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Year One Review Case Study

Jane and John’s Goodie Baskets

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Year One Review Case Study

Jane and John’s Goodie Baskets

This project is meant as a capstone to the course and includes most concepts we have covered this semester. This project is worth 20% of this semester’s feedback. You will need to go beyond theory and calculations in some questions and come up with solutions. To substantiate your solutions, use references from industry experts, don’t forget to quote sources and references using APA formatting. This is why this is a group project rather than an individual one. The intent is not to split up the project but for you to work in a group. It is difficult to get everyone together for group meetings, use your time together as effectively as possible by preparing what you can outside of these meetings. Group members should come to meetings with calculations completed and then you can reconcile your answers as a group. For questions 3 and 9, the intention is for the group to brainstorm solutions to these problems. Some theory may be referenced, but the intent of these questions is to apply the theory to the situations given.

The whole project must be typed. There should be a cover page with the appropriate information, (course name & number, your names, due date, title, and my name.) You can use a combination of Word and Excel to create your final report, make sure you show me your work in calculations in case there are errors and I can assign partial marks. This report should include all question numbers, page numbers and questions should flow one to the next without any space. If they don’t, I can only assume you each worked independently and put the project together at the end. You will be penalized for this. Make sure you use spell check to ensure the accuracy of your words.

This is a marked assignment therefore I will only answer theory questions and I will not respond to questions using the information directly from this project, it is not fair to the other groups.

This project will follow the Supply Chain and Operations Management/Purchasing Group Project process including the behavioral contract, time logs including attendance of members, peer evaluation form and the conflict resolution process. Individual projects will not be accepted and a 0 grade will apply.

Project Milestones:

  1. Behavioral contracts are due, 1 per team, Thursday July 9 at the start of class, your time log to date including attendance and any progressive discipline that has occurred should be included with this submission.
  2. Q1-5 are due on Thursday July 23 at the start of class.  I would like a short progress report on group- time logs and attendance of each group member at group meetings and any progressive discipline that has occurred. 
  3. Q6-9, the completed report including time log, peer evaluation signed by all members of the group and any progressive discipline that was done (if applicable), is due Thursday August 6 at the start of class.  

Company Background

Jane and John’s Goodie Baskets was a business that catered to university and college students in Southern Ontario that were away at post-secondary school. Jane and John’s Goodie Baskets created gift baskets for students that parents, grandparents and friends could send to the students away at school. These unique customized baskets served a unique market niche. Business was growing.

Their competitive advantage was response to the customer. They had a very agile operation and could complete orders on short notice. They had 10 people full time who together could do 1300 baskets per week. Their employees were an integral part of Jane and John’s Goodie Baskets success, to recognize their commitment employees received quarterly profit-sharing cheques. Flexible work schedules were also encouraged because Jane and John’s Goodie Baskets recognized that a motivated, fulfilled employee helped to improve customer relations and in turn their collective success and profitability. These employees enjoyed their work so much that employees did not leave and a “waiting list” of sorts was prepared of interested applicants to get a job when one opened.

There was not much training required as assembling baskets was pretty easy work and people were trained very quickly. New design ideas came mostly from employees so creativity and an artistic flair were important characteristics for employees. Each employee was paid $14 an hour and benefits added on another 36% for close to a $19/hour wage. Employees could do on average 3.25 baskets per hour. They also had a list of homemakers that were willing to take on making baskets on short notice. Some of these homemakers were on the “waiting list” for jobs. They paid these homemakers $6 per basket.

Some of the post-secondary schools had approached Jane and John’s Goodie Baskets about raising money for relief efforts in the Philippines after the Typhoon Kammuri. They were willing to assemble baskets and the wages they were paid were going to be donated to the Red Cross. They would put a team together on short notice and assemble the baskets in the school gym. They would include a note in each assembled basket about the donation to Red Cross Relief Efforts.

They had a newer facility that had 2000 square feet. Of that, 1000 feet was storage space, 500 square feet was office space and 500 square feet was assembly space. The storage space could hold about 7000 baskets. It costs $2 per basket per semester to hold inventory in the warehouse. At times when inventory is higher than 7000, it costs an extra $600 for every 1000 extra baskets to store offsite per semester. The offsite warehouse requires a minimum amount of space to be rented. This means increments of 1000 baskets, as an example 2000 baskets, the cost would be $1200.

Jane and John’s Goodie Baskets was approaching another year-end. It was time to review what had happened over the past year and set a budget for the next fiscal year. The company had one major product family which was Baskets.

Q1- Jane and John’s Goodie Baskets had been using an averaging forecasting model. They thought they should try something different for next year’s forecast. They recognized that sales were increasing and they felt they could apply a trend analysis for the yearly forecast and then applying a seasonal index by semester. The following chart represents the demand history over the last 3 years (The last semester is the sales forecast as the sales figures are not in yet.)

Calculate the next year’s forecast using trend analysis trend line y= 5200X +56,700 (See if you can get that trend line on excel-bonus of 2 marks). Using the yearly forecast calculate the forecast by semester using seasonal index technique. (5 marks)

Year 1

Year 2

Year 3

Fall

31500

35000

37000

Winter

21600

23100

25000

Spring

8500

9600

10000

Q2- Customer Service is very important to Jane and John’s Goodie Baskets. In fact, the target for customer service level is 99%. The following are the sales results to the forecast by month for last year. (11 marks)

Period

Forecast

Actual

Sept

6000

12000

Oct

6000

4000

Nov

6000

6000

Dec

6000

15000

Jan

6000

10000

Feb

6000

4000

March

6000

6000

April

6000

5000

May

6000

3000

June

6000

2000

July

6000

1000

August

6000

4000

a) What is MAD?

b) What is standard deviation?

c) What is the tracking signal per month?

d) The company uses a trigger of +/- 4, which period(s) should the forecast be looked at?

e) Reviewing the actual versus forecast for last year, do you agree with Jane and John’s Goodie Baskets’ forecasting technique? Give your recommendations to improve the forecast accuracy. (I am looking for a qualitative recommendation; it does not need to be supported by a revised quantitative forecast.)

f) Is the error random or bias?

g) For Jane and John’s Goodie Baskets to maintain their customer service goal above, how much safety stock should they maintain? What are the issues with carrying this level of safety stock given the product they are building?

Q3- Jane and John’s Goodie Baskets has always used a level production strategy to keep their 10 employees busy throughout the year. There are 50 weeks per year, 17 weeks in Fall and Winter and 16 weeks in Spring Semester. Use the sales forecast you created in Q1 to drive this production plan. (20 marks)

a) What is the level production plan # by week, there is no opening inventory or projected closing inventory. (2 marks)

b) Prepare the following three different production plans and the related costs for Jane and John’s Goodie Baskets. Discuss the advantages and disadvantages of all options presented and your final recommendation. Use information presented in the case as part of your analysis. Both quantitative and qualitative analysis should accompany this question. (18 marks)

  1. Level plan
  1. Chase plan
  2. Create an alternative plan different than level and chase.

Q4- The company sells three basket types currently with the following distribution of sales:

1) Exam Care Package equates to 50% of sales

2) We Miss You equates to 30 % of sales

3) Let Them Down Gently (Break up) equates to 20 % of sales

Disaggregate the level production plan calculated in 3 a) into Master Production Schedule quantities for each end item by week. (Does not have to be in the traditional MPS format just the number and how you got it). (3 marks)

**Note- we know there are problems with a level strategy- but that is what we are going to go forward with to complete the project.

Q5- Bill of Material Form (12 marks)

a) Prepare a bill of material for each end item. Continue on to prepare a master production schedule by end item for the months of September and October which are both 4-week months. Prepare a Material plan for component parts and include procurement lead-time where applicable. Include crew size required. (9 marks)

b) When would the first parts need to be received at Jane and John’s Goodie Baskets facility (1 mark)?

c) How many people in total would be required for final assembly? Do you see a problem based on the case information? Hint- do not use regular rounding rules here, give me a well thought out answer. (2 marks)

Part # 1561- Exam Care Package Parts List

Item #

Part #

Lead Time

Unit Qty

UOM

Part Description

Proc Cat.

1

1000

1

1

Set

Packaging Assembly

P

2

1200

1

3

Each

Red Bull

P

3

1300

2

1

Each

Starbucks Gift Card $25

P

4

6000

2

2

Each

Toblerone Chocolate Bar

P

Part # 4575- We Miss You Package Parts List

Item #

Part #

Lead Time

Unit Qty

UOM

Part Description

Proc Cat.

1

1000

1

1

Set

Packaging Assembly

P

2

3000

1

1

Each

No Frills Gift Card $25

P

3

3100

2

3

Each

Apples

P

4

6000

2

2

Each

Toblerone Chocolate Bar

P

Part # 1234 Let Them Down Gently (Break up) Parts List

Item #

Part #

Lead Time

Unit Qty

UOM

Part Description

Proc Cat.

1

1000

1

1

Set

Packaging Assembly

P

2

2100

1

2

Each

Tissue

P

3

6000

2

3

Each

Toblerone Chocolate Bar

P

4

5200

3

2

Each

Breath Mints

P

5

1800

2

1

Each

LCBO Gift Card $10

P

Assembly Time per Basket                                 The internal procurement lead time is 

Exam Care Package 0.3 hours 1) 1-week PR/PO

We Miss You Package 0.25 hours 2) as per BOM

Let Them Down Gently (Break up) Package 0.40 hours 3) 1-week ship/receive

Parts need to be in stock one-week before assembling kits.

Baskets are shipped as they are made, so no shipping set back is required.

Use MTS for Order Number

The company works a 40-hour week, 50 weeks of the year

Q6- Prepare the following inventory records demonstrating different ordering techniques. Hint- consider all elements of lead time. (9 marks)

1. 1200 Red Bull Order Quantity = 10000

Order Point with safety stock Safety stock = 1-week usage

Opening inventory = 10500

2. 3100 Apples Minimum = 2000

Min/Max Maximum= 15000 Opening inventory= 8000

3. 6000 Toblerone Chocolate Bars Review after 1st issue and every 4 weeks

Periodic Review with Target Safety stock = 5000

Opening inventory = 20000

Place 2 orders for each part. For part usage reference your material plans.

Q7- Given the following costs prepare an ABC analysis of component parts. Use the ABC spreadsheet format used in class. (7 marks)

Part #

Description

Unit Cost

Annual Usage

1000

Packaging Assembly

.75

1200

Red Bull

1.50

1300

Starbucks Gift Card $25

25

1800

LCBO Gift Card $10

10

2100

Tissue

.5

3000

No Frills Gift Card $25

25

3100

Apples

.50

5200

Breath Mints

.60

6000

Toblerone Chocolate Bar

1.10

Where does annual usage come from? ____________________________

Q8. Given the following count information, calculate inventory accuracy. (5 marks)

Part Number

Description

Perpetual Inventory Record

Count

1000

Packaging Assembly

6000

5760

1200

Red Bull

5000

4875

1300

Starbucks Gift Card $25

1000

995

1800

LCBO Gift Card $10

400

390

2100

Tissue

19620

18930

3000

No Frills Gift Card $25

1550

1540

3100

Apples

1750

1620

5200

Breath Mints

6814

6925

6000

Toblerone Chocolate Bar

10475

10396

If A items have a 0% tolerance, B items have a 3% tolerance and C items have a 5% tolerance, what is the inventory accuracy?

Q9- Jane and John’s Goodie Baskets Company has been struggling with meeting production schedules because parts are not available when required. The inventory records show the parts are in inventory but when they go to make the baskets they are not there. Review your inventory accuracy calculations for further clues to the issues. The President has asked you to provide your analysis and recommendations to him on this issue. Please include both short term and long-term recommendations and solutions to these issues. This should be in memo format to Heidi Toblerone, President. This should be supported by at least 3 references from LRC databases that support the recommendations you have given.

(16 marks)

Format- follows guidelines from Page 1 (4 marks) -

Group Work process followed - Behavioral contract, time log and peer evaluation. (8 marks). All group members will receive the same mark unless the peer evaluation is not equally split up. In this case the mark will be prorated. For example, if there are 5 group members each should contribute 20% * 5= 100%. If the peer evaluation indicates 15% for a group member and the group receives a mark of 75%, this student would receive a mark of 15/20= 75% * 75%= 56%. The rest of the students in the group would receive 75%. Students that contribute more than 20% or their share will receive the grade of the report. Please recognize this is a mechanism for the students if they feel a group member is not pulling their weight. If one group member takes on the collating report, as an example, they will not be rewarded. Projects will not be accepted unless all group members have signed the Peer evaluation sheet.

TOTAL MARKS = 100 marks and 20% of semester

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