Case Study: Hawkesbury Cabinets Pty LtdHawkesbury Cabinets Pty Ltd designs and manufactures custom-built kitchen cabinetry. Thecompany was founded in Mulgrave, Sydney in 2008 by siblings Fung and Mei Chen. Fung is amaster cabinetmaker and Mei is a qualified interior designer. The company had originally set outto service the needs of the growing Chinese community in the Hawkesbury. As the reputation ofthe company grew however, Fung and Mei found that their client base became more and morediverse. Fung's duties had evolved over time, and he now fulfilled the role of production andoperations manager. Mei, on the other hand, had found an interest in the financial and overallmanagement of the enterprise and so she had effectively taken on the role of general manager. Sowhile there was no formal identification of roles for the two owners, there was a fairlycomfortable distribution of managerial responsibilities.Traditionally, Hawkesbury Cabinets had focused entirely on custom-made kitchens, with thecustomer consulting with Mei to develop a unique kitchen designed specifically for the client'sneeds. As the company's reputation grew and sales increased however, several low volumecontracts had been signed to supply small 'spec' builders1 with a range of high quality, butstandardised kitchen cabinetry. These contracts required Hawkesbury Cabinets to manufacture alimited range of kitchen cabinets in small batches. Batch sizes ranged from a single kitchen up tofive kitchens of similar specifications. The client builders imposed more stringent deliveryrequirements and were far more price sensitive than custom-made kitchen buyers. Whilst thecustom-designed cabinetry continued to account for the majority of the company's sales, thebuilders' kitchens were becoming increasingly important. Currently, the standardised kitchensaccounted for 40 percent of factory volume and 25 percent of revenue.Hawkesbury Cabinets operates a single manufacturing facility in Mulgrave, where both customand standard kitchen cabinets are manufactured. The cabinet-making equipment consists mainlyof high quality general purpose machines in order to provide the flexibility needed for producinga wide variety of custom designed cabinets. The factory layout has various types of equipmentgrouped together. Saws and cutting tables are in one section, routers and shapers in another,whilst lathes and other less frequently used machines are kept away from the work area in theirown section. There are also several assembly areas located strategically throughout the factory.Painting and finishing is done in an environmentally controlled section towards the rear of thefacility. The quality of Hawkesbury Cabinets' finished products is held in high esteem, andreflects the quality of the materials chosen and the craftsmanship of the individual cabinetmakers.Both the custom and the standard cabinets had to compete for processing time on the sameequipment by the same craftspeople.During the past few months, sales of the builders' line of kitchens had steadily increased, leadingto more regular scheduling of this work. However, when scheduling trade-offs had to be made,the custom kitchens were always given priority because of the higher sales and profit margins.Thus scheduled lots of standard cabinet components were left sitting around the plant in variousstages of completion. This increase in the volume of work in process had changed the previouslyspacious manufacturing area into a factory clogged up with partially completed work.As she reviewed the progress of Hawkesbury Cabinets, Mei Chen was pleased to note that thecompany has grown. Sales of custom kitchens remained strong, and sales of the builders' linewere steadily increasing. However, the company accountant argued that profit margins were notwhat they should be. Costs associated with the standard builders' line were rising. An increasingamount of capital was being tied up in raw materials inventory, work in process and finishedproduct. To accommodate the increased volume of inventory, nearby warehouse space was nowbeing rented. Mei Chen was also concerned with increasing lead times for both custom andstandard orders. This was resulting in longer promised delivery times. The current operationssystems were pushing manufacturing capacity to the limit, and with the current layout, no spacewas left in the plant for expansion. Mei Chen decided that the time has come for her and herbrother to take a careful look at the overall impact that the new line of standard builders' kitchenswas having on their operations.Assessment TaskAfter you have carefully read and analysed the case study, write an essay discussing theoperational issues facing Hawkesbury Cabinets. The essay should identify and discuss theoperational aspects that are affecting the organisation, paying attention to both medium-term andday-to-day implications. Your argument should address the following three issues with responsesintegrated within the essay.1. The current production systems and processes used by Hawkesbury Cabinets (a technicalanalysis).2. The effect of the new builders' kitchen line on Hawkesbury Cabinets' operations(problem definition).3. The effect the move to producing builders' kitchens might have on the company'sfinancial structure2. (broader organisational issues caused by operational problems).