JGT2 Task 4

Store Recommendation
Three available store options:
Leasing a store on Route 20 (stand-alone store)
Opening a store in Auburn Mall
Waiting until the market improves

Best Outcomes:
Stand-alone store is best available option in favorable market (EMV $350,000)
Auburn Mall is best option in an unfavorable market (EMV $0)
If no market research conducted, stand-alone store is the best option (EMV
$150,000)

Store Explanation
The best location is a complex process with multiple influencing factors. Decision
tree will decrease the difficulty of task in multiple ways:
Creates a visual representation that allows easy tracing of decisions
Provides data, EMVs, to show the best option
Easily adjustable as new information becomes available

Location Alternatives
Factors to evaluate when determining location alternatives:
Market Favorability
Potential profits
Proximity to competitors (clustering)
Proximity to suppliers/distributers.

Project Techniques
1. Define the project and identify the breakdown of the work.
2. Determine the relationship between activities.
3. Draw out the network that connects all
those activities.
4. Determine and assign both time and cost to each activity.
5. Determine the critical path (discussed on next slide).
6. Use all this information to help plan and control the project

Project Techniques: Table 1

Activity Description Predecessors Optimistic (days) Most likely (days) Pessimistic
(days) Crash Cost/day A Funding/liability protection N/A 5 10 15 $1,000 B Excavate
grounds A 10 20 40 $2,500 C Pour foundation B 10 15 30 $2,000 D Inspect new
equipment B 10 20 30 $500 E Install utilities C 15 20 40 4,000 F Inspection (utilities)
E .1 .1 .1 0 G Build out facility D, F 15 20 35 1,500 H Final inspection G .1 .1 .1 0 I
Prep for operations-signs, etc. H 5 10 15 $500 J Clean-up I 3 5 10 $1,200

Project Techniques
Project will likely be completed in 108.2 days
Project Completion Date estimated at 122.1 days with 95% confidence
Activity I best option for a 5 day crash with $2,500 in cost.
Trade-Offs
Shoe production requirements with cost minimized:
Kidshuz shoes: $2,000 per batch; 25 batch minimum
Kidshuz sneakers: $1,500 per batch; 10 batch minimum

Total 50 batch minimum Optimal Production run:

25 batches of shoes and 25 batches of sneakers
Minimize cost at $87,500

Production Recommendation

Loafer production requirements with profits maximized:

Tassel loafers:
$800 per batch
2 hour assembly and 8 hours finishing
50 batch minimum

Penny loafers:
$1,200 per batch;
6 hour assembly, and 4 hours finishing
100 batch minimum

Production Recommendation Continued

Optimal Production run:

120 batches of tassel loafers
160 batches of penny loafers
280 total batches
Maximized profits of $288,000

Production Explanation
The best location is a complex process with multiple influencing factors. Decision
tree will decrease the difficulty of task in multiple ways:
Creates a visual representation that allows easy tracing of decisions
Provides data, EMVs, to show the best option
Easily adjustable as new information becomes available

Monte Carlo
The Baltimore store would like to improve ordering/reordering procedures
Daily demand 7-12 cases; sample of 200 days
Lead time 1-3 days; sample of 40 days Possible ordering and reordering procedure
Order 30 cases at a time
Reorder point of 12 cases or fewer

Monte Carlo Continued

Monte Carlo allows for simulation of events that involve chance, which will provide a
means to test the policy without having the policy in place. Simulation results:
Ineffective policy
37 cases of lost sales
Daily demand 9.35 cases
Average ending inventory 9.95 cases

Human Resources Strategy

New human resources strategy should:

Utilize employees effectively

Maintain an acceptable level of quality of work life
Create an environment of trust and commitment

Philosophies Continued
Incorporating management philosophies to improve the production process and
reduce waste Two philosophies:
Just-in-Time (JIT) production
Lean operations

Philosophies
Just-in-Time (JIT) production
Reduces waste
Materials arrive only when needed
No excess inventory Lean operations
Externally focused, focused on customer
Improves quality
Only value-added activities