Format and Requirements 1. The vehicle to provide your convincing argument will
ID: 381899 • Letter: F
Question
Format and Requirements 1. The vehicle to provide your convincing argument will be a letter to the CEO, 2. The letter will be requesting a meeting with the CEO where the merits of your 3. While you have a strong and healthy relationship with the CEO, you have a outlining your viable options that should be considered options will be discussed. different perspective on a number of operating strategies for the company The requirement of the assignment is to demonstrate your command of the terms and concepts of operations management, critical thinking skills, problem solving/decision-making skills, and communication skills 4· 5. This is a problem solving/decision-making exercise that requires your ability to (1) define the problem, (2) develop viable alternative solutions, (3) choosing a viable solution, (4) describing how the solution would be implemented, (5) and how the results of your chosen solution would be measured. 6. It is critical that you separate facts from beliefs in your response.
Explanation / Answer
Based on the given requirements, a letter to the CEO is to be written to decide or solve a problem in the operations.
LETTER
To,
The Chief Executive Officer,
Company Inc.
Dated December 1, 2017
Dear Mr. / Ms. ,
Reflecting on the management presentation and meeting last week, the operations department is encouraged by the increased allocation of budget for the expansion project of our second plant. The cost reduction efforts of the last two quarters have helped us weather the low sales. The big order win for 600 units from new clients comes as a huge relief. However, there are challenges in meeting this new demand of 600 units.
The new clients are very demanding and their engineering specifications are complex. The only machine that can be employed to fit their requirements is not in the best condition. The machine is overused and requires shutdown once every week for maintenance. The new machine that we have ordered is due for installation only in the third phase of the plant expansion project. To meet the challenge of fulfilling the new orders of 600 units, we must consider the option of outsourcing the manufacturing to a reliable third party contractor. Alternatively, we may advance the installation of the new machine to the first phase of the expansion project. Another possibility is to optimise our batch size to accommodate downtime on our existing machine until the expansion project is completed.
The outsourcing will cost us a service charge that is 5% more than our in-house production costs with one week longer process time per batch. The project advancement option will involve and extra cost of $100,000 for crashing the project and over utilisation of resources. If the third option of optimising the batch size is considered, my calculations show that the new economic batch quantity will be 60 units and we will need 10 batches to meet the new demand with full capacity utilisation.
I propose that the third option of optimising the batch size must be adopted since it has the least impact on cost and the risk of using overused machine is minimised by allowing frequent maintenance downtime. This option increases the certainty of meeting the new demand and will not affect the expansion project in any way.
I can make a detailed presentation of this plan in our upcoming weekly meeting . Looking forward to hearing your valuable inputs and approval on this matter.
Thanking you,
Yours sincerely,
Mr./Ms. .