Case Study Analysis: Trans-European Plastics (TEP)
1 Why is TEP unable to deliver all its products reliably within the target of one week, and what effects might that have on the distributors?
2 Applying the EBQ model, what batch size would you recommend for the babybath (143BB)? How long will each batch take to produce, and how many batches per year will be made? Should this model be applied to calculate the re-order quantity for all the products, and if not, why?
EBQ = v2C0D/Ch(1-D/P)
a. C0 = Cost of Setup
b. D = Demand Rate
c. Ch = Annual unit holding cost
d. P = Production Rate
3 How would the EBQ change if the set-up costs were reduced by 50 per cent, and the holding costs were re-assessed at 40 per cent, taking account of the opportunity costs of capital at TEP?
4 What internal problems result from the current planning and control policies? In particular, analyze stock turns and availability (e.g. high and low levels).
5 Using Pareto analysis, categorize the products into Classes A, B, C, based on usage value. Would this approach be useful for categorizing and controlling stock levels of all the products at TEP?
6 What overall recommendations would you make to Francis Lamouche about the proposed investment in the warehouse extension?
Please refer to the PDF document attached for the case study.
The question belongs to Operations Management and it is a case study about Trans-European Plastics (TEP). TEP has a high delivery time which is of a concern to the company. The company wants to modify its current operations to suit the needs of the changing market conditions. Most importantly, it wants to minimize it delivery time to the shortest.
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