The cyclone furniture case study
Questions
A) Describe the operating structure of cyclone furniture. Draw a structure diagram and discuss the improvements that can be made.

Answer - operating structure of cyclone furniture has three broad categories: 1. Domestic furniture 2. Export furniture 3. Office furniture
Each section has its own dedicated setup. Semi-finished furniture from these dedicated setups moves to single furnishing unit where activities like staining and polishing are performed by specialists. However, workers in three manufacturing units are interchangeable.
STRUCTURE DIAGRAM OF CYCLONE FURNITURE

/-- Domestic Furniture O \
V -- Export Furniture O --- Finishing O Upholstery O V C \-- Office Furniture O /
V= stock; o= operation; /= direct to next operation/customer
IMPROVEMENTS
Instead of three separate manufacturing unit it is more efficient to have single manufacturing unit for all three sections. This will result in economy of scales both in term of machinery and manpower. When all operations will be performed under one space than spare leased plant and machinery can be given back to lessor and cost can be saved to some extent.

b) What do think is the real cause for the cash flow problem at cyclone? what actions can be taken improve the situation? Comment on rangi management of factory.

Answer- main reason for temporary cash flow problem is high level of stock of raw material and finished good then required as it is evident from rangi statement have about three months of uncommitted stock of finished goods on hand at present.
Following improvements can be made: 1) EOQ system should be checked so that optimum level of stock of raw material can be maintained. 2) Idle unutilized machinery should be returned to lessor it will have positive impact on profit and loss account as well on