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Flex Furniture has been manufacturing dining room furniture for several furniture outlets in the U.S. since 1969. The company is known for their dining room

Flex Furniture has been manufacturing dining room furniture for several furniture outlets in the U.S. since 1969. The company is known for their dining room sets - tables, chairs, consoles, and sideboards - in which they offer tremendous choices and allow customization for dimensions, wood finish, upholstery, and fittings. The average promised lead time for their orders is eight weeks. Until recently, they were able to provide delivery within the promised due dates for 99.2% of orders with an occasional slip up causing orders to be at most 5 days late. However, in the past two years, over 33% of orders have been over three weeks late, which led to several complaints from buyers.

Flex Furniture prides itself on the quality of the furniture it produces and its willingness to incorporate requests for changes until the last possible time the order is released to production. Their manufacturing operation is set up by departments. Wood cutting, upholstery storage and cutting, assembly, hardware fitting, polishing, finishing, inspection, and packaging are organized as separate mini-shops, and furniture makes its way through these departments as needed. A sophisticated scheduling system helps them keep track of due dates and job schedules.

There has been a shift in the mix of orders for Flex Furniture, and this shift appears to mirror a change in the customer mix. Compared to two years ago, order sizes of 1 to 5 sets of one type have been reduced to half of what they used to be while order sizes of 45 - 50 sets of one type with hardly any customization have nearly doubled. The customer mix now includes more retail chains, besides the traditional boutique stores and interior designers. As a sign of this increasing trend, one of Flex Furniture's major customers, Eat-In Dining Rooms, recently contacted them with a potential order of 125 single type of dining room sets for their newly expanded stores and warehouses in the Midwestern U.S. This order is for one of the cheaper sets that Flex makes and requires no other customizations other than two wood finish types in the mix. Until now, Eat-In's order quantities for any one set had been quite small, with the largest order size being 5, even when the total order was for a larger quantity of up to 100. For the current large-volume order, Eat-In is demanding a shorter lead time of six weeks and is pushing for a discounted price citing the large quantity of the same set as a reason. Suchdemands for price discounts have also been brought up recently by buyers for several other furniture outlets although it has never been an issue in the past.

The production manager for Flex, Harmeet Singh, is in a fix. On the one hand, there is the potential for increasing sales by accepting large orders of identical sets albeit at discounted prices. On the other hand, he has longstanding customers of customized sets complaining about slipping on delivery dates and workmanship. He is also not sure how he can provide high- volume orders at shorter lead times. The marketing manager, Natalia Petruzzi, believes that customers deserve the quantity discounts for larger orders and does not see why Harmeet is not able to extract efficiencies from large volumes of the same sets as well as provide products more quickly than before.

Harmeet believes that some long-term operations strategy decisions need to be made, and that may need investments in the production process. He has scheduled a meeting with the marketing manager, Natalia Petruzzi, and the managing director, Selena Wong, to explain, from an operations management perspective: 


(1) The causes of the current delivery date problems, and the challenges in accepting the new large-volume orders with the current process configuration. Instructions: Refer to Operations Strategy and Process Configurations concepts for your response. 


(2) A proposed process configuration for accepting the new large-volume orders while continuing to serve the remaining customized-orders customers. Justify your choice of process configuration (present pros and cons).

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