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Chapter 4
Switching the production line from one type of snack bar to the other takes 30 minutes—
for cleaning the equipment and changing the wrappers, display boxes, and shipping cases.
Each night, a second shift of employees cleans all the equipment thoroughly and sets it up
for the next day’s production. Thus, changing production from NRG-A on one day to NRG-B
the next day can be done at the end of the day without a loss of capacity. (Capacity is the
80
maximum amount of bars that can be produced.) On the other hand, producing two products
in one day results in a half-hour loss of capacity during the changeover.
Fitter’s Production Problems
Fitter has no problems making snack bars, but it does have problems deciding how many
bars to make and when to make them. The manufacturing process at Fitter suffers from a
number of problems, ranging from communication breakdowns and inventory issues to
accounting inconsistencies, mainly stemming from the unintegrated nature of its
information systems.

Communication Problems
Communication breakdowns are an inherent problem in most companies, and they are
magnified in a company with an unintegrated information system. For example, at Fitter,
Marketing and Sales personnel do a poor job of sharing information with Production
personnel. Marketing and Sales frequently excludes Production from meetings, neglects to
consult Production when planning sales promotions, and often fails to even alert
Production of planned promotions. Marketing and Sales also typically forgets to notify
Production when it takes an exceptionally large order.
When Production must meet an unexpected increase in demand, several things
happen. First, warehouse inventories are depleted. To compensate, Production must
schedule overtime labor, which results in higher production costs for products. Second,
because some materials (such as ingredients, wrappers, and display boxes) are custom
products purchased from a single vendor, a sudden increase in sales demand can cause
shortages or even a stockout of these materials. Getting these materials to Fitter’s plant
might require expedited shipping, further increasing the cost of production. Finally,
unexpected spikes in demand result in high levels of frustration for Production staff.
Production personnel are evaluated on their performance—how successful they are at
controlling costs, keeping manufacturing lines running, maintaining quality control, and
operating safely. If they cannot keep production costs down, Production staff receive poor
evaluations. Managers are especially frustrated when an instant need for overtime follows a
period of low demand. With advance notice of a product promotion by Marketing and
Sales, Production could use slack periods to build up inventory in anticipation of the
increase in sales.

Inventory Problems
As noted earlier, Fitter’s week-to-week and day-to-day production planning is not linked in
a systematic way to expected sales levels. When deciding how much to produce, the
production manager applies rules developed through experience. Her primary indicator is
the difference between the normal amount of finished goods inventory that should be
stocked and the actual inventory levels of finished goods in the warehouse. Thus, if NRG-A
or NRG-B inventory levels seem low, the production manager schedules more bars for
production. However, she does not want too many bars in inventory because they have a

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