Chad's Creative Concepts designs and manufactures wood furniture. Founded by Chad Thomas on the banks of Lake Erie in Sandusky, Ohio, the company began by producing custom-made wooden furniture for vacation cabins located along the coast of Lake Erie and on nearby Kelly's Island and Bass Island. Being an "outdoors" type himself, Thomas originally wanted to bring "a bit of the outdoors" inside. Chad's Creative Concepts developed a solid reputation for creative designs and high-quality workmanship. Sales eventually encompassed the entire Great Lakes region. Along with growth came additional opportunities. Traditionally, the company focused entirely on custom-made furniture, with the customer specifying the kind of wood from which the piece would be made. As the company's reputation grew and sales increased, the sales force began selling some of the more popular pieces to retail furniture outlets. This move into retail outlets led Chad's Creative Concepts into the production of a more standard line of furniture. Buyers of this line were much more price-sen- sitive and imposed more stringent delivery requirements than did clients for the custom line. Custom-designed furmiture, however, continued to dominate sales, accounting for 60 percent of volume and 75 percent of dollar sales. Currently, the company operates a single manufacturing process in Sandusky, when scheduling trade-offs had to be made, custom furniture was always given priority because of its higher sales and profit margins. Thus, scheduled lots of standard furniture pieces were left sitting around the plant in various stages of completion. As he reviews the progress of Chad's Creative Concepts, Thomas is pleased to note that the company has grown. Sales of custom furniture re- main strong, and sales of standard pieces are steadily increasing. However, finance and accounting indicate that profits are not what they should be. Costs associated with the standard line are rising. Dollars are being tied up in inventory, both in raw materials and work-in-process. Expensive public ware- house space has to be rented to accommodate the inventory volume. Thomas also is concerned with increased lead times for both custom and standard orders, which are causing longer promised delivery times. Capacity is being pushed, and no space is left in the plant for expansion. Thomas begins a careful assessment of the overall impact that the new standard line is having on his manufacturing process. QUESTIONS where both custom furniture and standard funiture are manufactured. The 1. What types of decisions must Chad Thomas make daily for his com- pany's operations to run effectively? Over the long run? equipment is mainly general purpose in nature to provide the flexibility needed for producing custom pieces of furniture. The layout puts together saws in one section of the facility, lathes in another, and so on. The quality of the finished product reflects the quality of the wood chosen and the craftsmanship of in- dividual workers. Both custom and standard furniture compete for processing time on the same equipment by the same craftspeople. During the past few months, sales of the standard line steadily in- creased, leading to more regular scheduling of this product line. However, 2. How did sales and marketing affect operations when they began to sell standard pieces to retail outlets? 3. How has the move to producing standard furniture affected the com- pany's financial structure? 4. What might Chad Thomas have done differently to avoid some of the problems he now faces? 10:34 AM 23-Jul-20