Discussion Questions
1. How would you describe the current situation facing U.S. Stroller?
2. What are the pro’s and con’s of the options presented in the case?
3. What will be the impact of these options on the MRP system currently in use?
4. What option do you recommend and why?
U.S. Stroller is a manufacturer and distributor of a line of baby strollers. The company
makes three types of strollers in a typical batch production system. Recently, profits are
down and competition is entering the market that the company dominates. Proposals have
been made to go to a JIT production system or to a Cell approach for production. Students
are asked to analyze these proposals and come up with a recommendation.
The purpose of this case is to show how a batch system can be dramatically improved by
JIT or Cellular concepts. The case clearly describes the changes that must be made in the
production system to achieve the benefits desired. This amounts to a complete change in
layout of the production floor and a substantial overhaul of the MRP system. The case
nicely ties together some of the material from the text on JIT, GT, EOQ and MRP. The case
also requires the student to estimate cost and benefits of these types of proposals and to
identify negative effects of JIT and GT.
Analysis
Question 1: Current Situation?
U.S. Stroller must do something quickly. Profits have eroded. They are not losing money
yet, but financial results are poor based on percent of sales and return on equity. Also,
Japanese competition is coming. Even though U.S. Stroller still commands the dominant
share of the market, they are vulnerable on both quality and cost grounds. The Japanese are
following a typical Japanese strategy by entering the market with a high quality stroller on
the low end of the market. The Japanese can be expected to come after U.S. Stroller
directly after gaining a foothold in the market.
U.S. Stroller cannot delay making improvements, until after they have lost market share.
They must improve now in order to preempt the competition and to improve profits in the
face of probable price erosion. There should be a sense of urgency in making drastic
improvements in order to protect their market share. Some changes should be made,
assuming U.S. Stroller wants to survive in the long-run.
Question 2: Pro’s and Con’s?
Option 1: JIT
