Case Donner

The Donner Company is believed to be more adept than its competitors

in creating prototypes of new designs and anticipating/resolving any

problems that might be associated with these designs.

There are several problems being faced by Donner company, which need to be addressed.

a) Operations Plan - The standard hours associated with the processes are based upon competitor data rather than the actual usage by Donner

b) Production - Production bottleneck was not clear as it caused the work to pile up at a station without a way to know, which station was the source of the problem.

c) Planning - The rush orders were causing the production planning to go astray

d) Supply chain - The deliveries from August onwards were getting delayed by an average of 9 percent.

e) Quality - There was an increase in customer returns, which increased from 1% to 3% in August. There was an increase in pre-shipment rejections in September to 7% the vast majority of which was because of incomplete operations.

The problems can be addressed by doing the following :

The standard hours need to be re-worked considering the idle time being used

It is a batch process

There is variability in orders as a result of which the cost benefits varies.

The capacity in boards per day can be calculated for any given order size.

Cost Benefit of CNC for an average order size of 12 circuit boards

Cost = 800000

Manual = 495min CNC = 264min

Difference = 231 min

Direct Labor cost of 22 employees in August = 32.7

Per min cost = 32.7 / 232320

Recommendations

Change the policy of using CNCs for drilling for order greater than 6

Boards

Change the policy of shipping more in second fortnight of the month,

make it more equally distributed.

Cheetah strategy of low volume high variety. But should be both high as well.

The ability of the firm to increase its production capacity is being

hampered by the “shifting bottleneck”, which appears throughout various

stages of the manufacturing process...