Professional Documents
Culture Documents
MGT Case 2
MGT Case 2
CASE STUDY-2
BY
THE MIND BOGGLERS
CASE STUDY-2
MGT314 SECTION-15
Submitted to
Submitted by
Date: 16-05-2021
ACKNOWLEDGEMENT
Through this project, we have able to gather vast experience and knowledge of Operational
Management Functions, which is very remarkable.
First and foremost, we would like to give all gratitude to the almighty Allah for giving us the ability
to work hard and prepare our CASE STUDY-2 on “Walton Refrigerators”. We're very much
fortunate that we've received almost and sincere guidance, supervision, and co-operation from all
the group members while compiling this report
First of all, we would like to thank our course faculty Afnan Yusuf, department of management,
North South University, for giving us the opportunity to prepare this report & effortful supervision.
She also provided us some important advice and guidance for preparing this Case Study without
her help, this report could not have been a comprehensive one
Secondly, we would like to show our gratitude towards Hasanul Banna, Engineer, Walton Home
appliance division for giving us his valuable time and relevant information which has helped us to
prepare this Case study.
LETTER OF TRANSMITTAL
Date: 16-05-2021
Afnan Yusuf
Lecturer
Department of management.
Respected ma’am,
This is to inform you that with the full help and co-operation of our team members we have completed the
Case Study-2 on “Walton Refrigerator” which has been assigned by you. We are delighted to work on such
a project, it helped us to gather more practical knowledge on this course. We have tried to include all the
relevant knowledge we were able to gather. The report consists of the elements which have been taught by
you in class throughout MGT 314 course. We hope that the report meets all your requirements.
It will be an honor if you accept the submission of this report conducted by our group.
Sincerely Yours,
THE MIND BOGGLERS
EXECUTIVE SUMMARY
This report is about how a business company like Walton carries out its operational activities for
MASS products. We will discuss different segments like process type, quality management,
inventory management, and cost side of Walton's Refrigerator and freezer industry. This report
gives a brief idea about Walton and its products. Then it focuses on the operations management of
Walton Refrigerators. Here we discuss the repetitive process of Walton’s production, which goes
through 12 steps throughout the whole manufacturing process. Then we look at the approaches
Walton takes to maintain the highest quality of their products. Then we will discuss how Walton
manages their inventory during such a time by maintaining their product quality. We will also talk
about the supply chain management of Walton. And how Walton faces different challenges and
how they try to overcome those. We also will discuss some of the operational problems that Walton
has and how they can combat them. Walton’s way of producing and delivering its mass products
like refrigerators are becoming more efficient and faster, which is helping them to catch new
markets in the world. They are trying to make products using the latest technology and improving
them at low cost, which helps them compete and gives an advantage in the market. Walton is a
country brand; they try to give their customers the best service quickly. The refrigerator and freezer
industry is gradually increasing day by day. We continue to discuss Walton and its operations
management in the report, and we concluded it with some recommendations for smoother and
faster operational activities for the company.
TABLE OF CONTENTS
Serial No. Content Page No.
1 Introduction 1
2 Facility Layout 2
3 Quality Management and Control Issues 4
4 Inventory Management 5
5 Supply Chain Management 8
6 Operational Problems 10
7 Recommendation 10
8 Conclusion 10
9 Bibliography 11
10 Appendix i
TABLE OF FIGURES
Figure No. Content Page No.
1 Walton Refrigerator 1
2 Product Process Matrix 2
3 Process Layout 3
4 Precedence Diagram 3
5 Cause and effect diagram 4
6 Lean Production 5
7 Inventory Cycle 8
8 Bullwhip Effect 9
9 Supply Chain 9
LIST OF TABLES
Table No. Content Page No.
1 Line balancing 3
2 Quality cost types 4
3 Check sheets 4
4 Inventory types 5
5 ABC classification 6
6 EPQ inputs 6
7 EPQ outputs 7
8 Problems and recommendation table 10
INTRODUCTION
Our business is about Waltons’ Home Appliances industry, specifically the Refrigerator and
Freezer. Products that help us in house cleaning, cooking, and other household activities like
washing machines, ovens, refrigerators & freezers, etc., are home appliances. People are becoming
busier day by day. They want to do the household work more easily and efficiently. To utilize their
time effectively, especially in household activities, People are focusing more on products, such as
washing machines, hand blenders, microwave ovens. Day by day, this industry is developing by
innovation eco-friendly, sustainable, and easily usable products. Walton, Vision, Transcom,
Minister, Samsung, Singer, etc. are leading companies in this industry in Bangladesh.
Waltons products like smartphones hold 6%, Television 27%, air conditioner 22% and
Refrigerators & freezer 67% of the market shares. Since there is a great demand for our product
both locally and foreign, walton hope to expand their products and export it to other countries.
Walton products are tagged with “Made In Bangladesh”. They are
selling products to more than 20 countries like Australia, Middle
East, and African countries. (Global Operation, n.d.)
technologies like CFC free, Inverter, Nano health care, and anti-fungal door glass freezers.
Our factory is located in Gazipur near Dhaka and supply of our products is throughout the whole
country. 10,500 units of refrigerators and freezers are produced every month.
Process Type
The process type that Walton uses to produce its refrigerators
is Repetitive/Mass Processes. Walton produces high
volumes of refrigerators with low variety. Walton has
production lines in which they repetitively use the same
process with low variations to produce the refrigerators. The
variations include some slight design changes and the size of
the refrigerators. However, the process of making the
refrigerator is the same in all the cases. This type of process Fig. 2: Product Process Matrix
is appropriate for Walton since they want to produce a higher number of products with lower
varieties as quickly as possible.
Facility Type
The facility layout type that Walton uses to produce its refrigerators is Product Layout. Walton
uses its resources in a pre-arranged route to produce a single refrigerator. This layout helps them
to have a lower unit cost, higher output rate, high utilization of labor and materials etc. for
producing their refrigerators.
Manufacturing Process
There are multiple stages in the manufacturing process of a refrigerator/freezer. Firstly, they bring
the metal sheets into the production line. And cut the metal sheets into the shapes required to make
a refrigerator. Then the pieces are taken into a press where the sheets are pressed into the shape of
a refrigerator. Then they use automated machines to do thermal foaming. In the next step, they do
doors and cabinet foaming of the refrigerators. Then painting of the body and other parts is done
using computerized digital methods. In the next step, the compressors, which are premade by
Walton, are set. Wirings and tubings, and other components are connected. Then the refrigerators
are pressure tested with nitrogen, and leak testing is also done in this step. After that, there is the
final inception of the refrigerators. Then the refrigerators are packaged and stocked in the
warehouse. (Walton Factory Production Process, 2013)
480
CYCLETIME= 350 = 1.37 min
6.95
Nmin= 1.37 = 5.007 ≈ 6𝑤𝑠
2.64
P.I.T = 7×1.37 = 0.2752 = 27.52%
Precedence diagram:
WALTON always keeps a very sharp eye on quality, and they never compromise with it. They
always plan to serve up the highest quality product under the lowest of costs. Walton uses a TQM
approach where they do the following things: Finding out the customer demands and work
accordingly with the state of the Earth technology that meets if not exceeds customer satisfaction.
Preparing a process of the work or an assembly line through which the final product gets a perfect
touch, they keep track of their refrigerator’s performance results to keep improving their qualities,
they try to use efficiently use the raw materials and share information with the suppliers.
The quality costs related to the production of the refrigerators are Failure costs, Appraisal costs,
and prevention costs. Faulty parts, inspection costs,
training costs, etc., are incurred by Walton to maintain
quality.
Quality certifications – ISO 9001, ISO 14001, ISO 18001, BSTI, ROHS, CE, CB, etc.
INVENTORY MANAGEMENT
Inventory Analysis
Walton manufactures all the parts used to assemble their refrigerators in-house. For Walton’s
inventory, they have the raw material which are metal sheets, the manufactured refrigerator parts
such as compressors, and the finished product which is refrigerators. Additionally, they have spare
parts and maintenance supplies as supporting inventory. The full inventory classification is as
follows:
Type Inventory
Raw Material Metal Sheet, Metal Wire, Copper, Aluminium, Polyfoam, Plastic
Work-in-Progress Compressor, Condenser, Cooling Fan, Thermostat, Receiver
Finished Good Refrigerator
Operating Supplies Spare Parts
Category Inventory
A Metal Sheet, Compressor, Condenser,
Walton follows the Perpetual Inventory System for counting their inventories. They track the
removal of items from the inventory stock and monitors the current stock level of each inventory
item. For usage, Walton follows the LIFO (Last In First Out) method. That is why they keep the
inventories for a short amount of time, around 10 days.
Inventory Model
Since Walton follows the LIFO model and they manufacture their own parts for assembling
refrigerators, the Economic Production Quantity (EPQ) model is the most appropriate for their
inventory management.
To illustrate the process, the inventory levels of compressors will be used as it is the most important
component in manufacturing refrigerators. A single unit of compressor goes into manufacturing a
single unit of a refrigerator. Walton produces around 10,500 units of refrigerators each month,
putting the annual demand at 126,000 units. The company operates 300 days a year. So we get a
usage rate of 420 units per day. The estimated holding cost per unit is BDT 200, and the estimated
set-up cost is BDT 4,000. Walton can produce around 600 units per day.
Qp
The maximum average inventory (Imax) is around [ 𝑝 (𝑝 − 𝑢)] or around 1,230 units. This gives
The Covid 19 pandemic had a hard toll on their business. During the pandemic, their production
was off for a long period of time even though there Was a healthy demand of refrigerators on the
market. However soon the lockdown was eased, they started their production again following the
government rules and policies and following all the health measures.
The top suppliers of Walton are Taiwan and China. Their main raw materials for refrigerator
manufacturing, such as metal sheets are imported from there. Besides, other materials are supplied
from its own subsidiaries.
who then distributes them to the retailers, and then finally retailers provide them to the customers.
Materials flow from suppliers to the customers. Information flows in both directions, Walton
also accepts return products which is reversed product flow.
CONCLUSION
Walton is a very popular electronics brand in Bangladesh. From the start of its journey, Walton
wanted to become a Bangladeshi global brand. Walton has been improving their operations
throughout its inception and is trying to become a premium and customer-friendly brand. Walton
has very effective and efficient operations management. They now produce almost all types of
home appliances, electronics, mobiles, etc. It indicates that the company is evolving and trying to
improve. With an efficient and effective supply chain, strong management, and a very hard-
working and dedicated workforce, Walton is thriving to become one of the best brands in South
Asia. If further improvements are made in Walton’s operations, and their workforce is trained to
use the latest manufacturing technology, Walton can one day become a truly global brand from
Bangladesh.
1) desk, B. post. (2019, June 17). Local brand registers 77 pc growth in fridge sales Walton’s
target for five months surpassed. Bangladeshpost.net. Retrieved 4 may,2021 from
https://bangladeshpost.net/posts/local-brand-registers-77-pc-growth-in-fridge-sales-
walton-s-target-for-five-months-surpassed-4189
3) Habib, A. (2020, August 7). Walton, a local household name, now wants the world to take to
its products. The Daily Star. Retrieved 4 may,2021 from
https://www.thedailystar.net/business/news/walton-household-name-bangladesh-now-it-
wants-the-world-take-its-products-1941149
4) Kamal, M. A. M. I. (2021, May 3). Walton AC records 450% sales growth during Jan-April.
Unb.com.bd. Retrieved 4 may,2021 from
https://www.unb.com.bd/index.php/category/tech/walton-ac-records-450-sales-growth-
during-jan-april/68464
5) Walton Factory Production Process. (2013, October 4). Retrieved 4 may,2021 from
Www.youtube.com. https://www.youtube.com/watch?v=ynMVo5bt4J0&t=304s
i
Fig: Process Mapping of Walton production process
ii
Necessary data table for doing line balancing math
iii
Fig: Metal sheets are taken into the assembly line
iv
Fig: Metal sheets are pressed
v
Fig: Doors and cabinet foaming takes place
vi
Fig: Compressors are set
vii
Fig: Pressure, leakage and other testing
viii
Fig: COMPLETE REFRIGERATOR MANUFACTURING PROCESS
ix