A. Manufacturing recommendation
Shuzworld has decided to move forward with the production of Samba sneakers geared towards teens and pre- teens with the brightly colored look this younger generation craves. Senior management is interested in moving forward but would like to discuss production cost options as follows: option one reconditioning of the existing equipment versus option two buying new equipment within a Shanghai facility, or option three outsourcing the production to another vendor in China. My strategic recommendation would be to minimize cost so the solution in which cost is concretely minimized would depend on the factor of how many units are needed for this initial production. Utilizing the breakeven cost volume analysis tool, if 25 to 80 units are needed for production, the lowest cost option is option 1 which is $75,000 dollars. If preparing 80 to 300 units, the lowest cost option is option 2 which yields a cost of $240,000 dollars. Lastly, utilizing any amount of units over 300, yields the lowest cost, option 3, as $350,000 dollars.
A1. Manufacturing Recommendation: Output
Table 2: Breakeven points
Crossover graph
A1a. Manufacturing Recommendation: Explanation
I would prefer to minimize cost so the solution in which cost is minimized would mostly depend on how many units are needed for production. My sincerest recommendation would be to employ option 1, which is reconditioning the existing equipment, if planning involves producing 25-80. If the plan changes to accommodate the highly anticipated demand of the samba sneakers, I would prefer to produce greater than 300 units utilizing option 3 which is an outsourcing to the third party vendor within China.
B. Sales Volume Forecast
Shuzworld senior management has requested assistance with improving the performance of its retail mall stores by mimicking the infamous Four Corners Galleria store. The forecasting plan is to identify future trends of sales by a proposal to utilize the linear regression method versus the exponential smoothing technique.
B1. Sales Volume Forecast: Output
Linear regression/least squares
Exponential smoothing with Trend
B2. Results Difference
Linear regression, also known as, least square method, is much more accurate with less error than any other method as it creates forecast along regression lines. According to the compilated data of the least squared method versus the exponential smoothing technique, the mean absolute percent error measurements yielded favorable lower with the linear regression/least squared method at 3.945% versus 4.67% using the exponential smoothing technique with trend. Exponential smoothing with trend should be reserved for tracking inconsistent trends that move in an upward trend that is not necessarily linear with possible curves.
C. Control Chart Metrics
Applying the criteria from the control chart metrics would allow for superior improvement in the quality of the production machines. As noted within the control limit for the shoe sole height samples of sixteen soles, it appears that at the 13-14th hour, the overall length measurement of the shoes exceeded the upper control limit (UCL). When investigating causes for two plots above the upper control limit, a further analysis for the cause would be justifiable to prevent any further out of control issues. It is further noted that during the 2 -6th hour the length of the sole dip with a run of 5 below the central line rendering further analysis in to the cause for possible out of control behavior. A few ways to bring the process back into control could begin with identifying the causable attribute of the out of control range which may help to autocorrect the defect. Another suggestion to bring the control under order could be to initiate a sampling set and resetting or reconfiguring the control limits when necessary.
As noted within the control limit for the defective eyeletting fraction, it appears that both operators 13 and 20 have exceeded the upper control limit of 0.125. Another area of concern would be for operators 8, 12, and 19, as each of these operators remain at the lowest control level (LCL) of 0 which is quite surprising. My strongest recommendation to increase the control within the eyeletting devices would be to individually discuss concerns/issues the operators may be experiencing during his/her shift. For example, does the timeframe for lunch and or break need reevaluating due to restlessness or hunger, or may there perhaps be another variable that needs researching. Another solution for this scenario would involve utilizing a sampling statistic of each of the operators to recalculate control limits and redraw another control chart. Whichever solution is chosen, the overall objective should be to maintain productivity within predetermined control limits and to find distribution that fits neatly within our control limits rendering a notion of statistically in control.
References
1) Mindedge (2014). Shuzworld. Retrieved from http://wgu.mindedgeonline.com/content.php?cid=15874