Aic Netbooks: Optimizing Product Assembly Case Solution
AIC Netbooks had its incorporation in Taichung, China. The company had a diversified product portfolio and it had a competitive advantage of being a low cost provider. AIC Systems initiated its production of the QuiN 616 netbooks, after carrying an extensive research in the market in the year 2008. Just after the product launch, the product demand grew rapidly. The AIC Netbooks had received a proposal from a Mobile Telecom Company in order to run the promotional campaign, which required number of units per each contract signed.
On November 2008, he Production Manager (Elias Chan) was closely watching the production of the recently launched QuiN 816 netbooks in August 2008. Though, the production processes were running smooth on the full scale, but the demand for the product had grown even greater than the production levels. In order to meet the demand, the management had to take a prompt action by reviewing the production process so that the production could be maximized, in order to meet the demand from the customers (STEVEN C. WHEELWRIGHT and SUNRU YONG, 2011).
Just after the launch, a drastic increase in the demand of QuiN 816 Netbooks had been observed. The production manager was worried and he wanted to check the production processes in order to find ways for increasing the production, in order to satisfy the customers’ demand. The expected demand of 130,000 netbooks per month was greater than the total production of 110,592 netbooks per month.
In order to examine the prevailing situation at AIC Netbooks, a detailed quantitative analysis has been performed, along with the identification of the associated bottlenecks in order to improve the production process, by coming up with effective solutions.
The company’s product i.e. QuiN 816 Netbooks, were produced in the Kaizhi plant of China, which was established in 2007. According to given information in case, it takes 50 seconds for each product to complete a production cycle and the assembly line was 16 meter long with having 10 operating workers.
Currently, four assembly lines was producing netbooks and the total working hours was 9, including one hour for lunch. Out of seven days, the company opened for 6 days in a week. Thus, the total working days would be 24 days a month. In addition to this, because of high raw material cost, the profit margin of the product was low- 8%. The raw material cost was comprises approximately 88% of the total product cost (See appendix 1). In order to identify the production operation loopholes, trend analysis has been performed. The analysis represented that the10 operators was not sufficient in order to satisfy the need (See attached excel file). Thus, the number of workers should be increase. In addition to this, the analysis represented that the actual time was not according to the planned time. Each activity required more time as expected. Thus, it could be concluded that in order to maximize the production level, number of workers or the estimated time should be increased.
A complete analysis of the current situation has been performed in order to examine the gap between the expected production and the actual production. it has been examined that the total production was 110,592 netbooks per month. On the other hand, the expected demand would be 130,000 netbooks per month. Thus, the identified gap is 19,408 units. In order to minimize this gap, following alternative solutions has been proposed to maximize current production level.
- Increased Production Line
It is recommended that in order to maximize the production level, AIC Systems should increase its production (MC Adams, ME Mitchell, RC Rink, 1988). Currently, the four assembly production lines was running, which was not fully satisfying the expected demand of 130,000 units. Thus, the production line should be increased up to 5, which could meet the expected demand effectively along with producing excessive 8,239 units. (See appendix 2 & 3)……………………….
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