Operations Management for Chad's Creative Concepts

Operations Management 1
OPERATIONS MANAGEMENT
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Operations Management 2
Introduction
Chad’s Creative Concepts is a company that focusses on the design and manufacture of
wood furniture. The company was founded by Chad Thomas. Chad’s company had initially been
focusing on custom-made pieces hence being able to grow its reputation. However, with the
introduction of the standard line furniture, the company began having some production
challenges such as increased lead times, delays in delivery and also capacity problems. This
means Chad Thomas, the owner of the business will need to make some important decisions
regarding operation, expansion, production, and other departments so as to allow the company to
maintain its reputation.
Question 1
The operating decisions that Chad Thomas faces are divided into both short-term and
long-term decisions. Beginning with the short-term decisions, we have; One, how to set both
priorities and schedule of different orders. Chad receives orders for standard pieces and custom-
made pieces, which may be in high-volume or low-volume orders. Besides, sales have
skyrocketed but the production capacity and amount of equipment necessary for production have
not increased. Different orders from custom to standard lines are competing for the same
production capacity hence the standard line is suffering. In addition, the stock is piling due to the
increased inventory not being used up.
Secondly, the type of work policies to be maintained for the employees in the company.
Employee policies are crucial for the great running of the company; however, they will depend
on the nature of the business or size (Employment policies, 2018). Decisions that might be
incorporated include the number of hours to work in a day, the number of employees to employ,
and also hours for working overtime. Thirdly, the allocation of equipment, resources, money, and
labor for each product line. Since the two product lines are competing over the same resources,
Chad will have to decide how he will allocate each product line the resources, and labor required
to ensure quality is still met. The company has gained a good reputation for its creative designs,
and it would be a shame to reduce on quality due to lack of the right labor, or other resources that
are key for the success of the product lines.

Operations Management 3
Lastly, the level of inventory to be maintained in the different stages of production. This
decision is also linked to the long-term decision however its impact is felt more on the short-
term. The inventory to be considered includes raw materials, work in progress and finished
goods. Excess inventory leads to greater needs for storage or maintenance hence increasing
holding costs (Srivastava, 2018). This further leads to increased expenditure in a company. Chad
will have to decide the inventory to be allowed for both of its product lines to ensure efficiency.
On the hand, the long-term decisions faced by Chad include; One, the total money to be
tied with total inventory investment. Since the company is growing, this means that inventory
will automatically grow. Besides, Chad might consider other product lines along the way.
Therefore, Chad has to consider the total investment on inventory he might need to have in order
to ensure the company meets the growing needs and demands of customers. This will be
important since he will also be able to forecast future demand and be able to meet the demand
without delay (Penn State Executive Programs, 2018).
Secondly, the investment to be made on equipment for the support of efficient
production. Due to the growth of the demand of Chad’s products, Chad might have to decide on
when it would be effective to purchase more specialized equipment for the manufacturing of
both standard and customized furniture. Besides, the equipment would be required to support the
production of high-volume of orders. Thirdly, the skills and capabilities to be maintained in the
company. According to Lindzon (2018), valuable leaders are those who are able to shape the
impacts on businesses rather than react to them. Chad’s creative concepts designs is growing
hence Chad will have to think and decide on the skills that will be incorporated for the long-term
operations of the company. Due to competition, Chad will have to develop new strategies and
train his employees in order to remain competitive.
Lastly, the layout/structure of the facility. Since the company is producing two product
lines, it will be significant for Chad to decide on how the company will be laid out. This will be
essential since, in the event that new product lines are introduced, there will be no shortage of
inventory or resources since the company will able to handle any shortage. Besides, the present
product lines will be produced without delay hence meeting the company’s policy in lead time.