Toysplus Case Study

CASE STUDY TOYSPLUS. INC

INTRODUCTION

The situation posed in the study problem has several areas of work, at the level of inventory management, at the level of information management, relations with suppliers and at the organizational level in terms of the feeling of insecurity and distrust that apparently is widespread within the company. All these areas will be developed throughout the present work.

Using simulation as a tool, we have evaluated several inventory management options, choosing the most convenient way to minimize stock in the warehouse, as well as the costs that this entails, developing the MRP, the Production Master Plan, the cost analysis and the capacity analysis.

Reengineering and quality management in the company is a very effective tool to present the changes at the organizational level that must be corrected in order to handle more reliable data and therefore more efficient when using them when planning the production.

CHAPTER 1

INITIAL CONSIDERATIONS OF THE CASE

The company Toysplus is a company dedicated to the manufacture of toys, which presents a series of phenomena in the organization, this has made the vice president of manufacturing Dale Long, note that inventories have grown again and service levels are lower than Expected, despite the organization has a production planning and control system, however the implementation has been successful in the first months, and lately have returned the problems.

Andrea Melline , in charge of production control, indicates that she has had bad forecasts from marketing, and has raised inventories taking into account the variations in demand, which are reflected in inventories.

Characteristics of the organization:

•               Net sales of $ 20,100,000 per year

•               Portfolio of products: 22 toys, composed of games, toys, toy vehicles and novelty items.

•               Hierarchical organization of its administrative structure

•               Profitability indicators, low, 5% profit and return on assets less than 10%

•               Automated production line and ease of assembly

DIAGNOSIS OF THE ADMINISTRATIVE SYSTEM

Diagnosis

The organizational chart of the company is proposed as a hierarchical system in which it is not clear what is the importance or not of the areas of the organization, which is proposed as follows:

In the organization there are communication problems between the marketing and sales and manufacturing areas, which creates uncertainty between the fulfillment of the orders and the sales of the organization, which in turn, generates risk of lack of product in stock for the sale as an excess product that generates an inventory of finished products and immobilized capital.

DIAGNOSIS OF THE FINANCIAL SYSTEM

CONVENTIONAL FINANCIAL ANALYSIS

To carry out the financial analysis of the company, several indicators were found that reflect the situation of the organization, within which the following results were found:

LIQUIDITY INDEXES

The state of liquidity of the company tells us that it is in a difficult financial situation because the working capital is being financed mostly, and for every peso I have borrowed, I only have 0.94 cents to answer for the debt, which indicates that We do not have good payment capacity, they are also showing the indicators of current liabilities on inventories, that inventories are quite dependent on the sale of inventory and acid test, finally it is indicating that for each peso that the company only has with 59 cents to support short-term debt.

INDEX OF INDEBTEDNESS

The level of indebtedness is 81% quite high, meaning that the creditors would have a share of the indicated percentage on the assets of the company. The concentration of short-term liabilities is quite high, as is the ratio of indebtedness / sales, plus the 36% contribution to the coverage of non-operating expenses of annual revenues is significant.

The overall indebtedness of the company is exceeding its ability to pay, running a serious risk, if given the case could not meet short-term obligations.

PROFITABILITY INDEX

Although there is a high gross profit, we find that the perception of the manufacturing manager varies, taking into account that net profit is not 5% but it is 3%, which puts the company at a pessimistic level of profitability on the investments made, in addition to the investment in assets, profitability is also low, considering that 6% is lower than an alternative financial option.