The production process takes about two weeks after the materials are received. However, production time has recently increased to four weeks with no explanation for the increase. To determine the exact cause of the increase in production time, production processing must be re-evaluated. Profits for 2012 could rise from $5 million to $5.5 million if Eastern Gear can reduce processing time back to 3-4 weeks.

The manufacturing procedure.

The way orders are filled is constantly being interfered with. The average order spends 90% of its time waiting for a machine to become available and 10% of its time actually using the machine. Adding more machines would alleviate the wait. It would be an additional upfront cost, but they would easily recoup it by being able to fulfill more orders in less time. Part of the problem is that 20% of their orders have rush tags, which give them priority and put regular orders on hold. Eastern Gear must implement a production control process to manage both rush and regular orders. There should also be a separate operational procedure for large orders as opposed to small orders, because the smaller orders are currently taking longer to process because they must wait in line for the larger orders to be processed. Rush orders could be processed on separate machines.

Study of a Case Job Shop: Eastern Gear, Inc. Eastern Gear, Inc., based in Philadelphia, Pennsylvania, manufactures custom-made gears weighing from a few ounces to more than 50 pounds. Depending on the needs of the customer, the gears are made of various metals. 40 different types of steel and brass alloys have been used as raw materials in the last year. For more information, see Exhibit 1. Eastern Gear primarily sells to engineering research and development laboratories or very small manufacturers. As a result, the number of gears in most orders is small; the same gear is rarely ordered more than once. Exhibit 2 depicts the order size distribution in March 2016. Eastern Gear's president recently decided to accept a few larger orders of 100 gears or more. Although lower prices were accepted on these orders, they assisted in covering overhead. It was discovered that the large orders caused many of the small orders to be delayed for an extended period of time before being processed. As a result, some small order deliveries were delayed. It may be necessary to halt production and await new raw materials or clarification of the design. The tolerances or finishes required during machining are not always included in the custom er's prints submitted with the order. As a result, when the information is required, the customer is contacted directly. When the order is received, one copy is sent to the production supervisor, Joe Irvine, and the other copy is sent to the controller, Sam Smith. Smith places a purchase order for the raw materials needed after receiving the customer's order. Depending on the supplier and the type of material ordered, these materials can take one to two weeks to arrive. After receiving the customer's order, the supervisor reviews it and files it until the raw material arrives. The customer order, along with the materials, is then routed through the shop. Historically, most gears were manufactured in about two weeks after receiving raw materials. This production time has recently been increased to four weeks. Irvine expressed concern about bottlenecks in the manufacturing process. The bottleneck could be in one machine center one week and another the next. These bottlenecks make getting orders out on time difficult. ENTRY OF ORDER When a customer wants to order gear, James Lord, sales manager and marketing vice president, takes the order. By submitting a blueprint or sketch, the customer specifies the type of gear desired. The customer specifies the number of gears needed as well as the type of material. On rare occasions, the customer's engineer will call after the order has been placed and request a design change. In these cases, it is possible that EXHIBIT 2 Sales, March 2016. EXHIBIT 1: MATERIALS A B Material Type Usage in 2015 $(000) 36 10 15 $ (U OOI) 1 2 3 4 5 8 10 15 20 25 30 40 50 100 200 400 700 1.000 Orders received: 80 53 69 32 82 47 64 22 42 27 18 22 10 4 2 1 2. $ 3.200 4.250 8.163 4,800 16.392 15,987 26,871 13.172 31.555 23,682 21,600 32.000 18,693 12,500 14,068 9,652 35,600 20.000 $312,185 H 1 J K Everyone else 110 (18 32 75 40 60 30 53) $522 This case was created to serve as a springboard for class discussion, not to demonstrate either effective or ineffective management of an administrative situation. Another work center has 417 machines. While this layout 418 Part Seven Cams is in use FLOW OF MATERIALS AND PHYSICAL LAYOUT Exhibit 3 depicts Eastern Gear's standard job shop layout. Each work center uses the same machines or processes. Materials flow from one work center to another based on the operations required for a specific order. A typical order will proceed as follows. The raw material, a gear blank, is first delivered to the milling work center. The teeth are cut into the gear's edge here to the customer's specifications. The gear blanks are then sent to the drilling work center, where one or more holes in the gear may be drilled. The gear is then sent to a grinding center, where the gear teeth and surface are finished. If the customer requires it, the gear may then be sent to be heat-treated. When the batch of gears is finished, it is inspected by the next available worker before being shipped to the customer. Exhibit 3 shows how the machines on the shop floor are grouped by similar type. For example, all drills are housed in a single work center, and all milling allows for the development of worker skills and training. As a result, the flow of products through the shop is jumbled. The orders being processed in the shop are constantly interfering. The average order spends 90% of its time waiting for a machine to become available. Only 10% of the time is spent on the machine processing the order. As a result, it takes a long time (four weeks) for an order to pass through the shop. Orders of all sizes are processed together. There is no separate work flow for different order sizes. In fact, large orders are assisting in keeping the shop running at full capacity. HISTORY OF THE COMPANY Eastern Gear's business has been booming. The company lost money for the first two years, but it has made a small profit in recent months. In the last quarter, sales increased by 100 percent. For more information, see Exhibit 4. Although sales are rapidly increasing, a recent market survey indicates that sales can be expanded even further in the coming years. According to the market survey, if the current delivery lead time of five to six weeks is maintained, sales will be $5 million in calendar year 2016. If total delivery lead time can be reduced to three to four weeks, sales could be increased to $5.5 million rather than $5 million. Due to longer delivery lead times, the company recently hired an expediter, Matt Williams. Each morning, Williams reviews the shop's work progress and selects orders that appear to be behind schedule. Each order that is late is marked with a red tag. Indicating that it should be dealt with as soon as possible. Approximately 20% of orders have rush tags on them at the moment. Williams also devotes time to his EXHIBIT 3 Layout. Machines for milling Deck for receiving Receiving and storing raw materials Heat treatment Center for finishing and grinding Shipping and storage of finished goods Port of entry Tool chest Drilling in the Lunchroom EXHIBIT 4 FINANCIAL INFORMATION 560 in 2013, 1,500 in 2014, and 3,100 in the first quarter of 2016. Manufacturing expenses Materials Depreciation of Labor Overhead Total manufacturing expenses Sales commissions G&A costs Total expenses Before-tax profit 586 (26) 273 587 216 398 1.474 130 110 1,714 (214 522 1,063 412 422 2.419 263 297 2.979 121 214 327 140 150 831 80 93 1,004 59 All figures are in tens of thousands of dollars.

QUESTION:

After going over modules one and two of this course, read the Case Study: Eastern Gear, Inc.: Job Shopfrom Operations Management in the Supply Chain, 8th Edition. PP. 432- 434.

Based on your readings:

1. Illustrate how to select a Production Information Systems for Eastern Gear, Inc.
2. Depict the steps to manage the production process and the technologies that drive that process at Eastern Gear.