CRU COMPUTER RENTALS PROCESS FLOW

Communication

Sales Specialist LRC/ Megacenter

ID customer Old/New Verify Credit

Auto-routing to nearest LRC/ Megacenter

Phone (1-800 #)

Customer

Customer
Take Order Shipping dept. Package & label Shipped @ $25/unit

Available for rent inventory Status 20

Parts Supplier
Reserve Status 32
Order placed

1400 Review order (invoice tag, contents, ship date, ship mode) Shipper

Received @ $25/unit

X1/week (avg)

Warehouse

Picker

Quality assurance and picking

Printer Shp dt and spf instr Rev for accr. & del dt.

Config. Section

Carted

Parts group

Parts department
Storage

500

QUEUE X O X O
Order Sheets

Holding area

FIFO X O XO

Clean & install hardware/ software

Status 41 Status 42

Tech. (check config & order forms)

? Status 40

Repair group
Status 41

Series of tests

Repair

500 1000
Defective Status 40 (30%)

Status 42 Status 20 Status 24

500

Receiving Megacenter

Preconfig. dept.

Remove stickers
Check for not defective

Format HD

Basic cleaning

1500
Non-defective Status 24 (70%)

Status 40 15% of Status 24

225

Material
Paper

Electronic
Employee

2. Do not launch a sales drive this year. There is only an excess capacity of 100 units per week. If sales increases by more than 100 units per week, under the current system CRU will not be able to meet customer demand.
Order forms Status 41 I = 500 T = 1 week R = I/T = 500
Available for Rent Status 20 I = 1400 T = 1 week R = I/T = 1400

500

500

1400

1400

500

Recd. Parts stuck to machines Status 42 I = 500 T = 1 week R = I/T = 500 Defective Status 40 I = 1000 + 225 = 1225 R = 150 T = I/R = 1225/150 = 8.17 wks

500

30% (150) 500

Receiving I = 500 T = 1 week R = I/T= 500

150

70% (350)

Non-defective Status 24 I = 1500 225 = 1275 R = 350 T = I/R = 1275/350 = 3.64 wks

350

Excess Capacity /week = 500 + 500 + 150 + 350 1400 = 100 units

3. Richard can do the following:

a. Reduce flow times and inventory in status 24 (non-defective): Part of the problem lies in units not being identified properly in receiving. Have a more robust testing system at the receiving department. If all 15% of the units that are detected as faulty later are identified at this stage, flow time will change from 1500/350 to 1275/297. Though this will have no impact on the initial throughput, this will free up additional tech time and the check for not defective step could be eliminated. Over time more units can be processed through this department.
b. Reduce inventory in status 40 (defective): Hire more labor to increase throughput and reduce the inventory buidup for status 42 (now at 500). This will free up additional units available for rent. The incremental cost of labor will be absorbed through additional sales generated. c. Reduce double handling of material between storage, repair and preconfig department. This will reduce the non-value added time and will free up technician time to process more orders. d. Pass shipping costs to customers to generate additional revenues of $25 * 1400 = $35,000/week. e. Implement ERP system to partner with suppliers so order forms can be eliminated and the process of receiving parts reduces to less than a week.

4. Key performances for Richard:

a. Inventory b. Flow time through status codes c. % utilization