Blitz Company

In October, Mr. Alfred Jodal, President of the Blitz Company, reviewed the company's position
prior to planning next year’s operations.
The Market
The Blitz Company manufactures electrical circuit boards to the specifications of a variety of
electronic manufacturers. Each board consists of a thin sheet of insulating material with thin
metal strips (conductors) bonded to its surface. The insulating sheet acts as a structural member
and supports electrical components and fragile conductors that connect the components into an
electrical network. A typical example of the products produced by the company is a circuit board
consisting of a 4 x 2 x 1/16-inch plastic plate with 18 separate conductors bonded on its surface.
In the customer's plant, assemblers position electronic components in the holes on the board,
solder them in place, and install the assembly in final products such as two-way radios,
electronic instruments, and radar equipment. Because circuit boards reduce the labor required in
assembling and wiring electrical components, lessen the chances of human errors in assembly,
and reduce the size of completed assemblies, the market for circuit boards has grown rapidly
since World War II.
Competitive Advantages
Since the start of operations two years ago, the Blitz Company has specialized in making circuit
boards for experimental devices and for pilot production runs. Earning statements and a balance
sheet of the current year are shown in Exhibits 1 and 2. Most of the company's managers are
engineers with substantial experience in the electronics industry. Mr. Jodal and the firm's design
engineer, Mr. Alexander Krebs, have invented several of the company's processing methods and
have patented applications, processes, and modifications of some commercial machinery. The
president believes that the Blitz Company is more adept than its competitors in anticipating and
resolving the problems inherent in new designs and production techniques.

MANUFACTURING PROCESS
The manufacturing process is divided into three stages: preparation, image transfer, and
fabrication. In the first stage, patterns, jigs, and fixtures are produced and raw material is
prepared for processing. The next step, image transfer, yields a sheet of plastic with appropriate
conductors bonded on the surface. In the final stage, this material is transformed into shaped,
drilled, and finished circuit boards. The most common sequence of operations is listed in Exhibit
3.
Preparation Stage
The pattern used in the image-transfer stage is made by photographing the customer's blueprint
and producing a "panel" negative showing a number of the circuits in actual size, side by side, on
a 12 x 18-inch film. This negative is then used in conjunction with a light-sensitive chemical
(KPR) to be described later. In other preparatory steps, simple drilling jigs and fixtures and
routing fixtures for the fabrication operations are made using bench drills, a circular saw, a band
saw, and hand tools. Stamping dies, when required, are obtained from subcontractors.

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EXHIBIT 1: BLITZ COMPANY

SUMMARY OF PROFIT AND LOSS STATEMENTS

September August July Jan.-June Last year 2 years

back
$ % $ % $ % $ % $ $
*
Net sales 33,201 100.0 34,689 100.0 16,089 100.0 78,585 100.0 98,837 50,778
Direct material:
Beginning in-process inventory 8,277 24.9 4,743 13.7 3,906 24.3 3,162 4.0 2,511 1,209
From stock and purchases 5,766 17.4 12,462 35.9 4,557 28.3 22,971 29.2 25,947 14,136
Chemicals, film, and supplies 2,325 7.0 3,627 10.5 2,418 15.0 10,044 12.8 6,603 3,999
Shop wages and foreman’s salary 6,231 18.8 5,859 16.9 3,906 24.3 22,692 28.9 29,016 16,275
Overtime wages 279 0.8 1,023 2.9 0 0.0 1,023 1.3 n.a. n.a.
Other expenses† 1,488 4.5 1,116 3.2 930 5.8 6,231 7.9 7,254 3,534
Total 24,366 73.4 28,830 83.1 15,717 97.7 66,123 84.1 71,331 39,153
Less closing in-process direct
material (6,603) 19.9 (8,277) 23.9 (4,743) 29.5 (3,906) 5.0 (3,162) (2,511)
Cost of goods manufactured 17,763 53.5 20,553 59.2 10,974 68.2 62,217 79.2 68,169 36,642
Gross profit 15,438 46.5 14,136 40.8 5,115 31.8 16,368 20.8 25,668 14,136
Company overhead:
Salaries (admin., engr. And office) 4,836 14.6 5,487 15.8 4,278 26.6 25,482 32.4 26,784 11,346
Other (rent, interest, telephone,
utilities, etc.) 837 2.5 930 2.7 651 4.1 4,371 5.6 7,812 2,883
Profit (or loss) before taxes 9,765 29.4 7,719 22.3 186 1.2 (13,485) (17.2) (8,928) (93)

*
Recorded on day of shipment
†
Includes water, heat, power, payroll taxes, group insurance, and depreciation ($279 per month, this year).
n.a. – not available.
Source: Company records.

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EXHIBIT 2: BLITZ COMPANY

BALANCE SHEET, SEPTEMBER 30

Assets Liabilities
Cash $13,299 Accounts payable $24,180
Accounts receivable 53,196 Commissions 6,231
Taxes payable 3,069
Notes payable 14,229

Inventory:
Raw material $2,976
Supplies 2,232
In-process 6,603 11,811
Prepaid expenses 2,325
Current assets $80,631 Current liabilities $47,709
Depre-
Cost ciation
Buildings $14,880 $1,953 Long-term notes 2,604
Machinery 15,531 3,162
Small tools 2,325 2,232
Office equipment 3,627 651
$36,363 $7,998
Fixed assets $28,365
Net worth:
Capital stock $63,519
Surplus on Jan 1st (9,021)
Profit for year 4,185 58,683
Total $108,996 $108,996
Source: Company records.

The principal raw material used by the company consists of plastic panels with a thin sheet of
copper facing bonded to one surface. This material usually is purchased in sheets of desired
thickness measuring approximately 48 x 36 inches. In the preparation stage, these sheets are
inspected visually for flaws and are then cut on a shear into smaller panels measuring
approximately 12 x 18 inches. The panel’s exact dimensions are chosen by the operator so that
the maximum number of circuit boards can be obtained from the sheets. Location holes, used to
facilitate positioning in later processes, are then drilled in each panel.
Image Transfer
In the image-transferring process, the panels are washed, dipped into a solution of a light-
sensitive chemical (KPR), and baked. A panel negative is then laid over the KPR-coated copper
surface and the assembly is exposed to ultraviolet light for two minutes. A finishing dip in a
solvent removes that portion of the KPR coating which has been covered by the dark portions of
the negative and has not been exposed to the ultraviolet light. After this step the areas of the
panel's copper surface corresponding to the desired conductors remain bare.

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EXHIBIT 3: BLITZ COMPANY

Standard September’s September’s Total Standard

Production Production Production
Times (in Min.) (in (in
Min.) Hours)
Operation Setup Run Orders Circuits Setup Run Total Total
Photograph 29 0 59 4,690 1,710 0 1,710 28.5
Inspect and shear 20 .5 * 60 5,740 1,200 360 1,560 26.0
Drill (location holes) 10 .5 * 60 5,740 600 360 960 16.0
KPR 1 10 * 60 5,740 60 7,200 7,260 121.0
Touch and inspect 10 3* 60 5,740 600 2,150 2,750 45.8
Plate 10 5* 52 5,616 520 3,510 4,030 67.2
Etch 10 4* 59 5,739 590 2,870 3,460 57.7
Shear (into circuit
boards) 10 .5 * 56 5,728 560 360 920 15.3
Drill (location holes) 10 .5 † 53 5,709 530 2,855 3,385 56.4
Configuration:
Rout 50 ‡ 1‡ 49 2,380 2,450 2,380 4,830 80.5
Punch press 150 .6 † 4 3,329 600 2,000 2,600 43.3
Drill Holes:
Green pantographic 50 ‡ 0.05/hole 8 1,879§ 400 9,400 9,800 163.3
Manual 15 0.10/hole 40 494 600 4,940 5,540 92.3
Epoxy painting 50 ‡ 1† 8 1,000 400 1,000 1,400 23.7
Stake:
Eyelet 20 0.07/eye 14 487 280 340 620 10.3
Terminals 20 0.15/term 3 257 60 40 100 1.7
Solder 30 1.5 † 8 1,233 240 1,850 2,090 34.8
Inspect and pack 10 1.5 † 60 5,740 600 8,610 9,210 153.5
Total 713 67,341 12,000 50,225 62,225 1037.1
*
Per panel.
†
Per circuit board.
‡
Includes time for jigs and fixtures
§
Only lots of more than 100 boards were drilled on this machine.
Assumptions: 8 circuit boards per panel; 100 holes per circuit board; 10 eyelets and 1 terminal per circuit board.
Source: Prepared by case writer from company production records and standard times estimated by Mr. Jodal.

Next, the bare surfaces (conductors) are protected with a metal plating. The plater inspects each
panel, touching up voids in the remaining KPR coating and removing any excess before inserting
it into a 50-gallon plating tank, where a 0.001-inch thick coating of lead-tin alloy or other metal
is deposited on the panel's bare surfaces. In the following etching operation, the plated panels are
placed in rubber-coated racks and successively submerged in a coating solvent, a rinse solution,
an acid bath, and another rinse. The acid eats away the unprotected copper, producing a sheet of
plastic with a pattern of plated conductors on its surface.

4
Judgment and experience are important in the photographing, plating, and etching processes,
since, the operators have to compensate for such factors as changes in the shop's temperature and
the slow deterioration of the chemical action in various solutions.
Fabrication
Subsequently, the etched panels are cut into individual circuit boards on the same shear used
previously to cut the plastic sheet into panels. Two location holes are drilled in each circuit board
on a bench press.

Each individual board is then reduced to the desired final size and shape either by die-stamping
in a 20-ton punch press or by shaping on a routing machine. The operator of the routing machine,
which is similar to a vertical milling machine, places each circuit board on a fixture, which
controls the way it is fed into the cutting tool.

On the average, 100 holes are drilled in each circuit board, using either ordinary bench-drill
presses or the company's modified Green pantographic drill press.* An operator using the
pantographic press can drill as many as three circuit boards simultaneously by stacking them on
top of each other in a fixture positioned on the machine's worktable. The location of all the
drilled holes is controlled by a master pattern, that is, a plastic plate with the proper hole pattern
drilled in it, mounted alongside the worktable. To position the tool and drill the circuit boards,
the operator simply inserts the machine's follower stylus successively into each of the pattern's
holes.

After drilling, some circuit boards are coated with an epoxy resin in a painting process to inhibit
damage caused by corrosion, scratching, and rough handling. Care is required to position both
tools and work pieces accurately and to prevent scratching or marring of the circuit boards. To
reduce the chance of damage in transport, panels and circuit boards are moved and stored
between operations in racks holding as many as 15 pieces.

To assemble eyelets and terminals in the holes of the circuit boards, an operator sits before a
simple staking machine and places the hole to receive an eyelet or terminal on the machine's
anvil. Eye-lets are fed and positioned automatically; terminals are positioned manually.

In the soldering operation, each circuit is dipped into a vat of molten solder for a few seconds.

In final inspection, any production employee who has run out of ordinary work visually checks
each finished board for omitted operations, scratches, and poor workmanship. Items passing
inspection are wrapped in kraft paper and deposited in a shipping container.

Although the work normally progresses through the sequence of operations described, some
orders by-pass two or three operations. For example, some initial operations are omitted when
the customer supplies precut boards or negatives; others are omitted when the customer prefers
to do them in his own shop. Occasionally an order is sent ahead and then returned to continue
through the normal sequence of processes.
*
Occasionally these holes are punched out in the preceding stamping operation.

5
Supervision
Supervisory responsibility for various phases of production is shared by three men: Joseph
Hadler, the expediter; Alexander Krebs, the design engineer; and Michael Beck, the shop
foreman. Messrs. Hadler and Krebs report to the president; Mr. Beck reports to Mr. Krebs.

Mr. Hadler was hired in August this year. He keeps track of orders in process and initiates action
if an order fails to progress through manufacturing satisfactorily. When the foreman's daily
progress report, showing the last operation performed on each order, indicates a delay, Mr.
Hadler investigates and usually obtains the missing supplies or instructions, tells the foreman to
start the job moving again, or calls the customer and advises him of possible late delivery. On the
average, Mr. Hadler investigates two to three slow orders each day. In addition, he confers with
the sales manager and president to determine how many small, special orders, usually having a
four-day delivery date, should be sent into processing.

Mr. Krebs' primary duties are to inspect the customer's blueprints and requirements in order to
locate design errors, to determine the best means of processing, and to identify unusual
production problems. He commonly spends ten hours a week talking with shop employees about
these problems and others that crop up in processing.

Mr. Beck, the foreman, is in charge of all other aspects of manufacturing from the time he
receives a shop order and blueprints until he ships the order. In total, Mr. Beck supervises the
activities of 20 production employees. Four of these are lead men who spend about 10 per cent of
their time instructing people in their areas or advising the foreman on various problems.
The Shop Employees
Presently the shop was nonunion, and employees were paid an hourly wage averaging $1.72 per
hour. They used simple, manually controlled apparatus to perform light, short-cycle, repetitive
tasks and commonly performed two to three different operations every week. Only the
photographing, plating, and etching operations were not traded among a number of workers. The
photographer alone used the company's camera and darkroom to produce and develop negatives
used in image application. The plater and etcher exchanged jobs between themselves but not
with other employees. The usual pattern of work was such that most workers interrupted their
tasks seven to nine times a day to obtain more work from another room, to seek advice on a
problem, or to deliver completed work to the foreman's desk or other storage area.
Order Processing
As the first step in the preparation of a factory order, Mr. Jodal and Mr. Krebs estimate material
and costs. These estimates are used in preparing a bid for the customer. If the customer subse-
quently accepts the bid, the Blitz Company promises delivery in three weeks for orders of less
than 1,000 boards and five weeks for larger orders. The estimate sheet and blueprint are then
pulled from the files by a secretary and delivered to Mr. Krebs who writes detailed material
specifications (currently 30 types of copper-plated plastic panels were in use) and a factory order
showing the delivery date, the number of circuits, the material specifications, and the sequence
of operations. The order is sent to the treasurer, who requires one or two days to locate the
needed raw material at a low price and to order it. (The materials used in September are shown in
Exhibit 5.) A secretary then enters the order in a log and sends the blueprint and factory order to

6
the foreman. Most orders reach the foreman about four days after the bid has been accepted.

When the foreman receives a factory order he uses his own judgment in scheduling preparatory
work. Usually he delays his scheduling decision for several days until the raw material arrives
from the vendor. He then estimates the labor required in each step, examines the work in process
at critical points, figures the difficulties in meeting the new order's shipping date, weighs the
sales manager's priority on orders already in process, guesses at the possibilities of these orders
being held up, and then decides when to schedule the order. The foreman spends much of his
time determining when to move jobs ahead of others in process and when to shift workers from
one operation to another. Until a job is shipped, the factory order and blueprints are kept by the
foreman, who gives them to any worker requiring information. A ticket denoting the factory
order number is kept with the first rack of material as it moves through processing.
Facilities and Layout
When the company moved to its present location in January last year, Mr. Jodal had chosen a
production layout which he felt minimized installation costs, preserved the life of expensive
machines, and isolated the operations' diverse environments (Exhibit 6).† Cost had been an
important consideration because the company had committed most of its funds for equipment
and had not been able to attract outside capital. The plating apparatus had cost about $5,000.
The photographic equipment, the Green pantographic drill press, and the punch press were
purchased for approximately $1,500 each. The company had paid an average of $300 apiece for
the shear, eight bench drill presses, the routing machine, band saw, and circular saw; and less
than $3,000 for all the other equipment.

Mr. Jodal had spent $1,000 to install the partitions for isolating the production processes.
Removing these and putting up six others would cost about $3,000. The plating and etching
processes, which released acid vapors, had been located far from the machining operations to
prevent excessive corrosion of the machine tools. Similarly, the machining operations, which
created dust, had been separated from the photography, KPR, plating, and etching processes,
which were sensitive to dust and dirt. After a year and a half, neither the machine tools nor the
photographic equipment showed signs of corrosion. Similarly, dust from the machining areas had
not contaminated other processes, although no doors had been installed to seal the passages
between the process areas. Presently, the company was fully utilizing the space in its existing
plant. An 1,800-square-foot addition was due to be completed by next month.

CURRENT OPERATING PROBLEMS

In assessing the company's operating position, Mr. Jodal was most concerned about the
difficulties that he described as bottleneck, performance, quality, and delivery problems.
Production Bottleneck
The bottleneck was perplexing because it shifted almost daily from one operation to another,
without pattern. Anticipating where work would pile up in the shop on a given day had proven
difficult because individual orders imposed varying work loads on each operation. These
variations stemmed from differences in order size, from orders by-passing some operations, and
†
This plan shows the location of the addition to the plant due for completion in this year as well as a possible second
addition projected for two years from now.

7
from differences in circuit designs. Also contributing to fluctuations were the four-day rush
orders received about three times a week, orders requiring rework at one or two operations, and
work delayed in process pending a customer's delivery of special eyelets and terminals or a
design change, of which there were one to nine a week. Approximately a fourth of the jobs
delayed in process were held as a result of telephone calls from the customers' engineers who had
encountered a problem. Then, any time from one day to two weeks later, the customer would
grant permission to complete the order as originally specified or give new specifications. About
an equal number of jobs were stopped as a result of processing problems or mistakes made in
operations which could be overcome by a specification change. These orders were held until Mr.
Krebs could obtain permission to deviate from the customer's original specifications.

During the past several months the foreman had found it increasingly difficult to compensate for
these variations because he had no accurate way of predicting where work would pile up or run
out, or of assessing the future effects of any corrective action. A recent day's events were typical.
Early in the morning, three men engaged in manual drilling had run out of work. The foreman,
therefore, shifted them to other tasks until other boards could be readied for the drilling
operation. In this case, the foreman decided to meet the situation by expediting two orders that
required work in only one or two operations preceding drilling. By midmorning one of the men
transferred away from drilling had completed his new assignment and had to be given a different
job. In the afternoon, by the time the expedited orders had reached the drilling operation, the
foreman found that two employees assigned to certain of the steps by-passed by the expedited
orders had run out of work.

Only the small orders of ten circuit boards or less seemed to pose no scheduling problems. Such
orders always were assigned to a senior employee, Arthur Dief, who carried each one from step
to step, doing the work himself or having someone else perform it. Dief consistently met delivery
deadlines, even on four-day rush orders, and his reject rate was usually zero.
Performance and Methods
Mr. Jodal realized that it was impossible to evaluate shop productivity precisely. During his daily
trips through the shop, however, he had noticed that several of the machines were idle more often
than he would have expected. In commenting on the summary of productive labor shown in
Exhibit 3, the president noted that total standard man-hours did not include time spent reworking
or replacing circuits that failed inspection or were returned by customers. In addition, he believed
that the time required to move boards from one operation to another and between elements of an
operation was not adequately reflected in the standards. The time standards used in Exhibit 3
were based in part on a synthesis of what the company knew to be the standards applied in
competing firms from which they had hired various workers and supervisors, and in part on
judgments of Mr. Jodal and Mr. Krebs, after long experience in performing and observing those
jobs in the Blitz Company. In preparing time estimates for bid preparation, Mr. Jodal actually
used figures substantially above those standards.

8
EXHIBIT 4: BLITZ COMPANY
PRO FORMA PROFIT AND LOSS STATEMENT
Forecast for next four years, prepared by Rothchilde and Rommel, Inc., Management
Consultants, on November 21, last year.
(in thousands of dollars)
1 (this year) 2 3 4
Net sales $199 100.0%$336 100.0%$521 100.0%$823 100.0%
Direct material 45 22.4 75 22.4 116 22.3 181 22.0
Chemicals, film and supplies 17 8.4 32 9.4 56 10.7 74 9.0
Wages and foreman’s salary 50 25.2 88 26.3 135 25.9 214 26.0
Other expenses* 11 5.6 18 5.3 28 5.4 47 5.6
Cost of goods sold 123 61.7 213 63.4 335 64.3 516 62.6
Gross profit 76 38.3 123 36.6 186 35.7 307 37.3
Company overhead:
Salaries (adm., engr. and
office) 42 21.0 56 16.6 79 15.2 130 15.8
Other overhead (rent,
interest, utilities, etc.) 13 6.5 20 5.8 28 5.4 42 5.1
Profit before taxes 21 10.8 47 14.1 79 15.2 135 16.4
*
Water, heat, power, depreciation, etc.
Source: Company records

The president felt, however, that the job methods in use were far from ideal and that the
standards did not reflect improvements which could probably be made in almost any job in the
shop. As a specific example, he cited the plating operation. The plater worked at a desk
inspecting (touching up) panels and then carried the panels to plating tanks 18 feet away, inserted
them, and returned to inspect more panels. He interrupted his work at the desk every three or
four minutes to inspect the panels in one of the tanks. Mr. Krebs thought that the plater
sometimes spent 15 per cent of his time simply walking between the desk and the tanks.

Mr. Jodal suspected that methods improvements were not being introduced because of the
pressure for output, the constant shifting of men from job to job, and other immediate problems
which inhibited experimentation with new ideas. Furthermore, job improvements often seemed,
in retrospect, to have created more problems than they solved. For example, those infrequent
cases in which improvements had increased production substantially at one station often resulted
in work piling up at the following operations. The foreman was then forced to reschedule orders
and reassign workers, thus adding to the general confusion and occasionally creating personal
friction.
Quality and Delivery Problems
Mr. Henry Sacks, who joined the company as the sales manager in April this year, was
concerned about recent failures in maintaining quality standards and in meeting promised
delivery dates. Since August, customer returns had increased from 4 to about 8 per cent and ship-

9
ments on the average were nine days late. Mr. Sacks felt that a continuation of these conditions
would impede his hope of increasing the present sales volume and achieving the company's sales
goals. The sales goals (Exhibit 4) had been developed by a local consulting firm in November,
last year, after a month's study of the potential market. The sales manager predicted that volume
would reach only $600,000 in the fourth year if he began promising the four-week deliveries on
small orders that four competitors were quoting. If, on the other hand, the company were able to
regain its pre-August delivery performance, Mr. Sacks felt sales should exceed $1.5 million in
the fourth year. Both Mr. Sacks and Mr. Jodal believed that the company should continue to bid
only for low-volume, special circuit-board business. Their sales estimates, therefore, were based
on an order-size profile similar to that actually produced in September this year (Exhibit 5).

EXHIBIT 5: BLITZ COMPANY

The Order Size And Number Of Orders Processed During September

Order Size (Number of Circuit Raw Material Number of Total Number of

Boards in Each Order) Code Letters Orders Circuit Boards
1 A, B, D, E 7 7
2 A, B, F, H 8 16
3 B, D 2 6
4 A, B, C, F, H 10 40
5 A, D 2 10
6 B, C 2 12
10 B, D, E 3 30
11 D, F 2 22
12 A, J, K 3 36
14 A, E, G 3 42
20 D 1 20
40 B, K 2 80
50 C,E 2 100
60 C 1 60
84 J 1 84
100 C 1 100
113 E 1 113
136 C 1 136
140 F 1 140
154 A 1 154
200 D 1 200
229 E 1 229
252 A 1 252
800 G 1 800
1000 D, M 2 2,000
1050 A 1 1,050
60 5,739
Source: Company records.

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EXHIBIT 7: BLITZ COMPANY

VALUE OF ACTUAL SHIPMENTS IN SEPTEMBER

(In Dollars)
Date Daily Cumulative
1 $ 2,957 $ 2,957
4 (316) 2,641
5 1,079 3,720
6 451 4,171
7 592 4,763
8 2,242 7,005
11 637 7,642
12 (182) 7,460
13 681 8,141
14 1,576 9,717
15 (39) 9,678
18 1,051 10,729
19 3,515 14,244
20 2,678 16,922
21 1,479 18,401
22 605 19,006
25 47 19,053
26 (353) 18,700
27 (2,121) 16,579
28 4,771 21,350
29 11,851 33,201
*: Negative shipments, shown by parentheses, indicate that receipts returned for rework or refabrication exceeded
shipments.
Source: Company records
Quality
Mr. Jodal was concerned also about the present inspection system, in which formal inspections
of raw material and finished boards were supplemented by each worker's informal examination
of the units as they moved through processing. The president felt that any effort to specify
quality standards more exactly and to enforce them more rigorously might not be feasible
because the standards varied from customer to customer and even from order to order. For
example, in one episode a customer's engineers had praised the quality of the Blitz Company’s
work on one order even though the boards were scratched and marred and had one or two holes
located out of tolerance. A week later, other engineers at the same company had rejected 25
apparently perfect boards because one conductor on each had a single 0.005 x 0.010-inch nick in
it.

A tenth of the boards returned were damaged or out of tolerance. The remainder were sent back
because the Blitz Company had failed to perform one or two required operations. These boards
were reprocessed and shipped within one or two days. The company's pre-shipment reject rate in

11
September amounted to 7 per cent, of which 4 per cent consisted of total losses and 3 per cent of
missing operations.
Deliveries
Mr. Jodal always had emphasized a shipping policy aimed at clearing all the work possible out of
the shop prior to the end of each month. As a result, substantially fewer shipments were made in
the first half of each month than in the second half (Exhibit 7). Actual deliveries in August,
September, and the first part of October had averaged ten, eight, and nine days late, respectively.
During the period, the company had continued its historical practice of quoting three weeks'
delivery on orders of less than 1,000 circuit boards and five weeks' on larger orders. In August,
when deliveries climbed to a volume of $34,700, eight new people had been added to the
production force. Mr. Jodal observed that these eight workers had developed some skill by the
second week in August, but believed that they would require three months to become as skilled
as the company's more senior employees.

1. What is your assessment of the performance of Blitz Company?

2. What are the factors that are contributing to this performance?
3. What are your recommendations to Blitz Company?

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