Besides that, quality also is the one item that makes this case, Eastern Gear, Inc. to be related to the operations strategy. Quality refers to materials, workmanship, design and service. Consumers or customers’ judge quality in term of how well they think a product or services will satisfy its intended purpose. Customers are generally willing to pay more for a product or service if they perceive the product or service has a higher quality. Based on this Eastern Gear case, it shows clearly that the company has a low quality in production process. This is because, the production time increased from two weeks to four weeks and it appear the bottlenecks that make difficult for Eastern Gear to get the orders out on time. Other than that, the interference of the orders being processed which are the typical orders spend 90 percents of its time waiting in line for a machine and only 10 percent of the time is actually spent processing the order on a machine. Here, it takes a long time for an order to make its way through the shop. Due to processing of small and large order together, the large orders are helping to keep the shop at full capacity. From

this situation, it will increase their time in delivery the product to customers. We also can see from the case that the Eastern Gear is currently experiencing about a 6 percent return rate on completed orders due to poor quality. So, Eastern Gear also has low quality of their services but higher quality of their managers and workers where Eastern Gear hired only the highly skilled of their managers and employees to run their production well. Apart from that, this case also can be related to the operations strategy in the context of the quick response. The quick response can be a competitive advantage. It is the way where company quickly bringing new or improved products or services to the market. For example, Eastern Gear, Inc. did not show their quick response to the customers when in 75 percent of the cases, the returned orders have failed to undergo one or more operations or the operations have been improperly done. From this situation, Easter Gear had lost their opportunity to solve that problem in an efficient and effective way due to their slow response. Besides that, Eastern Gear also need to consider of their quick response to the order that appear to be behind schedule and receives a red tag which is on a rush basis in order to be able to quickly deliver existing products and services to a customer after they are ordered and still another is quickly handling customer problems. Eastern Gear case also can be related to operations strategy in the context of their inventory management. Inventory management can be a competitive advantage by effectively matching supplies of goods with demand. Inventory management is a very important part of core operations activities. Eastern Gear can acquire most of their revenue through the sale of merchandise (inventory). In order for business and supply chains to run effectively and efficiently, Eastern Gear must meet all the listed requirements for effective inventory management. Some of the main concerns are the level of customer service and the cost of ordering, storing and carrying inventory. Therefore, in order to be a successful and profitable company, inventory management must be managed wisely. There are certain requirements that must be taken into consideration during the inventory management process. These requirements are keep track of the inventory, have a reliable forecast of demand, knowledge of lead times and lead time variability, reliable estimates of inventory holding costs, ordering costs, and shortage costs, and have a classification system for inventory items. For example, Eastern Gear need to make sure each product that had been ordered will be delivering to customer on time in order to avoid increasing in the delivery time or to avoid from the cost for inventory holding is high. Besides that, Eastern Gear should have a classification system for their inventory which is means that they should separate the system for the different order sizes. Other than that, the case is related to operations strategy because it involves the service. Service might involve after-sale activities customers perceive as value-added such as delivery, setup, warranty work and technical support or it might involve extra attention while work in progress such as courtesy, keeping the customer informed and attention to details. For Eastern Gear, Inc. they involve the delivery service where there are increasing in their time to deliver product to customers. So, Eastern Gear added an expediter in order to improve their delivery services where Matt Williams will review the work in progress and select those orders that appear to be behind schedule and it will receive the red tag indicating that it should be treated on a rush basis. Besides that, Eastern Gear also provided the

setup or technical support services. For example, when customer returned completed order due to poor quality, Eastern Gear will reprocessed the returned order to be the good products that meet the customer’s expectations. After that, the case is related also to the operations strategy because it involves location. For example, Eastern Gear is located in Philadelphia, Pennsylvania. The location can be important in terms of cost and convenience for customers. If Eastern Gear, Inc. locate near the inputs it can result in lower input costs. Then, if Eastern Gear, Inc. locate near the market it can result in lower transportation cost and quicker delivery times. So, we know that convenient location is particularly important. Lastly, we can say that the case related to operations strategy because it involved the cost. For example cost of material that Eastern Gear buy from supplier, cost of production and also cost to deliver products to customers. Everything involved from inputs to outputs will have the cost. So, in order for Eastern Gear to have the competitive cost advantage, the company should implement higher productivity rates or better quality. 2.3.1 Case Be Related to Process Design Concept For this case, Eastern Gear, Inc. the company had implemented the Job Shop as their process design concept. This job shop make products to customer order by using a process layout. Thus, we can consider the job shop a special case of the batch process. In the job shop the product is made in batches usually in small lot sizes but the product must be made to customer order. A job shop uses general purpose equipment and has a jumbled flow. It has high flexibility for product mix and volume of production but the cost are generally higher since the volume and standardization are low. Job Shop Eastern Gear, Inc.: 1. Receiving dock 1. Receiving dock 2. Receiving and raw materials storage 2. Receiving and raw materials storage 3. Milling Machines 3. Milling Machines 6. Heat treating 6. Heat treating 5. Finishing and grinding centre 5. Finishing and grinding centre 7. Shipping and finished goods storage 7. Shipping and finished goods storage Tool crib Tool crib Lunch room Lunch room 4. Drilling 4. Drilling Shipping dock Shipping dock

According to the job shop design above, the material flow in Eastern Gear, Inc. is firstly the raw material a gear blank is sent to the milling work centre where the centre will cut the teeth onto the edge of the gear according to the customer’s specifications. Then, it been sent to drilling work centre where one or more holes may be drilled and at grinding centre a finish is put on the gear teeth and the surface of gear. Finally, it may be sent to heat-treating if it required by customers and then it will be shipped to customers. Eastern gear is suffering from many deficiencies. The company operates as a job shop style and this is inefficient to begin with. There are too many desks to cross to get material ordered and products rushed. There is a lot of wasted time with WIP sitting at work stations. The process design of the shop is inefficient. They also are lacking an organized quality control program. This has resulted in the doubling of production times and a six percent return rate on orders. It also appears that Eastern Gear could reduce costs and setup time and improve production by only accepting orders that are greater than 10, this way the shop won’t be constantly retooling machines and they will have less work in process. The loss in sales will be made up with the ability to accept more orders 10 and above. The eastern gear case shows how operations strategy and process design affect constraints within an organization. The operations turn to increased attention to priority orders and the addition of a new position to accomplish this in the organizations hierarchy. In the conclusion, the process design is a job shop and needs to change to reduce the amount of excess inventory, increase quality control and overall flow of the shop. 3.0 Conclusion In regards to the questions, some of the major issues within Eastern Gear include those within quality, poor understanding of capacity, problems with functionality of the facility all of which ultimately result undesirable throughput time. In regards to quality issues, the company needs to assess their process in obtaining customer orders, a more through purchase order must be created to prevent the delay in contacting the customer regarding tolerances or finishes. Furthermore, checks and balances in the completion of the order must be done to prevent calls coming in mid-production that result in the aborting of the production in order to develop a changed order. This will also lessen waste of raw materials. It appears that Eastern Gear needs to analyse its maximum capacity and make changes accordingly, they were able to maintain a 3-4 week delivery time prior to the introduction of larger orders. The facility layout does not offer much in terms of a smooth flow of the products to each center, a new design should be created in order to lessen the time between each work center. Due to the poor process flow, there are bottlenecks arising in different areas at different times, a process flow analysis must be created in

order to identify what is causing the bottlenecks and how to decrease them from occurring, this will result in a more streamlined process. Furthermore, at this time Eastern Gear is a made to order company, offering a plethora of different metals, they should assess which metals are the most cost effective for them and rid their inventory of the rest. They should then identify if they can start to reorganize to a more assemble to order company which would drastically lower the throughput time. Rhodes as a President has many actions to take. He needs to realize that he now has too many products to produce with the wrong kind of setup. He could turn part of his shop into a focus factory to put the rush orders and the large orders that are helping business. Rhodes also needs to address the amount of labour he has. It also appears that Eastern Gear could reduce costs and setup time and improve production by only accepting orders that are greater than 10. As a president, Rhodes also need to know how the operations strategy and process design affect constraints within an organization and need to increase his attention to priority orders and the addition of a new position to accomplish this in the organizations hierarchy. The process design is a job shop and needs to change to reduce the amount of excess inventory, increase quality control and overall flow of the shop.