Great Northern Bunk Beds, Inc

Abstract

Matt Dorman, founder and owner of this custom bunk-bed manufacturer, is considering a move to a new location. Matt Dorman, owner of this custom bunk-bed manufacturer, is considering a move to a new location. Students must perform a process-and-bottleneck analysis to evaluate the viability of the move. Economic justification involves calculation of the increased capacity available at the new location. In the video supplement to this case, Professor Elliott Weiss interviews Dorman about whether Great Northern Bunk Beds made the move, what happened to Great Northern Bunk Beds, lessons learned from the process, and his advice for others in the field of operations. The video may be used with text case Great Northern Bunk Beds. A teaching note is available to registered faculty.

Excerpt

UVA-OM-0818

GREAT NORTHERN BUNK BEDS, INC.

This April 1995 weekend would be the most important since 30-year-old Matt Dorman had taken the helm of the Great Northern Bunk Beds, Inc., (GNBB), of Beltsville, Maryland. A graduate of the University of Delaware (political science) and a 1992 MBA graduate of the University of Maryland (finance), Dorman had been owner-manager of this manufacturer of high-quality custom-made beds since November 1994. He purchased GNBB, which was located in a single 850 square foot facility, because he felt it was an excellent candidate for a turnaround. His initial plan was to bring this money-losing company to profitability for eventual sale. He felt that because of the strong demand potential and tough competition, expanding GNBB's capacity and marketing reach was vital for the company to reach its potential. Dorman felt it was time to study in detail how an expansion plan could help GNBB become more competitive by simultaneously cutting its costs and expanding its client base.

Market

In 1995, bunk beds were part of a $ 4.1 billion dollar furnishing industry. Children's furniture was the fastest-growing segment of the industry. According to Dorman, the Maryland market in which he competed was dominated by two main national players: This End Up, which Dorman considered the leader in this type of furniture business, manufactured a broad range of furniture products and sold them through its stores; and the other was the Pine Factory. Dorman also thought that customers were young couples with children in 80% of the cases, single-parent families in 10% of the cases, and people with very diverse profiles for whom the motivation to buy bunk beds was just as diverse in the last 10% of the cases. Some of them, for instance, just bought the beds because they needed to accommodate visiting relatives. Surprisingly, most of the time, space was not an issue for the customers, and very often bunk beds were purchased because children wanted them.

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Keywords: capacity planning, marketing programs, operations management, process analysis, scheduling