Space Age Furniture Company Assignment Example | Topics and Well Written Essays - 2500 words

Space board piece of furniture Company - Assignment ExampleAccording to the constitution the company incurs a cost of $0.75 per unit per week to hold stock for any subassemblies in stock from hotshot week to another. Hence Space Age Company will incur a total cost of $975 for the six weeks in relation to belongings cost. It is clear that due to the high number of subassemblies being produced, there is a beg for recess 3079 to be produced in high numbers since it is used to make the subassemblies. However, this can lead to the company incurring overtime costs in parade to meet the demand for sub assembles produced in lot sizes of 1000 units. This paper recommends that the lot size of producing the subassemblies should be reduced in order to avoid too much demand for part 3079. This is because it can lead to overtime costs, which in turn can lead to the loss of able rung. This can be d wizard by reducing the lot size to say 800 units and analysing its effects by dint of Ma terial Requirements Planning. If reducing that number still does not yield better results, the company can bring reducing the number further up to a point where they can sustain the demand for part 3079 that is used to make the subassemblies for the final products. Alternatively, since the machine that makes part 3079 can make as much units as possible, the company can consider employing more staff who can make the part in order to meet the demand for the subassemblies required. This will eliminate overtime costs, stock out costs and motivate the staff who will work the regular 40 hours per week. According to Hanna & Newman, for a company to come up with the crush course of action, a cost-benefit analysis must be done in order to choose the one that minimises costs and maximises benefits. In this case, the two recommendations will be analysed. A trade-off is a situation where one gains something at the expense of losing something. That is when one item increases, the other