Economics of Management Decisions Shuzworld

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Introduction

Shuzworld is a shoe (footwear) producing company which was founded by Edward Crowninshield in 1965. Initially, the company was known as Crown Shoes. The fist two stores of the company were located in Omaha, Nebraska. The company then expanded throughout the Midwest and Far West in the 70s; it then became a nationwide retailer in the 1980s. The name of the company was changed to Shuzworld in 1995.

The Company deals with family footwear, and it is committed to providing the necessary products in the competitive market; it is committed to providing families with high-quality footwear that is designed to exceed and meet the demands of today’s lifestyle. It aims to offer the right combination of convenience, quality, price and style.

Distribution Pattern

Shuzworld’s plants in China are facing some challenges in distribution of their products. This is because there are three plants and they have to transport the shoes produced to some storage stores. These challenges arise because the production capacities of the three plants differ, and the company has to search for ways of distributing their products well.

There should be a way that is cost effective, and it will help in ensuring that the three plants minimize the production costs so as to make more profit. The demand of some brands of shoes produced is low; the company should ensure that the cost of production of these brands do not get over the projected profits.

Therefore, the company should ensure that there is the production of other brands; these brands should be high quality goods to make sure that the shipment fees are reduced. This will ensure that the low prize products do not end up causing losses to the company. This will be effective in the shipping of the products since the shoes will be shipped in large quantities. This will lower the shipping costs, and the high costs of production will be recovered during the transportation of the finished products.

Probabilistic Modeling

The distribution pattern of this company can be assessed using the tool of Probabilistic modeling. This is because the company has data that can assist in making decisions for the company. In using this model, the decision maker has knowledge about the company, and he will be using this knowledge to come up with data that will be used for analysis. He will use the knowledge he has to derive data that will be used to generate information that will assist in decision making (Skinner, 2009).

This model of making decisions works by deriving the relationship between the level of exactness of a statistical model and the level of improvement of decision making. The two aspects must tally each other for them to make a good decision that will help in the progress of the company.

The distribution that Shuzworld should choose is one that meets allocation priority. This is essential if placed as the first level of distribution of the supply. The company should find the most probable way of controlling the shipments of resources, and they need to do this through getting the data that will be used to predict the decisions made. The level of allotment plan being derived will determine the priorities to be applied at different levels.

These levels include issues such as sales channels, geographies and customer levels. Probabilistic modeling should start distributing the supplies to allotment groups following the priorities defined.

Thus, the highly prioritized demands get satisfied first. In this case, Shuzworld has a lot of brands that are in demand, but the focus should be on the brands that are in demand and are needed urgently. Therefore, these brands should be processed first. They should also be allocated means of transportation that will not compromise the profits.

Supply distribution rules of Shuzworld should be examined so as to distribute the supply based on priorities. The cases with constrained supply for the demand of the total allocation group should be addressed through these rules. The rules dictate how supply constraints within an allotment group should be resolved (Skinner, 2009).

The main problem lies with the distribution since the supply has to pass several warehouses before they are shipped to the final consumers. The cases of transporting and re-transporting these goods will add to the cost of shipping, and this will reduce the profits of the company.

Therefore, the company should come up with a strategy to transport the finished products from the manufacturing plants directly to customers. This will ensure that the transportation costs are reduced, and this will be good for the growth of the company; the goods will be produced and reach the customers within a short time, and customers will develop trust with the company.

The probabilistic model will be essential and effective through following the supply distribution rules. These rules can be designed to realize the allocation needs that are needed in different situations. These are the equipments that can be utilized to get a reliable probabilistic view that Shuzworld will need in meeting the current challenges. They will help the various plant manufacturing and distribution managers to ensure that goods reach the customers as required.

The probabilistic model derives a lot from this because it examines some simple and fair allocation that is rooted in demand. Therefore, this method will help Shuzworld come up with a good probability on areas that the demand is high, and this will escalate the sales. The probabilistic model will help the company since high profits will mean big growth to the company; in the future, the company will meet the strictest of the demands of customers, and this will satisfy both the clientele and the company.

Importance of the Probabilistic Tool of Decision making

This tool of decision making is essential in every decision making as it aids the decision maker to examine a number of probabilities. In most cases, people may examine a scenario and fail to derive a good method, but this method gives the decision maker a chance to try various methods.

The method also covers what the people already know about the scenario, and this gives people confidence to face the challenge being addressed. Therefore, the decision maker relates the information that he has with the data on the ground, and this is the starting point to having very reliable information.

This company, Shuzworld, has experienced some challenges in the past, and the decision maker will use these challenges to tackle the problem at hand. This is because the decision maker will avoid using methods that Shuzworld has used in the past. The decision maker will also look at the methods that had some success and these methods will help hi to come up with a workable method (Robert, 2004).

The past of the company will help the decision maker to approximate some new methods that will solve the existing challenges. For instance, the shipping methods of the past will be examined, and the decision maker will use the data from the past to compare with the predicted figures.

Therefore, the decision maker will choose the method whose probability figures acts for the good of the company; the predicted methods that bring more loses to the company will be discarded, and the company will settle for the method that will be the most reliable in terms of shipment. The demand and supply constraints will be met effectively using the probabilistic method.

Reliability of Computer-Driven Shoe Machines

The automation of machines in companies has helped these companies save a lot in terms of man power, energy and work out put. All these help the company to realize big profits as compared to a time before automation was activated. This will be the case in Shuzworld since a lot of manpower profits and energy will be saved.

Using computers in any commercial enterprise is beneficial since the processes of running the company will be made easy, and this will ensure that the accuracy of every activity in the company will be increased. Indeed, computers have helped in the growth of many present enterprises.

Shuzworld, inevitably has a computer design that will help run the company in shoe production. This enterprise is very essential in that this will help the enterprise meet the needs of the customers. The supply will be high, and customers will get the products as per the demands.

Inculcating computer driven shoe machines in Shuzworld will be very essential for the running of the productions of the machines. This is because the errors done by the operators will be eliminated since the machines will work with utmost accuracy. The accuracy of computer driven machines will also be good to the whole organization since the company will make a lot of profit; errors will be turned in to profits.

The number of hours of the machine’s function ability will increase since the machine will not need to take breaks. Therefore, the productivity of the machine will be increased. More working hours will mean more production, and this will lead to a lot of profit for the machines. The computer driven machines will work in a fast, effective manner. The machine can also work late hours without changing the shift of workers. This is because the machine will be computer automated, and it will just be following command prompts to function.

Automating the machines with computers will ensure that the machines will produce a lot of shoes. The plant in China will produce more shoes than the 6 shoes assigned to be produced in every hour. In fact, the production rate will be doubled since the machines will be running automatically and continuously as compared to when the machines are run by people. The machines will also need less monitoring, and they will obey the commands given by a single operator.

Improving the Reliability

Computer run machines can increase the reliability of the system in a number of ways. First, the machines can be constructed such that one machine can manufacture a product through all the processes. This will increase the reliability in that in case one machine fails, other machines will continue producing.

Previously, the failure of one machine resulted in the failure of others since every machine performed a unique function in the manufacturing process; thus, all machines had to be working in order for the process to complete. For instance, the three machines produced six shoes per hour.

However, the three machines working independently could produce three boots in one hour. The failure of one machine will result to production of two shoes per hour, but this will also be an addition of the initial one shoe. Therefore, automating the machines with computers and increasing the functions of every machine will be indispensable in increasing the reliability of the system.

These machines will also avoid errors, and this will help the company to produce the required products at the required time. The goods produced will also be of standard quality, and this will be of much satisfaction to the customers. This is because customers value goods that have high levels of consistency. Therefore, the reliability of Shuzworld will be realized by computerizing the production machines.

The usage of computer run machines will also be effective; the company will not waste time looking for people who will manage to run the machines. The money used to hire the four operates will be used to increase the productivity of the plant, and this will help in the growth of the company.

Optimum Number of Shoelaces for Shuzworld Factory

Shuzworld faces a big challenge in that they order a bigger number of shoelaces than they need in a year. This is no good for the company since the company continues to pay quite a substantial amount of money to store these shoe laces in an inventory. However, the company should devise an effective model to use when ordering these shoelaces since this can be of great help to the company. The company can continue making great profits without losing much profit from these shoe laces.

The decision making tool for this scenario would be cost benefit analysis. The cost of keeping every pair of shoe lace I an inventory is $0.10, and if multiplied by $300000 it makes $30000. This is a lot of money that goes to waste, and it affects the profit of the company.

The benefit of this method is that the company always has enough shoelaces in case they are ordered. However, the cost involved in keeping each shoelace in the inventory will be much higher than that of ordering new shoelaces. Therefore, the cost of keeping shoelaces in inventories will be a risk to the company in terms of the profitability; thus, the company should examine the cost and benefit of the method chosen to advance their future decisions.

Economic Order Quantity

EOQ is significant in this situation; it applies only to situations when the order for manufactured goods does not change over the years (Robert, 2004). Each new order that is placed is fully delivered when catalog reaches zero. A fixed charge for each of the orders is deliberated, and people do this without considering the units ordered. In such cases, there is a charge for each entity that is in storage. Shuzworld’s charges are ten cents per pair.

The determination of the optimum number of shoelaces to be ordered will help Shuzworld to reduce the cost of acquiring, delivering and storing the shoelaces. Shuzworld should consider the total demand shoe laces for a year. This company should also consider the cost of acquisition of each item; it should also consider the fixed cost needed to place the order. Shuzworld should also consider the storage costs of every item per year; the times that an order is placed will affect the total cost.

Characteristics of One Cashier and Two Cashiers Waiting Line

Using the tool of paired comparison will help determine the choice of using one or two cashiers. The proposed stores will have an expected number of customers who will pop in a day. It is predicted that one customer will be served in every five minutes, and this will give the cashier enough time to serve each and every customer effectively. Therefore, one cashier will be enough to serve customers. One cashier, as compared to a two cashier scenario will be enough since the company will reduce the expenses involved in paying for two cashiers.

One cashier at the serving desk will be sufficient since this will give the customers enough time to navigate through various shelves in the store. This will give customers sufficient time to explore their choices, and this will make the customers satisfied. Having two cashiers will make the customers hurry in their choices, and; thus, they end up making the wrong choices. Consequently, they will get dissatisfied with the products, and they may fail to make other purchases in the store.

Shuzworld is expected to make a sale in every ten minutes in the new stores. Therefore, there will be enough time for the customer since this time will favor the customer’s time flame. This is because the customer will spend at most five minutes at the cashier. Therefore, the customer will not wait long before being served. In comparison to the two cashier scenario, the customer will hardly have any time to navigate the store.

This is because the customer will be served promptly after making the purchase; this will not be good since the customer may want to buy something else. This will not be possible with the customer already out of the store. Given that there will be a sale in every ten minutes, the number of the customers waiting will be reduced since the cashier has an approximate of five minutes before the next customer. This will enable the cashier relax in anticipation of the next customer.

Therefore, the cashier will develop some bonds with customers and these bonds will see the customer coming back as a return customer. Two cashiers will make the customers not develop some business ties with the enterprise. This is because a customer who comes back is likely to be served by a different cashier. Therefore, they may fail; to get the spirit of consistency of the enterprise.

Using one cashier for the stall job will be good in terms of convenience, time and customer satisfaction. The total check out time of the customers will be expected to be limited since the customers will get some time going through various selections. The sales persons on the ground will assist customers with the various shoes available, and this will help customers make the right choices. The customers will be able to come and leave before they are late for office, and they can take this time to window shop and walk around the stalls.

Using Paired Comparison

This tool of analysis is very important in this scenario since it gives comparisons of the various choices made (Skinner, 2009). In this case, the case of using one cashier proved advantageous since it will enable customers to explore the ends of the stall to make their purchase. The comparisons obtained are that using two cashiers will reduce the work of each cashier by half.

Therefore, each cashier will have less work to do. It will not be fine for the company since these cashiers will be given full salaries. The returns of one cashier will be paired with the return of two cashiers, and the data obtained will be used in determining the future running of the stalls.

Furthermore, the number of cashiers will not increase the number of customers. However, increased customers will demand an increased number of cashiers. Until then, the number of cashier should be kept constant since this analytic tool favors the choice of using only one cashier.

Conclusion

The challenges faced at Shuzworld are challenges that are common among the world’s major companies and enterprises. The various tools of analysis used by Shuzworld are indispensable in any company. This is because the complexities that are found in these companies are common, and they need to be addressed in an effective manner; this can only be done through the employment of decision making tools and tools of decision analysis.

References

Robert, C. (2004). Making Hard Decisions (2nd ed.). Belmont CA: Southwestern College Pub.

Skinner, D. (2009). Introduction to Decision Analysis (2nd ed.). New York: Probabilistic.

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