Operation Management: Buckeye Manufacturing Case Study

Management science is a journal published with the purpose of scrutinizing scientific research on how management in different institutions and organizations is carried out. Management in an organization involves leading and decision making. It involves key functional areas such as accounts, finance, marketing and operations department. Good management in a company sires good strategy, innovation and sustainability. Management science therefore gives us an insight on what management really entails.

Operation management therefore involves redesigning and reorganizing any aspects of production and operations involving the daily businesses of production in an organization, firm or company. It mainly deals with the goods and services and how the tastes, needs and wants of a consumer can be met. To meet this, the organization needs to carry out the process of product control, strategic manufacturing policy, productivity analysis and cost control. This productivity control can be done by regulating the materials used by ensuring use of better affordable materials and acquiring new assets too.

“The case at hand is centered on Buckeye manufacturing, a company that produces head engines used in truck manufacturing” (Anderson, Sweeney, Williams and Camm 406). The engines heads produced are tailored for either big or small trucks. The dilemma is that the company can only produce either the P head or the H head (Anderson, Sweeney, Williams and Camm 406).

Plans of changeovers to produce either of these engine heads cost 500euros. “When set for P heads, the organization’s maximum rate of production is 100 units weekly and when set for H heads, its rate is 80 units weekly” (Bhanot 83). The production costs of both the P Heads and H heads were high hence the need to minimize their production. According to the table provided in the attachment, the demand of both the products is high (Anderson, Sweeney, Williams and Camm 406). As discussed above, one of the main aims of operation management involve meeting the needs and taste or rather the essentials of a customer. The company needs to come up with means through which they can serve and maintain their consumers who obviously need both products.

The company shut down for the week in order to prepare a production schedule. “In the coming eight weeks, the manager aims at planning for both production and change overs” (Bhanot 83). The objective is to lessen sum of production. In addition to this, the changeover costs together with the inventory carrying costs were to be minimized.

Data presentation involves ways in which the solutions will be derived. The data is presented in an excel worksheet. Despite the fact that the worksheet formulation is similar to those of linear programming problems, the worksheet formulation needs more information while setting up the solver parameters and integer options dialog boxes. The excel solver that has information is in the lower portion of the worksheet. The decision variables are in cells B17:C17. This information involves solutions to buy and acquire four town houses and two apartment buildings (Bhanot 83).

The objective functions are represented in cell B13 in order to reflect the annual cash flow. The annual cash flow is 1000euros and is represented in cellB7:C7. The model is represented in cellA10 while maximum cash flow is in B13. The formula to be used is =SUMPRODUCT (B17:C7, B17:C17). The funds available are 2000euros represented in cellG4. Manager time available in cell G5 while town houses available in G6.

The left hand sides for the three constraints are placed in cells F15:F17 whereby cell F15=SUMPRODUCT (B4:C4, $B$17:$C$17) and to be copied to cell F16. Cell F17=B17.the constraints involved funds and time. The available funds were 2000euros yet the time available was limited. This is why there is need for quick solutions to be arrived at.

The right hand sides of the model of the three constraints are placed into cells H15:H17 whereby cell H15=G4 which is copied to cells H16:H17. Described above is the model formulation for the Buckeye manufacturing case.

The above model formulation should be solved in order to reach the solutions that the company requires. First and foremost in problem solving, one should select solver from the tools menu. Secondly, the valid values are entered into the solver parameters dialog box (Anderson, Sweeney, Williams and Camm 406).

The first constraint in the solver show that the decision variables in cell B17 and cell C17 must be integer where the integer requirement is created by using the add constraint procedure. $B$17:$C17 should be entered as the cell reference and ‘int’ as the form of the constraint so when ‘int’ is selected, the term integer appears as the right hand side of the constraint. Additional information required by the solver parameter includes the value of set cell, what it is equal to changing variables and the subject to the constraints (Kolluri and Singamsetti 71).

The second step involves selecting the ‘options button’. There is an option’ assume non-negative ‘which must be checked. In so doing, one should click the ‘ok ‘option available in the solver options dialog box then select “ solve “ in the solvers parameters dialog box. By clicking this, the solver is then instructed to compute the optimal integer solution (Kolluri and Singamsetti 71).

One should note that while the binary variables are present in an integer linear programming problem, then, one can select the destination ‘bin’ instead of ‘int’ while putting up the constraints in the solver parameters dialog box.

If the optimal solution is not found within the reasonable amount of time then the tolerance can be set again to five percent or a higher value. This will enable the search procedure to stop when a near optimal solution is found. “In order to reset the tolerance, click on integer options in the solver options dialog box, then enter the desired values in the tolerance box” (Anderson, Sweeney, Williams and Camm 406). From that, you can get your optimal solution.

The solution provided is that the Buckeye manufacturing company should purchase four townhouses and two apartment buildings. Whereas the annual cash flow of the company is, 70000euros. The results provided will enable the company to produce both the P head and the H head. “Due to the fact that the company’s inventory consists of 125P heads and 143 H heads, the inventory carrying costs are charged at a rate of 19.5 percent of the value of the inventory” (Anderson, Sweeney, Williams and Camm 406). A single P head was valued at a cost of 225euros while that of an H head is 310 Euros.

The production costs would be lowered since these new production costs were quite high hence the solution of acquiring town houses and apartments will enhance minimizing of production costs.

The solution also gives a chance for the company to acquire assets which shall be used as a source of revenue hence the rates of return on investments (Bhanot 83).

Conclusion

Buckeye manufacturing is a company that requires a revamp of the company management and operations. New strategies need to be put in place in order to make profits and avoid cases of failure of operations of the company. The management needed a plan on how to solve the problems that they were facing. The move to close down for one week in order to work on minimizing costs was a bold move. The use of excel to represent the data and to solve the problem was clear enough to offer a good and lasting solution. The aim of the operation management was to ensure that business operations of the manufacturing company were efficient. This was to be achieved by use of the few and available resources. This way the production costs shall decline to reasonable amounts (Kolluri and Singamsetti 71).

The demand for the products was relatively high and the move to acquire the townhouses and apartment building was to give chance for more production of both products by the company. This move would meet the consumer needs and help maintain them.

All firms, organizations and companies need to carry out operation management. This operation improves not only the managerial aspect of the company but also the productivity of the same company. While the company’s productivity is improved then the profit rates increase and this leads to increase in the GDP of the country.

All in all the above operation needed time that was a major factor in operations management. Time is a crucial factor in management hence the need for the Buckeye company to close down for a week to establish a way forward in how they would handle the coming eight weeks was much needed. A sustainable solution is always the main joy in a crisis faced company and I am sure Buckeye manufacturing gained so much in the operation management.

Works Cited

Anderson, David, Dennis Sweeney, Thomas Williams and Jeffrey Camm. Quantitative Methods for Business. 12th ed. Mason, Ohio: South-Western, Cengage Learning, 2013. Print.

Bhanot, Sandeep. “Quantitative Methods for Business.” SIES Journal of Management 6.1 (2009): 83. Print.

Kolluri, Bharat, and Rao Singamsetti. “Introduction to Quantitative Methods in Business: An experimental Approach without the Use of Calculus.” Journal of American Academy of Business, Cambridge 16.1 (2010): 71. Print.