Kuiper Leda is an electronics components manufacturer that specializes in the production of Electronic Control Units (ECU’s) and sensors for the automotive industry. Kuiper began operations with an assembly plant that assembles ECU’s accompanied with a production line dedicated to microchips. Kuiper has recently added a production line that assembles Radio Frequency Identification Devices (RFID) Tags. These technological advancements have enabled Kuiper to become internationally recognized as an industry leader.
As the scenario explains, inventory management involves planning and controlling inventory from the raw material stage to the final delivery at the customer’s end. Often enough, businesses rely on suppliers for inputs that are required to manufacture their products. There is a vital need to manage their production schedules efficiently in order to maintain their commitments to their customers. Not only does the business need an adequate supply to manufacture the product, but they also need the ability to properly manage a shortage or excess of inventory.
Historically, Kuiper has primarily worked with smaller customers and has a daily capacity of 1,250 units for ECU’s and 250 units for RFID’s. Recently, Kuiper has been recruited by Midland Motors to annually assemble 250,000 ECU’s and 35,000 RFID’s. This order places a significant increase in demand for producing higher volumes of product in addition to daily operations. Due to the long term benefits of a successful business relationship with Midland Motors, Kuiper management has placed a priority on these orders.
Kuiper’s existing capacity is not currently able to handle the increase in production orders. Kuiper must now decide how they will meet the Midland Motor order in addition to maintaining their current daily operations. A decision must be made about the future operating procedures concerning the increase in demand. Kuiper must now investigate the possibility of manufacturing the products...