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Als Auto Case 1-2

3 analyze and discuss the capacity requirements of

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3) Analyze and discuss the capacity requirements of Al’s Auto Tire and Lube. (HINT: all mechanics are working on vehicles the full number of hours shown scheduled in Table 1). a) What is the utilization by day? By automobile mechanic? b) What is the average weekly capacity cushion? c) What is the average weekly revenue from services and retail? 4) Analyze and discuss the inventory considerations of Al’s Auto Tire and Lube. a) What is the safety stock needed for seat coverings and for all parts and supplies shown in Table 3? b) What is the total annual cost of ordering and holding inventory for all items in Table 3? c) What is the reorder point for all items in Table 3? 5) What recommendations do you have for Al? Your recommendations should be a direct reflection of your analysis, and include the challenges associated with implementation, as well as viable alternatives. 3
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Figure 1 Al’s Auto Tire and Lube Layout Stock Area Waiting & Retail Area Service Area 4
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Table 1 Shop operating hours and mechanic schedule Day* Shop hours Mechanic schedule Total hours 1 2 3 4 5 6 7 Mon 10 10 10 10 10 8 8 8 64 Tues 8 - 8 8 4 4 4 4 32 Wed 10 10 10 - 10 - 4 4 38 Thurs 8 8 - 8 8 4 - - 28 Fri 10 10 10 10 10 10 10 10 70 Sat 6 6 6 6 - - - - 18 * The shop is closed for business on Sunday. Table 2 Service details Type of service Hours to perform service Price of service Percent customers requesting service Oil change 0.5 $ 35.00 40% Service inspection 0.75 $ 45.00 5% Tire rotation and balance 1.5 $ 75.00 35% Brake pad replacement 2 $100.00 20% Table 3 Sample of Parts and Supplies Products Retail Sales Price* Volume (in units) used in shop per week** Volume (in units) sold thru retail per week** Oil filter $ 15.00 86 23 Windshield wiper blades $ 20.00 8 18 Windshield washer fluid $ 8.50 12 50 Antifreeze $ 10.00 15 5 Evergreen scented car freshener $ 9.99 n/a 25 High performance motor oil $ 6.50 430 60 Battery $ 55.00 9 2 Spark plugs $ 17.50 40 10 Super-fuzzy rearview mirror dice $ 35.00 n/a 20 Decorative license plate frames $ 12.00 n/a 20 * Purchase cost from supplier is 50% of sales price ** Standard deviation of demand is 10% of total weekly demand 5
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