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McLeod Motors LTD Operations Management
McLeod Motors LTD is a successful company with numerous customers in the original equipment manufacturer (OEM) market. These customers use motors as components in large products and in the replacement market. They have made over 40 models of electronic motors.
Report made by
Osama Mir
16/1/2012
SUMMARY McLeod Motors LTD is a successful company with numerous
customers in the original equipment manufacturer (OEM) market.
These customers use motors as components in large products and
in the replacement market. They have made over 40 models of
electronic motors. During the previous year McLeod engineers
have recommended that the company minimize the different
number of end shields and replace these different end shields
with a new end shield called BN-88-55. The new end shield
replaces 15 end shields in one motor product line of motors. Sue
Reynolds, plant manager at McLeod Motors LTD factory realized
that this new product would result in lower manufacturing costs,
make higher sale and lower inventories; however, the results that
the vice president expected to see at the end of the period did not
occur. McLeod Motors LTD has too much inventory and the
warehouse does not have enough space for all their inventories
such as: Raw Materials, Work in process, finish goods and
supplies. Sue Reynolds needs to investigate the reasons why the
warehouse does not have enough space and what Macleod has to
do in order to decrease their inventory and lower the cost of
keeping the inventory in the warehouse. Sue Reynolds has to
consider what action to take and what should tell John Ingram.
PROBLEM STATEMENT McLeod Motors has experienced sales boom and this affects all
areas of company. All the machines busy to make orders ready
and send it to the customer in the right time. Warehouse space
was scarce and the machines were usually all occupied. The
company replaces 15 end shields in the new BN-88-55 but they
still do not have enough space in the warehouse. The construction
of the new BN-88-55 shield consumes too much time of the daily
operations.
BN-88-55 BN-88-55 is a motor component designed by the engineers of
McLeod Motor to reduce the number of different end shields.
BN-88-55 was machined from aluminum die. It has the ability to
accommodate with the shaft. Its inner surface has various ribs to
add strength. Major benefits of it are that it allows better
production runs, lower inventory and reduces cost.
BN-88-55 is bowl shaped motor component which has a diameter
of 16.6 cm and is 4.8 cm deep. It costs McLeod motors 5.28 $ on
the casting of each BN-88-55. It takes 3.1 minutes of direct labor
time to process which costs 0.77 $.The added overhead allocation
cost is 2.31 $. Hence the total cost on each BN-88-55 is 8.36 $ and
McLeod motors sold them for 10 $ to replacement market
customers.
For better understanding there is a Case study below.
Reference Case Study is available here.
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