Page 2 - CIMA MCS Workbook May 2019 - Day 2 Suggested Solutions

CIMA MAY 2019 – MANAGEMENT CASE STUDY

If the timber panels for a customer’s house are manufactured to even slightly incorrect
specifications and this isn’t spotted until they are on site, this would be very damaging for us in
terms of how the customer perceives us and could be detrimental to our brand, as well as being
expensive to rectify as they would have to be re‐made and difficult because we already work to
full capacity, so other projects would have to be delayed in order to re‐make the panels.

So the whole process from supplier to customer must be as efficient as possible. This is why
quality across all of our processes is so important.

You will regularly come across members of our quality assessing team during your work here.
They are responsible for ensuring that everything we produce is to the right quality standard. In
this way, we should avoid costly re‐works and unnecessary delays.

Theory of constraints and bottlenecks

The theory of constraints relates to production processes where sequential events have to take
place in order for production to be achieved, such as in our factory. The theory is used to identify
and understand bottlenecks in production.

Bottlenecks are areas of production that, for whatever reason, hold up the flow of production
relative to other processes and act as a constraint on overall production capacity.

It may be that one part of the production process moves more slowly than others. This could be
due to a capacity limit for that part of the process or because something has slowed the process
down, such as a fault in the machinery used. This part of the process would be classed as a
bottleneck, because it constrains completion of products moving through the entire production
line.

Bottlenecks can be particularly constraining in a JIT system because of the need for product to
flow smoothly through production, with no buffer created by the presence of stock.

Improvements in efficiency can be made if bottlenecks are removed or elevated (their capacity is
increased). This could be achieved by replacing the machinery used in the part of the process that
has lower capacity. It could be that employing more staff or allowing shift working means that a
machine can be more fully utilised. Or regular maintenance could stop a slowdown from
occurring.

This would potentially mean that production capacity could then be increased.

Finance Manager

TASK 2 – RELEVANT COSTING AND CAPACITY

To: Carla Holm

From: Finance manager

86 KAPLAN PUBLISHING