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Narragansett Yacht manufactures fiberglass sailboats which range from 18-foot

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Narragansett Yacht manufactures fiberglass sailboats which range from 18-foot day sailors to 50foot ocean racing yachts. The company was founded in Newport, Rhode Island, a hotbed of sailing;activity, but high labor costs forced it to move its manufacturing operations to Corpus Christi, Texas;in 1990. The boat-building industry is very competitive and highly labor intensive, and protability;depends on getting the maximum efficiency out of the labor force. Narragansett has managed to keep;its workforce nonunionized, this means that all of its employees can be shifted from task to task, and;Narragansett can thus maintain flexibility. However, the price for this freedom has been a relatively high basic wage rate and a no-layoff policy. The no-layoff policy, in turn, makes it essential;that the workforce is kept productively employed, this means that Narragansett simply must not;run out of the various parts that go into the assembly of a boat. Therefore, a good inventory management system, which must track a large and varied inventory of parts ranging from inboard diesel;engines and masts costing thousands of dollars each to screws and rivets costing only pennies each;is essential.;Sailboats are built in sequential steps. First, the major fiberglass components are laid up in;molds. To begin, each mold is cleaned and inspected, and if no damage is found, the mold is waxed;with an agent which facilitates lift-out of the nished work. Then gelcoat, the cosmetic outer layer;is sprayed into the mold and left to dry. If the gelcoat layer shows any imperfections, it must be;destroyed, resulting in losses to Narragansett of $50 to $500, depending on the size of the mold. If;the gelcoat layer is good, berglass strips are hand-laid on top of the gelcoat and bonded with liquid resin until the desired thickness is reached. Some sections on the hulls of the large racing yachts;have sections which exceed one inch in thickness, but most of the sections are only about 1/4-inch;thick. Finally, the sections which do not require signicant strength are formed by a chopper gun;which sprays berglass strands into the mold rather than using hand-laid strips.;After drying, the sections from the molding room are trimmed and brought to the assembly;line. Here, the decks and hulls are joined, and the inboard engines, electrical wiring, steering systems, and plumbing xtures are installed. After the structural work has been completed, the woodwork is done. Finally, the deck hardware (winches, cleats, running lights, and so on) and the interior;upholstery are installed.;After a last inspection, the boat is taken to a water testing facility where the engines and;transmissions are tested, and the boat is checked for leaks. Finally, the boat is cleaned, installed on;a shipping cradle, and placed on a truck for delivery to a dealer located somewhere in the United;States or Canada.;Copyright 1994. The Dryden Press. All rights reserved.;Case: 30 Inventory Management;It should be obvious why efcient inventory control is so important to Narragansett Yacht. If;stocks of gelcoat, fiberglass, or resin were to run out, the molding room would be forced to shut;down, and input to the assembly line would be curtailed. Without engines, wiring harnesses, and;steering systems, the boats could not progress to the finishing work stage. Any disruption in production would slow shipments to dealers and, possibly, result in missed sales. Furthermore, since;selling prices are xed, any increase in production costs due to poor inventory control must be borne;by the company, and the intense competition and resulting low prot margins makes this an almost;intolerable situation.;Narragansett carries more than 10,000 different items in inventory, and these items vary;widely in price, ordering lead times, and stockout costs. (Stockout costs are all the costs, from higher;production costs to lost profits, that result from running out of stock of a particular item.) Narragansett uses the ABC method of inventory classication, along with a variety of inventory control;methods, to manage its different inventory items. The ABC inventory classication system works;like this: Narragansett maintains data on the average annual usage and cost of each item. Based on;these data, plus the multiplier values given in Table 1, Narragansett assigns a numerical inventory;importance value to each item using the following formula;Inventory;importance;value

 

Paper#25909 | Written in 18-Jul-2015

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