Operations management- comprehensive case study analysis

5-6 pages to complete below. Part Three is already completed (see attached)

Need to create a:

1. Introduction Section (1-2 paragraphs)

2. Conclusion Section (1-2 paragraphs)

3. Part One – Managing Operations (2-4 pages)

4. Part Two – Quality, Process and Location (2-4 pages)

Then combine Introduction Section, Part One, Part Two, Part Three and Conclusion Section into ONE file consisting of 10-12 pages combined (not including Cover and Reference page) to create the comprehensive case study analysis.

OVERVIEW:

Imagine that you are hired into the role of the Operations Manager at the company described in the case study (Nissan). Although there are many issues facing the company, you have some experience and are well qualified to provide direction in solving these problems. Prepare a cohesive case study analysis for submission as one document.

The project is the creation of a comprehensive case study analysis. You will write a comprehensive analysis of the Nissan case study (see attached) that’s been analyzed throughout the course by addressing the critical elements below.

ASSIGNMENT:

You NEED to do Part One and Two below. Part Three has been already been completed (see attached). Part One, Two and Three need to be combined into one document to create the case study analysis.

Also need to be included is:

1. An Introduction Section: which provides an overview of the company and some of the key challenges that it is facing.

2. Summary /Conclusion Section: that highlights some of your most important recommendations for improving operations at the company

PART ONE: Managing Operations case study analysis, which evaluates how Nissan uses OM functions to provide products and generate value for its customers and how it achieves a competitive advantage using operations management, among other critical elements (Less than 4 pages- no minimum)

I. Generating Value

A. Evaluate how the company in the case study uses operations management functions to provide products and generate value for its customers.

i. Support your claims with examples from the case study or outside sources.

B. Assess how this company achieves a competitive advantage using operations management.

i. Provide examples found in the case study or outside sources to support your reasoning.

C. Compare and contrast service operations and manufacturing operations at the company in the case study.

i. How are they the same?

ii. How do they differ?

iii. How does each of these operations provide value for their customers?

II. Theories and Techniques

A. Compare and contrast the critical path method (CPM) and the program evaluation and review technique (PERT).

i. What types of projects at this company would favor PERT over CPM? Why?

ii. What types of projects at this company would favor CPM over PERT? Why?

B. Explain the steps used to develop a forecasting system.

i. How would these steps be specifically utilized by this company?

ii. What do you predict would be the result of implementing a forecasting system for the top-selling product line at this company?

C. List the major categories of supply chain risk and associated risk reduction tactics.

i. How could the company mitigate exposure to supply chain disruptions caused by natural disasters?

1. For example, consider the 2011 earthquake and tsunami that devastated parts of Japan.

PART TWO: Quality, Process, and Location case study analysis that addresses the typical problems that operations managers face. (Less than 4 pages- no minimum)

I. Theories and Techniques

A. Explain the five steps of the theory of constraints (TOC) process.

i. To what processes might the company in the case study apply TOC?

ii. Why would applying TOC to these processes be advantageous?

B. Describe how total quality management (TQM) principles and tools can be used to improve quality in the latest line of products in the context of the case study.

II. Data Analysis

A. Draw a cause-and-effect diagram that assesses why some of the company’s supply chain partners might have struggled to implement some of the company’s newly developed materials.

i. Summarize your findings from the diagram.

B. Draw a hypothetical process (time-function) map for producing a recently released (within the past two years) product manufactured by the company.

i. As an operations manager, how will you use the value map?

ii. Be sure to include your process map within your case study analysis.

C. Considering the data and options below, determine where the company should locate its new manufacturing plant.

i. Explain why this would be the favorable location.

Factor Weight Mexico City Columbia, SC

Political Risk .25 70 80

Transportation Costs .20 40 90

Labor Productivity .20 85 75

Rental Costs .15 90 55

Labor Costs .10 80 50

Taxes .10 90 50

D. The company believes that it might have some inefficiencies in its inventory management process.

i. Develop an ABC classification system for the following 10 items.

ii. Based on this information, what do you recommend for improving inventory management?

Item Annual Demand Cost/Unit

I5 1750 $10.00

D1 6000 $10.00

A2 3000 $50.00

E9 1000 $20.00

J8 2500 $5.00

C7 1500 $45.00

B8 4000 $12.00

G2 300 $1500.00

H2 600 $20.00

F3 500 $500.00

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July 1, 2023

Individual Assignmnet Corporate Finance

Tenyearsago,in 2003,GeorgeReebyfoundeda smallmail-‐order companysellinghigh-‐ qualitysportsequipment.SincethoseearlydaysReebySportshas grownsteadilyand been consistently profitable.

The companyhas issued2millionshares,all of whichareownedbyGeorgeReebyand his five children.Thecompanydoesnot useanydebtin its capitalstructure.Forsomemonths George has beenwonderingwhetherthetimehas cometo takethecompanypublic.This wouldallowhimto cashin on partof his investmentand wouldmakeit easierforthefirmto raise capital should it wish to expand in the future.

But how much are the shares worth? George's first instinct is to look at the firm's balance

sheet, which shows that the book value of the equity is $26.34 million, or $13.17 per share.

A share price of 13.17 would put the stock on a P/E ratio of 6.6. That is quite a bit lower than

the 13.1 P/E ratio of Reeby's larger the rival, Molly Sports.

Georgesuspectsthat bookvalueis not necessarilya goodguideto a share'smarketvalue. Hethinksof his daughterJenny,whoworksin an investmentbank.Shewouldundoubtedly knowwhatthesharesareworth.Hedecidesto phoneheraftershefinishesworkthat evening at 9 o'clock or before she starts the next day at 6.00 a.m.

Beforephoning,Georgejots downsomebasicdata on thecompany'sprofitability.After recoveringfromits earlylosses,thecompanyhas earneda returnthat is higherthan its estimated10%costof capital.Georgeis fairlyconfidentthat thecompanycouldcontinueto growsteadilyforthenextthreeto fiveyears.In fact,hefeelsthat thecompany'sgrowthhas beensomewhatheldbackin thelast fewyearsbythedemandsfromtwoof thechildrenfor the company to make large dividend payments. Perhaps, if the company went public, it

could hold back on dividends and plow more money back into the business.

Therearesomecloudson thehorizon.Competitionis increasingand onlythat morning MollySportsannouncedplans to forma mail-‐order division.Georgeis worriedthat beyond thenextthreeorso yearsit mightbecomedifficultto find worthwhileinvestment opportunities.

GeorgerealizesthatJennywillneedto knowmuchmoreabouttheprospectsforthe businessbeforeshecanputa final figureon thevalueof ReebySports,buthehopesthat

theinformationbelowis sufficientforherto givea preliminaryindicationof thevalueof the

shares.

Column1	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013E
earningsper share,$	-‐0.70	-‐0.23	0.81	1.10	1.30	1.52	1.64	2.00	2.03	2.33	2.68
Dividend,$	0.00	0.00	0.20	0.20	0.30	0.30	0.60	0.60	0.80	0.80	1.00
Bookvalue pershare,$	7.70	7.00	7.61	8.51	9.51	10.73	11.77	13.17	14.40	15.93	17.62
ROE,%	-‐7.14	-‐2.99	11.57	14.45	15.28	15.98	15.28	16.99	15.41	16.21	16.85

a) HelpJennyto forecastdividendpaymentsforReebySportsand to estimatethevalue of thestock.You do notneedto providea singlefigure.Forexample,youmaywishto calculatetwofigures,oneon theassumptionthattheopportunityforfurther profitableinvestmentis reducedin year3and anotheron theassumptionthatitis reducedin year5.You canassumea costof equityof 12%forthecalculation.

(21points)

OnceReebyoperatesas a marketlistedfirm,Georgewillhaveto justifythefirm’scapital structuretowardsshareholders.Hehas heardfromhis daughterthatmostfirmsshould use atleastsomedegreeof debtif thegoalis themaximizationof shareholdervalue.Jenny mentioneda “debttax shield”as thereasonforherclaim.George,on theotherhand is worriedabouttheincreasedriskthatdebtmightbringforequityholders.

b) Brieflyexplaintheleverageeffectand howitis relatedto theexpectedriskfor shareholders.Also,explainthebalancing(ortrade-‐off) theoryof capitalstructure. Whatarethetwoeffectsthatneedto bebalancedand whatdoesthetheoryimplyfor thedebt/equitychoiceof Reeby?(13points)

Georgeis increasinglyconfidentto takethefirmpublic.However,therearestill someissues aroundtheIPOprocessthathehas notyetfiguredout. Hehas writtendownthesequestions and asksforyourhelp:

c) Pleaseexplainwhata „Greenshoeoption“ is and underwhatcircumstancesitis used.

(4points)

d) WithintheIPOprocessunderwritersplayan importantrole.Definetheterms underwriterand syndicateand explaintheirrole/purpose.(4points)

e) In 2003,prosecutorschargedseveralinvestmentbankersforwhatis called“spinning”.

Brieflyexplaintheunderlyingprincipleand rationalizetheuseof spinningby investmentbanks.(8points)