To:

Dr. Dayton

From:

Jamal Al Balushi

Subject:

Franklin Fan Company

Date:

January 1st, 2017

Introduction and Issue:

Dan Block and ED Spriggs, two engineers one in Electrical Engineering and the other in
Mechanical Engineering, had put their education, experience and effort together and established
Fan Franklin Company which is a manufacturer and distributer company of electric fans. Dan
Blocks garage was the first location to start up their new invention in and began their business
from. After seven years of success, good achievements and steady growth in Blocks garage in
the Northern side of Chicago, Block and Spriggs decided to move their business to an old meatpacking warehouse in the Southern side area of Chicago. The old meat-packing warehouse
provided the two engineers with larger area and space so their business expanded and as a result
of that the storage capacity enlarged as though. This supported the situation of the company to
produce additional lines of fans. The expanded lines of fans lead the company to have more
selection which let to explosive growth of business when it combined with the trend of ceiling
fans. After 15 years of growing and success, the business had again relocated to another place
which was more than 100,000 Square feet. The larger area increased storage capacity of the
company from 65% to 90% and Franklin Fan Company became the largest independent fans
maker in the North. However, the growth on sales was not much progressed. This pushed the
administration of the company to create the materials manager position in order to overcome this
issue and they hired Sue McCaskey. Sue McCaskey realized that the operation of manufacturing
and storage was not efficient and the circumstances of gathering irregular specimens were
unacceptable because of the inaccurate stock data. Also, due to the lateness of materials purchase
and delivery, the company lost almost 10% of the offers available.
Analysis:
Franklin Fan Company aims to grow in its field and raise the business and sales again. Its
objective constantly to dominate the fan market manufacturers and sellers. The desire of grow
had come up because of the growing market. By reviewing the two types of fans that Sue

McCaskey had chosen (CF151 & PF032), some detailed results have been realized. For the first
type (CF151), the holding cost drawn lower to be $3712 because of the reduction in volume from
2000 to 400 units. On the other hand, there was an expansion on requesting cost by $3714 while
the aggregated cost tested fall by $7426. Moreover, for the second type (PF032), the holding
amount was reduced by $ 1305 because there was decrees in demand from 15000 to 1197 units.
The requesting cost increased by $1306 and the aggregated cost dropped by $2611. By
improving the manufacturing productivity, the capacity will increase in lower cost. More
efficient tools would increase the accuracy of fans which will increase the sales.
Recommendations:
If the production of the CF151 and PF032 fans are standardized, Franklin Fan Company should
manufacture these types of fans when the demand is low and material is also low. Thus, when the
demand increases, the company can sell the stored volumes of fans built earlier.

References:
-

Manufacturing Capacity (n.d). Retrieved December 28, 2016 from

http://www.themanagementor.com/EnlightenmentorAreas/sm/MS/mfgcapacity.htm

Krajewski, L. J., Ritzman, L. P., & Malhotra, M. K. (2013). Operations Management

Process and Supply Chains (10th ed.). Upper Saddle River, NJ: Prentice Hall.

Appendix B
5-Step Critical Thinking Decision-Making Process Matrix
Step 1: Identify the problem(s) and uncertainties.
What exactly is the problems?
Sue McCaskey, the first assigned material manager, found the inventory operation
process in a bad situation after collecting random samples due to the unavailability
of aggregate inventory information. Moreover, the company customer service is
insufficient. Also, 10% of sales are lost to competitors due to backorders.

The problem is this

Franklin Fan Company is currently facing numerous problems in relation to their inventory
system. Each problem could be considered both short-term and long-term because both problems
need focus immediately but may take an extended period of time to furnish. The first problem is
in relation to their customer service department. The customer service department puts orders on
backorder that are not immediately filled from stock. This mistake is leading to 10% of the
demand being lost to competitors. The next problem is the need to change the inventory
management system. When the new manager, McCaskey, requested inventory and customer
service data from the warehouse, several areas did not have inventory records. Without a full
functioning system in place that takes inventory of all the products in the warehouse, there is no
way to tell where money is being lost and how to rectify the situation.
This is an important problem because
This is an important problem because it has effected Franklin Fan Company in the
following way:
Loss in sales
Backorders
Customer satisfactions
Bad reputation

The key question(s) that needs to be answered to solve this problem is

What

can be done to overcome the following problems?

The Problem Individual Records for Products are not compiled.
Aggregate Information not available.
Inventory is misplaced.
Costumer Service is Inadequate.

Step 2: Obtain information.

The following information is needed to answer this question
1

Why will the periodic review system do for Franklin Fan Company?

What will the will continues review system do for Franklin Fan Company?

How can we calculate holding cost and ordering cost?

What are the reasons for the backorders for CF151 item?

Some important assumptions I am using in my thinking are

The current inventory management is not efficient

The company incurred costs that can be avoided.
Continuous review system can improve the current situation.

The points of view relevant to this problem belong to

The firms management (decision makers)

The employees ( affected by the workflow and the company financial performance)
Customers
Suppliers

Note: Remember to view the information you have obtained for potential bias. This is from the
perspective of your own bias to the research and the bias of the authors who compiled the data
and the research you gathered. In other words, do not discount the importance of others data
because of your own bias (is).

Step 3: Make predictions about the future.

If this problem gets solved, some important implications are

Inventory costs saving.

Proper future strategies.
Net income improvement.

If this problem does not get solved, some important implications are
Inappropriate inventory managing process leads to improper future strategies. Extra holding costs
including warehouse expenses and ordering costs is incurred due to the current firms inventory status. In
addition, customers dissatisfaction and bad reputation are results of massive backorders and
unavailability of required materials upon request. Consequently, lower sales and revenues are generated.

The potential alternative solutions to solve the problem are

Adopt Periodic review system.

Adopt continuous review system.

Step 4: Make decisions by choosing among alternatives.

What is the best solution and why
I recommend that we utilize the continuous review system for the ceiling fan and personal fan. The Q
value for the CF151 product will equal 400 while the reorder point will be 1966. Also, under this system,
the PF032 item will have a Q value of 1196 and a reorder point of 3102. The continuous review system
tracks the remaining inventory of a stock-keeping unit (SKU) each time a withdrawal is made to
determine whether it is time to reorder.

Appendix C
WEEK 3 BUSINESS BRIEF RUBRIC: FRANKLIN FANS-INVENTORY

Total 75 points

Criteria
Develops an
opening
paragraph that
introduces the
case and
identifies the
problem from
Step 1 of the 5-Step
Critical Thinking
Decision Making
Model.

Prepares a
detailed report
on managing the
inventory of the
CF151 ceiling
fan.
Step 2 of the 5-Step
Critical Thinking
Decision Making
Model.

Prepares a
detailed report
on managing the
inventory of the
PF032 ceiling
fan.
Step 2 of the 5-Step
Critical Thinking
Decision Making
Model.

Presents a proper
inventory system
recognizing all
relevant costs.
Step 2 of the 5-Step
Critical Thinking
Decision Making
Model.

Explains by how
much
recommendation
s for these two

Unacceptable

Acceptable

Proficient

Vaguely develops an
opening paragraph
that introduces the
case and identifies
the problem or does
not have an opening
paragraph.

Develops an opening
paragraph that
introduces the case
and identifies the
problem and, for the
most part, fulfills
assignment
requirements.

Develops an opening
paragraph that
introduces the case
and identifies the
problem and
demonstrates solid
ability to accomplish
the assignment.

(0-3 points)
Vaguely prepares a
detailed report on
managing the
inventory of the
CF151 ceiling fan or
is completely off
topic.

(4 points)
Prepares a detailed
report on managing
the inventory of the
CF151 ceiling fan
and, for the most
part, fulfills
assignment
requirements.
(8 points)
Prepares a detailed
report on managing
the inventory of the
PF032 ceiling fan
and, for the most
part, fulfills
assignment
requirements.
(8 points)
Presents a proper
inventory system
recognizing all
relevant costs and,
for the most part,
fulfills assignment
requirements.
(8 points)
Explains by how
much
recommendations
for these two items

(5 points)
Prepares a detailed
report on managing
the inventory of the
CF151 ceiling fan
and demonstrates
solid ability to
accomplish the
assignment.
(9-10 points)
Prepares a detailed
report on managing
the inventory of the
PF032 ceiling fan
and demonstrates
solid ability to
accomplish the
assignment.
(9-10 points)
Presents a proper
inventory system
recognizing all
relevant costs and
demonstrates solid
ability to accomplish
the assignment.
(9-10 points)
Explains by how
much
recommendations for
these two items

(0-7 points)
Vaguely prepares a
detailed report on
managing the
inventory of the
PF032 ceiling fan or
is completely off
topic.
(0-7 points)
Vaguely presents a
proper inventory
system recognizing
all relevant costs or
is completely off
topic.
(0-7 points)
Vaguely explains by
how much
recommendations for
these two items

Student Score and

Comments

items reduce
annual cycle
inventory,
stockout, and
ordering costs.
Step 4 of the 5-Step
Critical Thinking
Decision Making
Model.

Integrates
established
operation
management
principles into
the discussion.

reduce annual cycle

inventory, stockout,
and ordering costs or
is completely off
topic.
(0-3 points)
Rarely integrates
established operation
management
principles into the
discussion.
(0-7 points)

Synthesizes
relevant
information and
materials to
provide evidence
of critical
thought.
Develops ideas
with clarity and
logic.

Uses supporting
documentation
that has been
properly
referenced and
cited.
Considered
holistically,
demonstrates the
ability to write at
the graduate
level.

Synthesizes
information at a
minimal level.

reduce annual cycle

inventory, stockout,
and ordering costs
and, for the most
part, fulfills
assignment
requirements.
(4 points)
For the most part,
does a good job of
integrating
established
operation
management
principles into the
discussion.
(8 points)
For the most part,
effectively
synthesizes
information, which
supports main ideas.

reduce annual cycle

inventory, stockout,
and ordering costs
and demonstrates
solid ability to
accomplish the
assignment.
(5 points)
Consistently does a
good job of
integrating
established operation
management
principles into the
discussion.
(9-10 points)

(0-3 points)
Demonstrates little
clarity and logic.
Readers have
difficulty following
the line of reasoning.

(4 points)
Develops ideas with
clarity and logic.
Readers can
generally follow the
line of reasoning.

(0-3 points)
Inadequate or
minimal use of
supporting
documentation or not
properly referenced
or cited.
(0-3 points)
Considered
holistically, the
student demonstrates
an inadequate ability
to write at the
graduate level.
(0-7 points)

(4 points)
For the most part,
uses supporting
documentation that
is properly
referenced and cited.

Consistently and
effectively
synthesizes
information, which
provides strong
support to main
ideas.
(5 points)
Develops ideas with
clarity and logic.
Ideas flow smoothly
from one to another
and are clearly
linked to each other.
(5 points)
Consistently uses
supporting
documentation that
is properly
referenced and cited.

(4 points)
Considered
holistically, the
student demonstrates
an acceptable ability
to write at the
graduate level.
(8 points)

(5 points)
Considered
holistically, the
student demonstrates
a proficient ability to
write at the graduate
level.
(9-10 points)
SubTotal Points

Turnitin.com

Revisions based on the

Originality Report
Grammarly

Did not turn paper into

Turnitin.com
Assignment zero points
Did not revise paper based
on the originality report.
Minus 25 points
Did not revise paper based
on Grammarly.

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Minus 25 points
5-Step Critical Thinking
Decision Making Model

---

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Did not complete and

submit.
Minus 40 Points
Total Points =