B&L Inc

B&L Inc

Brian XXXXXX, materials manager at B&L Inc. in Lancaster, Pennsylvania, was considering a proposal from his purchasing agent to outsource manufacturing for an outrigger bracket. It was the end of April and Mr. Wilson had to evaluate the proposal and make a decision regarding whether to proceed. B&L Inc. Manufactured trailers for highway transport trucks. The company comprised three divisions: the Trailer, Sandblast & Paint, and Metal Fabricating Divisions. Each division operated as a separate profit center, but manufacturing operations between each were highly integrated. The Metal Fabricating Division produced most of the component parts of the trailers, the Trailer Division performed the assembly operations, and the Sandblast & Paint Division was responsible for completing the sandblasting and final painting operation. B&L manufactured approximately 40 trailers per year, with about two-thirds produced during the period from November to April. The outrigger bracket, part number T-178, was an accessory that could be used to secure oversized containers. The bracket consisted of four component parts welded together, and each trailer sold by B&L had 20 brackets – 10 per side. The Metal Fabricating Division was presently manufacturing the outrigger bracket. The subassembly parts – T-67, T-75, T-69, and T-77 – were processed on a burn table, which cut the raw material to size. Although the burn table could work with eight stations, this machine had only been operating with one station. The final assembly operation, T-70, was performed at a manual welding station. Manufacturing lead time for the outrigger bracket was two weeks. However, the Metal Fabricating Division had been able to coordinate supply and production with assembly operations. Consequently, finished inventory levels of the outrigger bracket were kept to a minimum. B&L’sinventory holding costs were 20 percent per annum. In an effort to reduce costs, the purchasing agent, Alison Beals, who reported to XXXXX...

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