A Cat Corp Final Paper

Randolph Final Paper

February 20, 2016

QSO 510

A-CAT is one of the leading producers of electrical appliances in India. It is part of the medium scale industrial companies in the area. They produce and distribute domestic electrical appliances in a rural area. The company has two medium- sized manufacturing units in a small town, and an alliance with other companies for the production of cabinets and TV signal boosters and battery chargers. The manufacturing units had been in operation since 1986 and in 2010 they had sales of 9,800,000 Rs. They have 40 employees and the following departments: purchasing, design, manufacturing, and sales and service. Their primary product is a voltage regulator of 500 KVA that was sold as VR-500. This company is primarily focused on the rural market, where they felt like there was less competition. Recently, sales have fallen off and they were considering changing their policy of purchasing and stocking spares. They previously had four suppliers and now they only had one. The sales division of the company is supposed to forecast the right amount of transformers to keep in the system to go with the voltage regulators. The voltage regulators were used in a variety of products so they had an effect on the entire supply chain.

There are several key stakeholders in this case study. The internal stakeholders consist of the departments that utilize the transformers, and the members of management that rely on forecasts to make other company decisions. The heads of the departments are also stakeholders, as well as anyone that benefits from company profits. External stakeholders are the people that buy the products that have the transformers in them, as well as the suppliers of the transformers.

There are many factors that could be affecting the performance of operational issues. Weather during certain times of the year can be an issue. Turnover and personnel can be an issue. If workers are largely untrained or there are too many vacant positions, this can cause performance issues. Poor management can cause operational issues. Company culture can affect performance. Not all factors can be quantified, and only the ones that are measurable can be used to do an analysis for the company. Bottlenecks in the manufacturing system can also be quantified and cause a significant production delay. These prevent the process from flowing properly and the company might have too many resources waiting for another department to finish their part. The data will be analyzed, projection results will be determined, and the results will be reported to the company so they can produce a production plan. The company needs sustainable operational processes that work for both them and their supplier.

The voltage regulators are important because the rural part of India that A-CAT Corporation sells to is bothered by the frequent power failures and load fluctuations on the devices themselves due to the power grid in this part of India. Although the company doesn’t provide the data, it would also be important to try to track the frequency of power failures and overloaded electrical lines. This might tell the story behind fluctuations in sales because customers might have purchased products that did not have adequate voltage regulators in them and if there is a particular month with lots of variance every year; this could be an important part of the tracking and forecasting. According to Chand, forecasting is important because it ensures the smooth and continuous working of an enterprise (Chand, 2014).

The inventory levels of transformers at A-CAT Corporation in rural India is causing multiple issues for the company such as cash-flow, supplier issues, and capital blocking on other products’ spares and components. Too many spares and overstock can be a real issue for most companies. The longer inventory sits unsold, the greater the chance it will never sell at all, meaning the company will have to write it off, or discount it deeply (Merritt, 2012). Management has been tasked with determining a smarter way of forecasting the needed on-hand inventory for transformers using the prior 60 months of data as well as twenty quarters of refrigerator sales. This data will be used for the analysis. The analysis team would have brought in any other measurable data regarding turnover, bottlenecks, and electrical grid issues, but this data is not available for review.

Inventory is a place where the company should be able to have immediate gains since the company is struggling in this area. Determining the true forecast for the stock of the necessary transformers and putting in place something to help in the future such as a build to, where the company can work with their suppliers to give them lead time and not strain their system or their operations. Some of the questions the company needs to answer that should be answered in this analysis are the following:

1. Is there seasonal variation that should be planned for?
2. Are there differences in sales of refrigerators that are different than the need for voltage regulators amongst all products sold?
3. What is the best optimization model for the production of the voltage regulators?
4. Should the company have any kind of overstock plan, or should the company adopt a just in time inventory strategy?

Just in time inventory was developed in Japan in the 1970s and has very little room for error. Analysis is very important to the proper implementation of this system or a company can miss on their sales drastically (Hindle, 2009). The analysis will consist of different statistical methods, since the company needs to record the different average values. A time series analysis was conducted since 60 months of data are present. This will lead to a trend analysis and will be helpful to the management team for making decisions about how many transformers A CAT should have on hand at any given time.

Next the company has asked that the analysis team submit our selection of statistical tools and data analysis, and then justify the selection. They have also asked for a spreadsheet, a hypothesis, the results of the analysis, any inferences from the test, and a forecasting model that addresses the company’s problem.

The team used Microsoft Excel as the selection of statistical tools and data analysis. Excel has a Data Analysis Tool Pak that is useful in analysis for most simple applications. The team also needed to use an online calculator to help complete the analysis, but this was not known when we first worked through the data. The team selected Excel because we owned the program and it is easy to use and import the data. The data analysis tab is easy to use and a person can set the significance and the output easily. The dependencies of the data are easy to see because the output is in the form of a graph or a table.