Mexicana Wire Works
Ron Garcia felt good about his first week as a management trainee at Mexicana Wire Winding, Inc. He had not yet developed any technical knowledge about the manufacturing process, but he had toured the entire facily, located in the suburbs of Mexico City, and had met many people in various areas of the operation.
Mexicana, a subsidiary of Westover Wire Works, a Texas firm, is a medium-sized producer of wire windings used in making electrical transformers. Carlos Alverez, the production control manager, described the windings to Garcia as being of standardized design. Garcia’s tour of the plant, laid out by process type, followed the manufacturing sequence for the windings: drawing, extrusion, winding, inspection and packaging. After inspection, good product is packaged and sent to finished product storage; defective product is stored separately until it can be reworked.
On March 8, Vivian Espania, Mexicana’s general manager, stopped by Garcia’s office and asked him to attend a staff meeting at 1:00 P.M.
“Let’s get started with the business at hand,” Vivian said, opening the meeting. “You all have met Ron Garcia, our new management trainee. Ron studied operations management in his MBA program in Southern California, so I think he is competent to help us with a problem we have been discussing for a long time without resolution. I’m sure that each of you on my staff will give Ron your full cooperation. ”Vivian turned to Jose Arroyo, production control manager. “Jose, why don’t you describe the problem we are facing?”
“Well,” Jose said, “business is very good right now. We are booking more orders than we can fill. We will have some new equipment on line within the next several months, which will take care of our capacity problems, but that won’t help us in April. I have located some retired employees who used to work in the drawing department, and I am planning to bring them in as temporary employees in April to increase capacity there. Because we are planning to refinance some of our long-term debt, Vivian wants our profits to look as good as possible in April. I’m having a hard time figuring out which orders to run and which to back order so that I can make the bottom line look as good as possible. Can you help me with this?”
Garcia was surprised and apprehensive to receive such an important high-profile assignment so early in his career. Recovering quickly, he said, “Give me your data and let me work with it for a day or two.”
1. What recommendations should Ron Garcia make, with what justification? Provide a detailed analysis with charges, graphs, and computer printouts included.
2. Discuss the need for temporary workers in the drawing department.
3. Discuss the plant layout.
Read the Case Study on page 339 of the textbook on the “Chase Manhattan Bank” (Shown Below). Thoroughly answer the three associated Discussion Questions on page 339 using appropriate citation and clearly delineated tables and graphs when necessary.
CHASE MANHATTAN BANK
The workload in many areas of bank operations has the characteristics of a non-uniform distribution with respect to time of day. For example, at Chase Manhattan Bank in New York, the number of domestic money transfer requests received from customer, if plotted against time of day, would appear to have the shape of an inverted U curve with the peak around 1 p.m. For efficient use of resources, the personnel available should, therefore, vary correspondingly.
A variable capacity can be achieved effectively by employing part-time personnel. Because part-timers are not entitled to all of the fringe benefits, they are often more economical than full time employees. Other consideration, however, may limit the extent to which part-time people can be hired in a given department. The problem is to find an optimum workforce schedule that would meet personnel requirements at any given time and also be economical. Some factors affecting personnel assignment are listed here:
1. By corporate policy, part-time personnel hours are limited to a maximum of 40% of the day’s total requirement.
2. Full time employees work for 8 hours (1 hour for lunch included) per day. Thus, a full timer’s productive time is 35 hours per week.
3. Part-timers work for at least 4 hours per day but less than 8m hours and are not allowed a lunch break.
4. 50% of the full timers go to lunch between 11a.m. and noon, and the remaining 50% go between noon and 1 p.m.
5. The shift starts at 9 a.m. and ends at 7p.m. (i.e., over-time is limited to 2 hours). Any work left over at 7p.m. is considered holdover for the next day.
6. A full-time employee is not allowed to work more than 5 hours overtime per week. He or she is paid at the normal rate for overtime hours-not at one-and-a-half times the normal rate applicable to hours in excess of 40 per week. Fringe benefits are not applied to overtime hours.
In addition the following costs are pertinent:
1. The average cost per full-time personnel hour (fringe benefit included) is $10.11
2. The average cost per overtime personnel hours for full timers (straight rate excluding fringe benefits) is $8.08.
3. The average cost per part time personnel hour is $7.82.
The personnel hours required, by hour of day, are given in the following table. The bank’s goal is to achieve the minimum possible personnel cost subject to meeting or exceeding the hourly work-force requirements as well as the constraints on the workers listed earlier.
WORK FORCE REQUIREMENTS
Time Period Number of Personnel Required
9-10 am 14 people
10-11 am 25 people
11-12 am 26 people
12-1pm 38 people
1-2 pm 55 people
2-3 pm 60 people
3-4 pm 51 people
4-5 pm 29 people
5-6 pm 14 people
6-7 pm 9 people
1. What is the minimum-cost schedule for the bank?
2. What are the limitations of the model used to answer question 1?
3. Costs might be reduced by relaxing the constraint that no more than 40% of the day’s requirement be met by part-timers. Would changing the 40% to a higher value significantly reduce costs?
Both case studies should be answered in a minimum three- to four-page paper using appropriate APA style.