AIC Netbooks was facing problems with increasing production demands for their QuiN 816 Netbook. They considered two options: 1) increasing shifts to 10-12 hours which was not sustainable, or 2) installing a new production line which would increase capacity with only one-time expenses. The new production line was determined to be the better solution as it provided higher production output while keeping recurring costs like salaries and training lower compared to increasing shifts.

1. AIC Netbooks:
Optimizing Product Assembly
CASE-2
GROUP 2
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2. Contents
• Company Overview
• Good practices
• Bad practices
• Problems faced
• Solutions
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3. Company Overview
• Founded in Taichung, Taiwan, in 1992
• Produce printed circuit boards
• Focuses on motherboards and graphic cards
• In 1993, launched Intel Pentium CPU with PCI bus chipset
• Initially competed with low-cost manufacturing plan
• Supplier of Dell, HP, ASUS & MSI
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4. Company Overview
• Evolved as Original Design Manufacturer (ODM) in early 2000’s
• First Taiwanese firm to shift completely in China
• In 2001, shifted plant to Kaizhi
• In 2007, entered consumer electronic market
• In March 2008, started developing QuiN 816 Netbook
• Elias Chen- Production Manager for QuiN
• James Ashey- Chief Industrial Engineer
• Will Lapin- Process engineer
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5. Good Practices
• Outsourcing of components
• ODM – low cost, innovation, relationship
• Batch in a line process style was used
• Gravity feed shelves were used
• Double check process in assembly line
• Responsibilities were given to workers
• Kaizen was implemented
• Poka-yoke process
• Initially assigned 2 Floaters
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6. Bad Practices
• Non Standard Operations
• Firefighting attitude to tackle problem
• No new hiring despite requirement
• Unsanctionedbuffer inventoriesbetween stations
• Quick fixingtheassemblylineproblem bysupervisors
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7. Problems faced
• How to improve productivity of existing capacity
• Unexpected spike in production demand
• CSO unwilling to invest on 3rd shift workers
• Increasing shifts to 10 or 12 hours was not sustainable
• Even with 2 floaters per line, they were barely keeping up
• Continuous production led to wear and tear of machinery
• Pressure from corporate office to improve current performance and boost GrossMargin
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8. For increasing production of Netbook to cope
up demand two options are available:
 First option: Increasing Shift
• Production will increase and also time of one shift is reduce to 8 hours
• Cost of installing new line will saved
• Optimum utilization of capacity of plant
• Fixed cost will not increase much
• On regular interval expense is to be incurred
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9.  Increasing a new line of production
PROS:
• Production will increase
• Variable cost will be less
• Capacity of plant will increase
• Only one time expense is required
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10. Interpretation
 For option one: Increase Third Shift
• Production will be 145,152 units per month if one shift timing is set upto 8 hours
including 1 hours for break and lunch time
• Here salary is to be paid at regular interval of time and so it will increase monthly
expenditure
• Also training is to be given to employees which will increase an additional burden of
expense
• Management is not ready to increase one more shift
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11.  For option two: Increase a new line of production
• Production will be 138,240 units per month
• Here salary of only one panel of worker will increase
• This expenditure is non-recurring in nature
• Less training expenditure will be there
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12. Conclusion
• The best solution according to me is option second:
• As the production units are higher in option one, also the salary and training expenses
will also be higher
• Only one time expense is required in installing new line of production
• As comparing to option one, second is more suitable
• If employees will be less it will be easy to manage them
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