Chad's Creative Concepts produces custom and standard wood furniture. While custom furniture dominates sales, standard furniture sales are growing steadily. However, standard furniture production faces scheduling issues, high inventory holding costs, and longer delivery times. Chad must make decisions to improve operations for both custom and standard lines to meet growing demand effectively and efficiently.

2. • Introduction
• Case Findings
• Problems
• Reasons behind the problems
• Questions and Answers

3. • Chad's Creative Concepts is a company founded
by Chad Thomas that designs and manufactures
wood furniture.
• The company began by producing custom-made
furniture and within a short duration developed a
solid reputation for creative designs and high-
quality workmanship.
• As company’s reputation grew and sales
increased, the sales force began selling some of
the pieces to retail furniture outlets, which led
them into the production of a more standard line
of furniture.

4. • Buyers of standard line furniture were much more price
sensitive and imposed more stringent delivery
requirements.
• Custom designed furniture, however, continued to
dominate sales, accounting for 60% of volume and 75% of
dollar sales.
• Currently, the company operates a single manufacturing
facility where the equipment is mainly general purpose in
nature for providing flexibility to custom made furniture.
• Both custom and standard furniture compete for
processing time on the same equipment by the same
craftspeople.

5. • Sales of standard line is increasing
steadily, so it requires more regular
scheduling, but custom made furniture is given
priority because of its higher sales and profit
margins.
• Thus, scheduled lots of standard furniture
pieces are left sitting around the plant in
various stages of completion.

6. • The holding cost of the company is increasing
with dollars tied up in inventory, both of raw
materials and work in process.
• The company has to rent expensive public
warehouse to accommodate the inventory
volume resulting in further increase of holding
cost.
• The increased lead times in both segments
has resulted in longer promised delivery times.

7.  What type of decision must Chad Thomas make daily for his
company’s operations to run effectively? Over the long run?
The situation that Chad is facing is between the manufacturing and
turn over. He needs to focus on decisions on
scheduling, inventory, capacity & layout.
• He need to make scheduling decision to make sure there is not many
raw materials as work in progress status. The standard line
manufacturing need to be scheduled properly to avoid this problem.
• The standard product’s warehouse is costly. So, he need to reduce
inventory by deciding on good supply-chain and implement it.
• As both the manufacturing line are well in demand and well
increasing as well. So, he need to increase capacity to accommodate
demand for both product lines.
• He can also separate out the production lines after increasing
capacity

8.  How did sales and marketing affect operations when they
began to sell standard pieces to retail outlets?
As given in the case, the sales is growing steadily for the
standard pieces. This means, the front end team is working
good, but the backend team, the operation is not effective to
produce that much of pieces to meet the demand and it is being
waste in their warehouse or still under work in progress. We can say
that this is happening because the company is more focused on
custom line and gives it higher priority as compared to standard line.
The is not the problem of sales and marketing but just a less
effective operation which Chad should work on to resolve.

9.  How has the move to producing standard furniture affected
the company’s financial?
• Finance and accounting of the company have indicated that the
profits aren't what they should be.
• Costs associated with the standard line are rising because there is
no active sale and the inventory is increasing in the form of raw
material and work in progress which is holding the investments of
the company.
• Additional cost is increased because warehouse has to be rented to
accommodate the inventory volume.
• If this situation will continue, further Investment in product cycle
will be low or even nil at one point of time

10.  What might Thomas have done differently to avoid some of
the problems he now faces?
Few recommendations for Chad in order to reduce finance and slow
manufacturing process are as below -
• Reallocate warehouse to a cheap and cost saving location.
• Reduce raw materials from stopping under work in progress.
• Change manufacturing schedule to reduce WIP stock of standard line.
• Give same manufacturing priority to both custom and standard lines.
• Enlarge the business capacity by enabling more facilities.
• Recruit more staff or encourage its existing staff for overtime in order
to reduce delay in manufacturing line.