PR 9-3 (LO 9-2, 9-5) Ralph Wilson started his machine shop in Santa Ana, CA with a small business loan about 10 years ago. [Connect Only]
[The following information applies to the questions displayed below.]
Ralph Wilson started his machine shop in Santa Ana, CA with a small business loan about 10 years ago. Since then, he has built a thriving business making products for companies such as Boeing, Walt Disney Corporation, and several others. This case describes the process by which Wilson Precision Products (WPP) converts a variety of materials into finished products. Although WPP sells its finished products to customers and purchases its materials from vendors, those processes are not part of this case.
Production
After WPP receives an order from a customer, Ralph or another supervisor signs one production order for each finished product that the customer ordered. This starts the production process. The inventory manager checks the bill of materials for that finished product and prepares one or more materials issue lists depending on when the materials are needed. For some products, materials are issued multiple times, since not everything is needed at once. The manager then removes the materials from their designated bins and gets them ready for use in production.
As soon as the materials are available, WPP manufacturing employees begin labor operations following the labor plan. Production usually involves cutting, treating, machining, assembly, testing, etc., but the specific steps depend on the particular finished product. Precision machining is characterized by the tight tolerances for hard-to-machine materials, so WPP only allows qualified employees to work on each step. Employees scan their ID cards to record when they start and end work on each production labor step. Each labor operation step is assigned a labor operation control \#, and each operation corresponds to one labor plan step. When production finishes, the manager updates the production order to record that production is complete, and the inventory manager places the finished products on designated racks. Each rack holds one finished product so WPP can plan for packaging and delivery. Of course, there are often open racks which do not hold finished goods.
Inventories
WPP maintains a materials inventory required for manufacturing its finished products. The materials inventory includes