Case Study: Worldwide Chemical Company

BUSN 6110 – Operations Management
Webster University

Problem: Worldwide Chemical Company, manufacturers of polymer fiber and flake is suffering chronic production equipment failures causing significant output shortfalls, losing business to competitors.

Facts: ▪ Because unreliable equipment made on-demand production too risky to attempt, the response to seasonal fluctuations in demand was to stockpile inventory for months. ▪ Equipment problems affected first-run quality, resulting in wasted product and further production delays. ▪ The production manager refused requests by the maintenance manager to halt production for scheduled equipment maintenance, but became belligerent when breakdowns occurred. ▪ Maintenance personnel were underutilized until a failure halted production, then would be called as “firemen” to repair equipment, sometimes working round the clock to do so. ▪ The plant manager had been repeatedly called on the carpet by corporate management for routinely missing production goals. ▪ Employee morale was very low due to rumors of plant closing for chronic production goal shortfalls.
Assumptions:
In any business, excess inventory is waste, and this company has adopted this wasteful practice. When an equipment failure halts or significantly decreases production, replacement parts are needed ASAP, so confiscatory rates for super-expedited shipping are being paid. All employees are assumed to be sufficiently competent to perform, given the proper working conditions.
A final assumption is that there is currently no third, or graveyard, shift.
Discussion:
Worldwide Chemical makes polymer flake and fiber, which is used in all form of final products constructed of plastic or composites. Major consumers are typically auto, office furnishing, toy and aircraft manufacturers, as well as carpet