Mexicana Wire Works Ron Garcia felt good about his first week as a management tr
ID: 2382821 • Letter: M
Question
Mexicana Wire Works
Ron Garcia felt good about his first week as a management
trainee at Mexicana Wire Winding, Inc. He had not yet developed
any technical knowledge about the manufacturing
process, but he had toured the entire facility, located in the suburbs
of Mexico City, and had met many people in various areas
of the operation.
Mexicana, a subsidiary of Westover Wire Works, a Texas
firm, is a medium-sized producer of wire windings used in making
electrical transformers. Carlos Alverez, the production control
manager, described the windings to Garcia as being of
standardized design. Garcia’s tour of the plant, laid out by
process type (see Figure 7.20), followed the manufacturing sequence
for the windings: drawing, extrusion, winding, inspection,
and packaging. After inspection, good product is packaged
and sent to finished product storage; defective product is stored
separately until it can be reworked.
On March 8, Vivian Espania, Mexicana’s general manager,
stopped by Garcia’s office and asked him to attend a staff meeting
at 1:00 P.M.
“Let’s get started with the business at hand,” Vivian said,
opening the meeting. “You all have met Ron Garcia, our new
management trainee. Ron studied operations management in his
MBA program in southern California, so I think he is competent
to help us with a problem we have been discussing for a long
time without resolution. I’m sure that each of you on my staff
will give Ron your full cooperation.”
Vivian turned to José Arroyo, production control manager.
“José, why don’t you describe the problem we are facing?”
“Well,” José said, “business is very good right now. We are
booking more orders than we can fill. We will have some new
equipment on line within the next several months, which will
take care of our capacity problems, but that won’t help us in
April. I have located some retired employees who used to work
in the drawing department, and I am planning to bring them in
as temporary employees in April to increase capacity there.
Because we are planning to refinance some of our long-term
debt, Vivian wants our profits to look as good as possible in
April. I’m having a hard time figuring out which orders to run
and which to back order so that I can make the bottom line look
as good as possible. Can you help me with this?”
Garcia was surprised and apprehensive to receive such an
important, high-profile assignment so early in his career.
Mexicana Wire Winding, Inc.
Questions
1. What recommendations should Ron Garcia make, with
what justification? Provide a detailed analysis with charts,
graphs, and computer printouts included.
2. Discuss the need for temporary workers in the drawing
department.
3. Discuss the plant layout.
Source: Professor Victor E. Sower, Sam Houston State University. This case
material is based on an actual situation, with names and data altered for confidentiality.
Explanation / Answer
Objective function: Maximum profit
To make the optimum profit by satisying the limitations total units of
Assume X1, X2, X3, X4>=0
Constraints
Product W0075C >= 150 units
Product W007X >= 600 units
X1 < = 1400
X2 < = 250
X3 < = 1510
X4 < = 1116
Inspection capacity is not a problem. Work overtime can be schedule to meet the requirement.
Total maximum profit
34 x1+ 30 x2+ 60 x3+ 25 x4
Profit for product x 1 per unit = 34
Profit for product x 2 per unit = 30
Profit for product x 3 per unit = 60
Profit for product x 4 per unit = 25
Equation developed using the constraints,
Plant capacity (Hours)
Required hours/ unit
Drawing constraint:
1x1+2x2+0x3+1x4 <= 4000
Extrusion constraint:
1x1+1x2+4x3+1x4 <= 4200
Winding constraint:
1x1+3x2+0x3+0x4 <= 2000
Packaging constraint:
1x1+0x2+3x3+2x4 <= 2300
x1 > = 150
x4 > = 600
x1 < = 1400
x2 < = 250
x3 < = 1510
x4 < = 1116
Ans1:
In April, the following quantities to be produced to achieve maximum profit:
W0075C = 1100 units
W0033C = 250 units
W0005X = 0 units
W0007X = 600 units
Opitmum profit = USD 59900
Since packaging hours will be utilized fully, the remaining hours of drawing and extrusion will be unused.
Ans 2:
There is no use of hiring the temporary workers in the drawing department,because hours for drawing are un-utilized due to lack of winding and packaginghours. If we don’t have sufficient packaging hours to proceed the product afterdrawing and extrusion, the finished product will not be come out for delivery.
Ans 3:
Sequence: drawing, extrusion,winding , inspection and packaging
After inspection good products is packaged and sent to finished product storage.Defective product is stored separately until it can be reworked
Product W0075C X1 Product W0033C X2 Product W0005X X3 Product W0007X X4