Chad's Creative Concepts is a furniture manufacturer founded by Chad Thomas. The company traditionally focused on custom furniture but has expanded into standard furniture lines. While standard furniture sales are increasing, custom jobs still dominate sales volumes and profits. The company is now facing problems of rising costs from inventory of raw materials and works in progress for standard furniture, which sits unfinished while custom jobs are prioritized. A review found profits are lower than expected given the company's growth. Thomas will need to make decisions to better manage production and inventory levels to improve the company's financial position.

1. CHAD’S CREATIVE CONCEPTS
PRODUCTION AND OPERATIONS MANAGEMENT
CENTURION UNIVERSITY OF
TECHNOLOGY AND MANAGEMENT

2. CONTENTS
• INTRODUCTION
• PROBLEMS
• REVIEW
• QUESTIONS AND ANSWERS

3. INTRODUCTION
• Chad’s Creative Concept is a manufacture company founded
by Chad Thomas on the banks of Lake.
• The company is an American designer and manufacture of
wooden furniture.
• The company is producing furniture within a short period of
time for high quality and creative design.

4. Cont…
• Traditionally the company had focused entirely on custom-
made furniture, with the customer specifying the kind of
wood from which the piece would be made.
• A good reputation for creative designs and high quality.

5. PROBLEMS
• Both custom and standard furniture compete for processing
time on the same equipment by the same crafts people.
• Custom designed furniture, however, continued to dominate
sales, accounting for 60% of volume and 75% of dollars sales.
• Lots of standard furniture pieces were left sitting around the
pant in various stages of completion.
• Sales of the standard line have steadily increasing, custom
furniture was always given priority because of its higher sales
and profit margins.

6. REVIEW
• Costs associated with the standard line are rising. Dollars are
being tied up in inventory both of raw materials and work in
process.
• When the progress was reviewed it was noted that the
company has grown, the sales of custom pieces remain
strong and the sales of standard pieces are steadily
increasing.
• However, finance and accounting have indicated that profits
are not what they should be.

7. What type of decisions must Chad Thomas make daily for his
company’s operations to run effectively? Over the long run?
• He has to know the demands of people what they want.
• Raw materials allocation.
• He has to increase the production unit and quantity of
products.

8. How has the move to producing standard furniture affected
the company’s financial structure?
• Additional cost is increased because warehouse has to be
rented to accommodate the inventory volume.
• Finance and accounting of the company have indicated that
the profits aren’t what should be.
• If this situation will continue, the further investment in
product cycle will be low.

9. What might Thomas have done differently to
avoid some of the problems he now faces?
• Reallocate warehouse to a cheap and cost saving location.
• Reduce raw materials from stopping under work in progress.
• Change manufacturing schedule to reduce work in progress
stock of standard line.
• Enlarge the business capacity by enabling more facilities.

10. Thank You