Operations Management
Instructor: Manuel Baganha
TA: Virginia Ulfig
Fall Semester 2014/2015

Three Jays Corporation Case II

Chantal Al-Koufri – 11635
Duarte Mendes – 11166
Mafalda Lencastre – 11227
Sara Lopes – 11286

To whom it may concern, As President Jana Fremont requested as the goal of my internship, I have evaluated the current inventory situation at Three Jays Corporation. In order to do so, I had to make a series of analyses that I will proceed to present, which will, in turn, lead to a set of recommendations taking into account the current situation and the objectives of the company. Current Situation Three Jays, as I have learned, is a company which produces and …show more content…

We have 51 cases of 12 jars that are produced by every 50-gallon mixture. We assume that Julia and Emma work 8 hours per day, 5 days a week, and that their hourly salaries are 13,46$ and 15,63$ respectively. Also assuming that the part-time workers support the whole production run, each of them earns approximately an hour and a half worth of salary, which amounts to 18,75$ in total per batch, whereas Julia and Emma only dedicate one hour of their work to the production of the batch. Dividing these values per case, we get that there is a labor cost of 1,673$ per batch, which is significantly higher than the one previously calculated in order to obtain the EOQ and the ROP, and therefore must be updated. The cost of the three part-time workers makes sense because it relates to times when the production is actually happening. Every batch requires an expenditure on the salaries of these workers, and therefore should be included in the labor costs. Looking at Exhibit 2 while taking into account these findings, it is evident that the setup costs are improperly calculated. The order processing, when we assume that the buyer works 8 hours per day, 5 days per week, has a cost of 5,05$ per batch, as opposed to the 5,75$ used in the model. Emma's and Julia's salaries amount to a 29,09$ product preparation cost per batch, as opposed to 30,25$. However, the most serious error is the