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Operation Management

Essay by   •  March 19, 2016  •  Research Paper  •  2,552 Words (11 Pages)  •  1,359 Views

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Abstract

This paper includes the components that is essential in operation administration before production, during and after like MRP, ERP, Supply Chain Management and linear programing. Moreover, I have analyzed implementation of direct programming, and diverse models utilized while functioning and producing products.

Introduction

Due to high competition, innovation and increasing changes in business trends in global market every business needs to have the ability to vary both the level of production and the range of products according to the changes in customer demands .Operation management comes in here, where it is responsible for managing the creation of goods and services by transforming input resources to supply products to meet expected demand. It helps to add value to the inputs that are procured in by the business so that the resulting output can be sold at a profit. In addition it aims to produce goods and services of the required quality, in the required quantity at the required time in the most cost effective way.

Operation management plays a significant role for making a business profitable and successful by taking smart decisions according to the type and need of the product and incorporating these ideas to the business model.

One example can be taken of Rolls- Royce car where shifting to a quality location proved to be a smart operational decision. When BMW moved production from the industrial northern town of Crewe it chose a very expensive and very crowded part, southeast England. The main benefit was the proximity to a small airport where the helicopters and executive jets of intending purchases of the cars can arrive in style. The company identifies the potential buyers and invites them to visit the factory where the invitees attend events held at the nearby exclusive marina and horse race and motor race courses. The area has been termed as the 'playground for the wealthy' and future customers spend a day or two at the races or the marina before browsing the car and more often signing an order form .Since Rolls Royce is a luxury brand the treatment of the customer was done in such a luxurious manner which influenced the consumer to buy their product most of the time then not. The style of product delivery added value to the car which ultimately sold the product. This is a small example of how operational decisions leads to profitable business.

Operations management: Transformation process of goods

Operations management can be defined as all those business functions that perform the activities of planning, organizing, leading and controlling the resources required to produce an organization's goods and services, in order to create value. - "Reid & Sanders "

Operation management involves the systematic direction and control of the process that transform inputs into finished goods or services for customers.

A Transformation process involves series of activities that adds value to the input before final output is produced for the customers or clients. Where the inputs are raw materials, it is relatively easy to identify the transformation involved and where the inputs are people or information, the nature of transformation may be different. For example, a hospital transforms ill patients (the input) into healthy patients (the output).

Decision making process and forecasting

Business decision are characterized by risk and uncertainty. Hence, forecasting is generally used to facilitate the business decision making process. We have to consider both demand forecasting and economic forecasting for long term sustainability and profitability of the business.

Economic forecasting helps you to understand the need of change in strategy according to economic condition of the country. For instance, if the forecast indicate country economy is growing, then it will help investor to invest more and improve profits.

Higher degree of uncertainty makes it difficult for any business to predict future sales but demand forecast will help manager to overcome these difficulties to some larger extend. Forecasting helps manages to predict more accurate demand and helps to came up with product mix.

I have a company it’s a marketing and research company where I need to take decisions on a daily basis. For me taking decisions is situational and I try to view the situation critically, analyzing consequences of the choices on hand and taking the optimal decisions from those choices.

Forecasting

” Forecasting is one of the central point in decision making process which acquires data about supply and future interest." (Stevenson W. J., 2012)

According to (Stevenson, 2012), forecasting includes six steps:

1. Determining the purpose of the forecast.

2. Selecting the items to be forecasted

3. Establish time horizon to know the time taken to finish the job.

4. Obtaining, cleaning and analyzing appropriate data.

5. Select a forecasting method like Judgmental techniques, time-series techniques, or associative model.

6. Make the forecast and monitor it.

In the waiting line model, forecasting can help oversee and diminish the waiting lines. For instance; particularly in general stores, the waiting line is not generally high, unless it is a top time. Amid the top time, all money counters are open and have a clerk to go to the customers. Be that as it may, amid the idle time, when not many clients are available and can be taken care of by few money counters, without a production of waiting line, few money counters are open. Thus, determining is conceivable through past encounters and time records, which offers the organization some assistance with hiring low maintenance representatives to address the group amid the top time, diminishing the holding up line. (Herzer, C, Render and Russell, 2000)

Material requirement planning (MRP) & Enterprise resource planning (ERP)

Material Requirement Planning (MRP) is a computer based data framework that interprets the completed item necessities of the expert timetable into time-staged requirements for sub-assemblies, segment parts, and crude materials, working in backward from the due date utilizing lead times and other data to decide when and the amount to arrange. Subsequently, necessities for end things create

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