Memorandum Memorandum

MEMORANDUM 9

Memorandum

Memorandum

To:the CEO

From:

Subject:Evaluation of the four projects and a recommendation of which projector combination best suit the organization.

Thankyou for giving me this chance to exercise what I have learned inprocess analysis, this opportunity will play a tremendous role inincreasing my skills and experience. As requested I conducted anevaluation of the four projects recommended by the engineers to seehow they would improve the existing process. For a business to remaincompetitive, it is paramount to make the best decisions andselections when it comes to production performance and operatingcost. In this memorandum, I will provide you suggestion on what canbe done to solve the current problem being faced by your company.From what I understand the management believes that there is a needto increase the production of the circuit cards to meet the currentdemand. Based on my study I arrived at the following conclusions.

  1. Project 1) Hiring Inspectors: when the number of inspectors is increased by one the profit increases to 910 a positive value. Further increase in the number of inspectors leads to a negative profit increment. A reduction in the number of inspectors may reduce the project cost, but it leads to negative increment in profit. Thus, the number of inspectors should be maintained at 4.

  2. Project 2) Bin sizing: after remodeling is done the number of cards completed increases. The profit increment is highest when the storage capacity is at 8. The production also increases at this point. It is paramount to note that remodeling will come at a cost the higher the number of remodeled storage bin the higher the cost. Thus, the bin sizing should be maintained at bin storage capacity of 8.

  3. Project 3) Quality project: here I found that when the numbers of defective cards are reworked at soldering and component placement a decline in cost is experienced and the profit increases. The defective percentage as per this project is recommended to be 2% as at this point the profit is the highest.

  4. Project 4) Setup time reduction: this was meant to reduce the cards preparation time before baking, here I the findings showed the best set up time is a 3min because at this time the profit increment is at highest 342 and the number of completed project rising to 24947. Therefore, the time set up for card preparation before baking should be approximately three minutes.

Themain aim of these operation management projects is to ensure thatproduction of circuit cards is profitable and that the products arequality goods. In this regard, the company will be in a position tomeet demand and assure efficient production of circuit cards. Thebasis of these conclusions is explained by the rest of this memo. Iplan to present my evaluation of the project in four parts and lateron compare the combination of the four projects in six pairs. Thiswill be followed by a recommendation on which project is paramount tothe company and why the company should take the initiative ofadopting it.

Project1) Hiring Inspectors

Fromthis project, we can deduce that the high the number of inspectorsthe lower the profits. This is caused by the increase in the cost ofpaying this inspector while as the productivity is still low. Adecline from the current number also causes a decline in profitdespite the fact that the cost of paying inspectors declines. Thenecessary number of inspectors that will deliver valuable results isfour. With four inspectors the operations are running smoothly theprofit are rising and the number of completed card increases.

Thefirst question we have to ask ourselves when adding the number ofinspectors is what value they will add to the company. Inspection isconsidered as part of quality control the objective being separatingthe defective product from the defective free product. An inspectorprevents the shipment of defective products. Shipping defectiveproducts is unacceptable as it makes the company lose credibilitythus giving the competitors an added advantage. The benefits ofimplementing this project include the following offering thecustomers a true perspective of the customers buying behavior. Thisinformation is important for the company because it helps it retainthe knowledge of how the product is received in the market. Ignoringthe acquired knowledge from inspection will leave room forcompetitors to exploit. Another benefit of the inspectors is offeringinsights into coming up with better designs that might lead to lesswaste and higher quality. Reduction of future cost here inspectionspares the company from incurring the cost due to the rejection oftheir item or return of the damaged shipments. All in all, inspectorsin their right number will be the source of considerable valueregarding cost reduction and as a competitive defense tool.

Project2) Bin sizing

Afterremodeling is done the number of completed card increases. When thenumber of remodeled storage bin increases to eight the profit beinggenerated by the company is at the peak, further increase in thenumber of storage bin leads to negative profits. Of course, theproduction of these bins cost money thus the increase in costs. Thebenefit of this process to the company is that increases the of cardsthat can be held by a storage bin. This way limiting factor thatregulates the amount of work in process inventory will be removedthus ensuring an increase in productivity. Moreover, those in chargeat this stage will have to ensure quality by visually inspecting eachcard and repairing the defective ones.

Project3) Quality project:

Thisproject led to the reduction of the number of defective cards thatare reworked at the component placement and soldering operations. Thebest percentage of defect percentage is 2%. At 2% there is anincrease in increment in profit of 1724 this clearly shows thedefective percentage ought to remain at this point. From this pointany increment causes a decline in the number of produced card.Quality is one of the prominent issues that are challenging businesstoday. The reason being the markets have become more competitive: thecustomers are now more demanding, knowledgeable, able to shareinformation and to complain when offered poor quality. In thisregard, if your company manages to develop a good reputation as thehub of quality services then it will have an advantage over itscompetitor. The cost would cause your company due to poor qualityinclude lost customers, the cost of remaking products or reworking,cost of refund and wasted materials. Poor quality attracts unhealthycompetition. The aim of quality management being a project I believein controlling activities with a goal of ensuring that the cards meetthe specifications and their purpose. The gains of implementing thisproject include having in mind the needs of the customers, motivatingworkers to get more involved in production and decision making.Another advantage is less wastage from defective unfinished products.Quality eliminates the cost incurred in paying for the inspection.

Whatshould be noted is that adopting this project may push the companytowards becoming a bureaucratic. Besides, the project requires strongleadership and the costs and disruption may outweigh the benefits

Setuptime reduction project:

Theassignment here was reducing the prep time used in preparing thecards. As a tool, I checked to see how the project can be used toreduce excessive waste of time. Also with a low cost being incurred Iwanted to find out whether the project would help in attainingincreased capacity from the current equipment. As seen the product isimproved and in some cases a cross-functional team is used in solvingproblems. The findings were as follows: every reduction in timecaused an increase in the number of completed cards and increment inprofit. The reduction of setting up time in the oven is best whendone in three minutes at this point the number of cards completed is24,947, and the profit increment is 342. The benefits that thecompany will get by implementing this project include the following:

  • Fewer adjustment errors

  • On hand inventory reduction

  • Improved customer service levels

  • Labor utilized effectively

  • Increased scheduling capacity

  • Fewer shortages and stock-out

  • Improved cash flow

  • Improved machine efficiency

  • Reduced overall cost of quality

  • Material waste reduced

  • With this benefits the company

Theoutcomes of these benefits are the customer are happy, the idleassets will be utilized, and the a return on investment will berealized within one year.

Thefollowing is my comparison of the different combination to come upwith the best project combination that would work best towardsmeeting the company goal.

Project1 &amp 2 in this combination the profit increment are highest whenthe number of the inspector is four, and the storage bin capacitynumber is four. This combination seems better at this point becausethe cost is lowest at this point.

Project1 &amp 3 here the profit increment is highest at 5694 when thenumber of inspectors is four, and the percentage defect is 1 percent.The cost is low at 1400.

Project1 &amp 4 at this point we can say that we determine the best pointof the combination by not referring to the highest increment inprofit but rather at which point the profit is high than the costincurred. Statistically a combination of 5 inspectors and a setuptime of 5 results to profit increment of 2002 but the cost is higherat 2060 which means that this is not a viable combination. The bestoption seems to be a combination of 4 inspectors and a setup time of6 minutes here the profit increment is higher at 1936 than theproject cost of 1030. What should be noted is despite all this thereis an increase in the number cards as the number of inspector raisesand the oven time drop. The reason I did not opt for eight inspectorsand set up time of 2 minutes is because of the high cost and lowprofits or returns.

Project2 &amp 3 here the best combination is when the number of bin storagecapacity is 8 and the percentage defectiveness is 3% at this pointthe cost of the project is at its lowest, and the profit increment isat its highest.

Project2 &amp 4 I believe the best combination when bin storage capacity is8 and the setup time is four this results in an incremental profit of570.

Project3 &amp 4 the best combination here is when the percentage defect is2% and the oven set up time is seven which results to an incrementalprofit of 1724.

Inmaking these decisions I used the profit increment in determining myanswer because we determine whether a project is good through lookingat the profit generated after.

Afterreviewing these combinations, I would like to propose that project 1and 3 be chosen for implementation. This is because they yield thehighest profit increment of 5694. With four inspectors and apercentage defect of 1 percent, the company would surely recover itsinvestment within one year.

Tosum up, I do believe from the evaluation I have presented to you thatyou will be able to come up with a better decision on which projectto adopt. My recommendation is if the funds are available adoptingtwo or more of the project would be appropriate as in the long runthe company would be able to get back its investment and enjoy thehigh production. Nevertheless, if only one project is to be chosen,then my recommendation is project one whereby the number ofinspectors is raised to four.