A key component of each phone is the circuit board(s) containing the integrated circuit chips. Each phone assembly department purchases from outside vendors the basic boards and chips to be attached to its board(s). The board department of the plant receives the boards and chips in kits from each phone assembly department and assembles them into completed boards ready for assembly into the phones. The board department (with a cost structure that is 80 percent fixed and 20 percent variable) uses a single highly automated assembly line of robotic insertion machines to precisely position each chip on the board and soldering machines to solder the chips onto the board. The board department is a common resource for the plant; all five of the phone assembly departments use the board department to assemble some or all of their boards. Since the board department has a single assembly line, it can only assemble boards for one type of phone at a time. The assembly departments have authority to seek the most competitive supplier for all their parts and services, including circuit board assembly.
The board department’s assembly schedule is determined at the beginning of each month. The five assembly departments request a time during the month when they plan delivery of particular kits to the board department and specify the number of boards to be assembled. The manager of the board department then takes these requests and tries to satisfy the assembly departments’ requests. How-ever, the board department manager finds that she has a peak load problem; the assembly departments tend to want their boards assembled at the same time. The only way to satisfy these requests is to work overtime shifts during these peak periods even though the board department has excess capacity at other times of the month.

a. If you manage a phone assembly department, when during the month would you tend to request that your phone circuit boards be assembled by the board department (everything else being held constant)? Explain why.
b. Identify various dysfunctional behaviors likely to occur among the phone assembly departments and the board department.
c. What management changes would you suggest? In particular, what changes would you make in the accounting system? Explain why each change should be made.

  • CreatedDecember 15, 2014
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