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Donner Company case study. Operations Management Case study. Institute of Business Management. Business Management (BM1231) Uploaded. Samantha Wiz.
Donner Company
Donner Company Case Overview Donner Company manufactures printed circuit boards for both large and small companies, specializing in experimental devices and for pilot production runs in the late 1980s. The circuit boards that it produces are made from thin sheets of narrow metal strips and insulating material. The process to produce each circuit board is very meticulous. Donner Company Case Study GSB 723 Operations management Spring 2015 Group 5 Scott Lozier, Timothy Little, Anas Hidar, Xiaocao Yu Situation As we see in this case, the Donner Company used to do be a successful company, specializing in the high quality and speedy delivery of its products. As of recently, however, it is having some operation problems, specifically in the areas of delivery time.
Introduction
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There was a time when human did not have any electronic gadget like TV, radio, computer, cell phone, laptops and so on. But with the evolution of industrialization, technology gained significant attention. New processes as well as new products are the results of technology.
Electronic products like TV can be found in almost every house and these gadgets have become the need of human lives. Printed circuit boards have been considered as the main component of any electronic product. A lot of people are using electronics products so the demand of printed circuit boards has increased.
About Company
Donner Company was founded in 1985. It produced circuit boards called “soldermask over bare copper (SMOBC)”. Circuit boards were produced by Donner Company for pilot production runs and experimental devices. Managers of Donner Company had enough experience in electronic industry and they all were engineers. Donner Company was known for its innovation as well as for introducing new designs.
Problem Statement
Donner Company was facing many problems like productions and operations problems. Management was looking for a solution that could keep the company operations in flow and they were focusing on information and physical flow. Recently, Donner Company installed an automatic plant and they already had manual plant. Management was looking forward to know what process should be used to reduce the process time.
Q1. What orders would you schedule on the CNC drill? On the CNC router?
Solution
First we will find how much time will be taken by CNC router and CNC drill. For this purpose we have two equations
CNC Drill Manual
Donner Company Case Study Pdfs Pdf
CNC Router
Where y = Number of boards.
Or equal to
CNC router should be used if numbers of boards are greater than 6. In this case, less cost will be incurred and it will take less time to process. Manual drill should be used if numbers of boards are less than 6. In this case, less cost will be incurred and it will take less time to process.
Recently, Donner Company purchased Computer Numerically Controlled (CNC) Micronic Jr. high-speed drill for $80,000. This machine can be used for drilling as well as for router functions. There are two options to drill the circuit boards and these options are manually and CNC machine. It is necessary for the company to decide, which options should be used to schedule orders. It can be found with the help of breakeven point of every option. It is assumed that 50 minutes is the set-up time and 1 minute is the run time for CNC drill manual. For CNC router, it is assumed that 150 minutes is the set-up time and 0.5 minute is the run time for CNC router (See Exhibit 1 in the appendix). Breakeven point can found at the point where the consumed time will be equal in both cases.
50 + (1) * N= 150 + (0.5) * N
150 - 50 = 1N - 0.5N
0.5N = 100
N = 200
If order size (N) is equal to 200, same cost as well as same time will be consumed in both options. If order size (N) is less than 200, CNC manual will be the best option to be used because it will take less time and less cost will be incurred. If order size (N) is greater than 200, CNC router will be the best option to be used because it will take less time as well as less cost will be incurred.
Q2. What is the capacity of the Dry Film Photoresist area? (Assume the order size is eight). How does capacity change with order size?
Solution
It is assumed that there are eight (8) working hours and order size is eight (8). 47.4 minutes are required for a panel and each panel is consisted of 8 boards. With those assumptions and given data, we can find number of orders per day.
= (8 * 60)
47.4
= 10.126
= 10 Orders per day
It is found that in case there is an increase in order size, daily capacity orders will decrease. There is a negative relation between order size and daily order capacity. It is also found that in case there is an increase in order size, daily capacity of boards will decrease. Positive relationship exists between order size and daily capacity of boards (See Exhibit 2 in the appendix)
Q3. What is the standard labor time for an order of 1 board? 8 boards? 200 boards?
Solution
When number of boards is 1, Donner Company should use manual drilling because it is cost effective as well as time effective. Total operation Time is 396.55 minutes for manual drilling and 683.05 for CNC Machine (See Exhibit 3 in the appendix)................
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Managing a small manufacturer of printed circuit boards facing a number of production and operations management problems. On the first day of this case is used to analyze the different stages of production capacities and consider the process bottlenecks and key solutions production. The emphasis is on physical flows. The second day focuses on the information flow. We detail the problems faced by the company, to discuss the tools and methods for the analysis of processes that can be used to determine the relative importance of these issues, solutions and discuss implementation issues. 'Hide
by Roy D. Shapiro Source: HBS Premier Case Collection 14 pages. Publication Date: September 27, 1988. Prod. #: 689030-PDF-ENG
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Donner Co.
Autor: Maryam • November 14, 2017 • 2,762 Words (12 Pages) • 363 Views
2.2 Layout problem
The shop floor layout was designed to efficiently utilize the space available. The plating processes which released large volumes of acid vapors had been located far from the machining operations to avoid the corrosion of the machine tools. Though this generated stellar results in the form of longer lifetime of the tools but it highly reduced the productivity of the plater. The plater had to simultaneously inspect panels as well as carry them to the plating tanks. The large distance between the operations consumed 15% of the plater’s time. She was also interrupted every 3 to 4 minutes to inspect the panels in the tanks. The productivity of the plater could be increased by decreasing the distance between inspection panel and the plating process. The two could be separated with highly insulating material to avoid the corrosion and increase machine life time along with plater’s productivity.
2.3 Operating problems
One major problem faced by the management was the shifting bottlenecks problem. This was caused due to varying order sizes and differences in circuit design.
25% of problems in job delay process were caused due to design problems encountered by engineers after placing the order. This once again led to bottlenecks as workers had to await further specifications of the new design. This shifts the bottlenecks to other operating procedures.
Also there was no quality specification for raw materials which may turn out to be defective. This may cause disruptions in the work of operators working on a specific project, they may require additional raw material (which takes about 1 – 2 days to locate, then a few additional days to be delivered to the company). Eventually there might be delay in the entire production cycle..
Donner promised a 4 day delivery to customers who placed rush orders. The company already suffered from bottlenecks on a daily basis but still promised a 4 day delivery system. Clearly this meant that, no matter what, rush orders were a priority (This was also due competitive pressures faced by Donner). If raw material was needed for rush orders, it was obtained from the existing inventory, which was originally bought to fulfil large orders. This causes shortages in inventory, which means that Donner’s purchasing has to locate and purchase additional material (which normally took 2 days). The result is possible stoppage of operation process until new raw material was obtained, which also meant down time for the operators (down time at one process, hence a bottleneck at a specific process).
2.4 Productivity problems
With so many operating problems, many productive problems were obviously expected. With frequent changes in orders size and designs, management noticed that machines were idle for many hours than was expected. In addition, standard labor time for each process was not accurate time as it did not include the time spent by workers on orders which required reworking. The management also faced a dilemma in using manual labor (for drilling and punch press) or the CNC machine for the same purpose. Evidently the management did not use the breakeven point to solve this issue.
2.5 Delivery problems
Since all the processes were interconnected, also there were high rates of re-works and customer returns (which increase from 1% to 3%), Donner failed to meet is delivery dates. However, rush orders remained unaffected causing bottlenecks as these orders were treated as special cases wherein raw materials, workers and other processes were fetched to fulfill these needs on a special basis.
Finally, the new sales manager for Donner stated his concerns that Donner’s sales may not be able to reach $2M in sales (in 1988) if it continued to have such productivity and delivery problems. So he believed Donner should continue bidding for low volume orders and improve their quality standards, so that sales reach $3M.
3. Standard Labor Time and Bottleneck
3.1 Break-even order size
As per the process described in the case, there are two options, viz. the process can be carried out either with CNC machine or without it. The break even size of order in terms of boards is calculated as follows:
Standard Production time
CNC
Punch press
Setup
150
50
Run
0.5*
1*
*Run time per circuit board
Let the number of circuit boards in 1 order be N. (N is the order size)
Total time setup= Setup Time + Run time
Using the Break-even analysis, it is the point at which time consumed by CNC router is equal to taken by Punch Press.
Therefore,
150+0.5*N = 50+1*N
100= 0.5N
N =200
Inference:
- If number of circuit boards ordered is more than 200, Donner Company should go for CNC drills.
- If number of circuit drills ordered is less than 200, then Punch press shall be used,
- If it’s exactly 200, then either of the two can be used.
3.2 Standard labor time
Standard labor time for order size 1, 8 and 200 is as follows (Exhibit 2)
Order Size
1
8
200
SLT (min)
396.55 = 6.61 hr.
799.4 = 13.23 hr.
11849 = 197.48 hr. or 8.22 days
As calculated in the table in Exhibit 2, the bottleneck is as follows:
- Operations without using CNC machine
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