Production and Operations Management: A Problem-solving and Decision-making Approach - Assignment Example

?a) MOBEEN CASE STUDY: APPLIED OPERATIONS MANAGEMENT Batch production Batch production is a manufacturing technique in which products or components are manufactured in batches rather than in a continuous stream. This method of production is adopted when identical products are to be produced. Batch production allowed Mobeen to cut expediting cost and speed up the service delivery time which eventually helped the Mobeen to retain its customers, providing following advantages: Pre-prepared products Pre-prepared products are those products which are purchased ready made by suppliers and sold after garnishing. Well the use of this technique has allowed the Mobeen to speed up the delivery time enforce less human efforts. Reduced live cooking time Batch production reduces live cooking time, which helped the Mobeen to stay focused on the company objective and meet customers’ emerging needs. Increase in customers Batch production speeds up delivery process, which attracted more customer in the town thus resulted in increase in total number of customers. Greater profit Batch production allowed Mobeen to achieve higher level of profits by achieving high quality and efficient service. Just in time production JIT production strives for the organization to improve return on investment by producing as needed and by reducing the carrying cost of associated inventory. JIT management aims to best utilize production capacity of an organization by purchasing right set of raw materials, followed by producing right quantity of products at right time for the potential customer. The purpose of JIT management is to increase company’s performance by decreasing inventory levels, by encouraging smoother production flow in the work environment, and by lowering storage cost to minimum; these activities will help the company to decrease cost per unit to the minimum possible level. It allows the company to reduce number of quality rejects, capital expenditures, production time, and production of inventory to the optimum level. JIT management is an efficient concept to get the best out of efforts made; it synchronizes schedules, production, distribution and activity of sales which allows the firm to stay focused on the objectives and achieve best possible results (Gaither, 1984). This system helps the organization to meet demand as it arises. With advantages there are also some disadvantages attached with JIT management; firstly JIT ignores the effect of various conflicting demands in the environment, organizations do not work in isolated environment and are affected by the many external environment therefore JIT should understand the effect of environment on the organization as it fails to undertake this perspective; secondly the conceptual foundation of the JIT management is as old as the concept of organization, therefore it reflects an old idea to bring a change in the current modern setting which sounds quite unconvincing for organizations to adopt; thirdly benefits resulting from JIT management is limited when it is used in any other environment except from which it originates. 2) Flow/mass production is not appropriate in this case because Mobeen concept was operating in a niche market, mass production is adopted when a company is operating in large market and the company is targeting to diverse customers. Well the other major reason is the nature of product to be produced, as it is organic and perishable therefore mass production is not appropriate in the case. Mass production in this case could have been resulted in expiry of many products. 3) Mobeen’s aimed to achieve high levels of capacity utilization firstly allowed the restaurant to best utilize its resources which eventually resulted in high level of efficiency and effectiveness in work processes which increased the level of profits, secondly it allowed the restaurant to stay competitive in the market. 4) Implementation of Strict quality control system could have allowed the restaurant to compete in a far better way by maintaining the USP of high quality service and organic food, fast food chain is so vast therefore to compete in such a competitive environment Mobeen needed to adopt strict quality controls, secondly implementation of strict quality control system could have been allowed the restaurant to best utilize its capacity by reducing the number of defects and failures to its minimum. 5) Just-in-time technique is a production and management technique which allowed an organization to meet emerging needs of customers as they arises, it is very crucial for those businesses where freshness of product is very important specially in restaurant business where customers look for fresh meals, secondly it helps the business to maintain a clear image and reputation in the market, therefore in this case the use of this technique is very crucial for Mobeen’s success. 6) Advantages IT system to monitor sales and stock levels is a systematic automatic system which minimizes the possibility of wrongdoing, plus the automatic system requires less supervision and human efforts, therefore those human efforts can be used in other productive activities. Use of IT system to monitor sales and stock levels saves the time of manual monitoring by employees, therefore it is considered time effective. It increases the overall efficiency of the performance of the organization. Disadvantages IT systems to monitor sales and stock levels discourages employee participation to an extent as employees are less involved in the process due to automatic monitoring therefore they are less aware of the circumstances. b) GKS Bicycles Steps should be taken by the GKS bicycle prior to introducing JIT production GKS bicycle is currently not making the best use of its technology, so it is quite obvious that GKS can work in a better way whereas the levels of order are quite predictable therefore consideration of installation of JIT production system can held the organization to best utilize its resources but the organization need to take following steps before introducing JIT production: Awareness revolution and ensures commitment It involves saying good-bye to the traditional ways of production and accepting the new techniques, rules, and ways of managing and controlling the JIT production system; it involves abolishing the old concept of production, having strong believe on the future performance of the new system, do not expect the new system to eliminate defects 100% as it is practically not possible though it will definitely reduce the defects to minimum, make sure do not spend any money on the improvement, involve employees in the gathering information, and corrects mistakes immediately rather than ignoring or leaving for the future. Introduce 5 S’s to the work place These 5S’s includes Seiri which means Proper Arrangement, Seiton which means Orderliness, Seiso which means Cleanliness, Seiketsu which means Cleanup, and Shitsuke which means Discipline. Adoption of these 5S’s will give the work environment a new face. Redesign flow process ­­­­­Before actually implementing the JIT production, organizations need to work on the design of processes; it includes redesigning the flow of work, reducing production lot quantity, linking operations with the flow order, balancing of operations capacities, considering preventive measure, and by reducing time needed for setting up related activities. Standardize operations By standardizing operations, the company will be able to achieve better quality at comparatively low cost by adopting efficient ways of arranging people, products, and, machines. Multi purpose handling Mutli purpose handling allows employees to be a part of decision making process; the company needs to decentralize its operations. In multi purpose handling, one employee is responsible for several tasks. HOW THE USE OF JIT PRODUCTION MIGHT HELP GKS BICYCLES TO BECOME MORE COMPETITIVE JIT production will allow the GKS to best utilize its resources and time by producing as needed, this technique will allow the firm to stay cost effective for the long run. JIT minimizes cost, improves quality, and reduces defects to its minimum; this may help the company to create a unique selling proposition for the long-run and to gain a competitive advantage over others. Through practicing JIT production, the company can use previously tied up funds in inventories for a productive activity, this system also allows the company to utilize previously used warehouses for the some productive purpose, Reduction in manufacturing time allows the company to build a strong relationship with customers by responding quickly to the potential customers, whereas reduction in defects by a large percentage will allow the company to achieve greater customer and environmental satisfaction. In this way JIT will help the company to stay competitive in the long run; JIT develops a strong production base which affects the whole supply chain and will help the company to enjoy the profits for the long-run (Hall, 1989. C) SOFA WORLD QUESTIONS 1) Quality control methods Quality Control Methods What does it involve? Benefits of its use Drawbacks associated with its use End of production check It involves checking of quality at the end of the production process, those factories which practice this method of quality check, checks random samples of products for defect at the end of production process. This method allows an organization to check whether a product meets its standardized criteria or not. The random sampling of products may not give a clear vision about all possible defects because of the limited size of sample analyzed. This may result in ignoring major defects which may affect the overall performance of the organization. Integrated checks Built in checks in the production systems which check the production processes and value added at each stage of production in term of quality and defects. Integrated check system is integrated with the production system. Less human effort is needed as integrated systems are capable enough to check the defects as they arise. Any unidentified error in the integrated check system may affect the accuracy of results. Total quality management(TQM) TQM involves management and control of all associated activities which affects the quality of the product. It involves every stakeholder of the organization in managing and improving the quality which works as a source of motivation, secondly this concept focuses on continuous improvement of quality. Too must focus on the quality may result in ignoring other important elements which contribute to the performance and growth of the organization. Quality assurance Quality assurance includes management and control of quality of raw materials, production assemblies, products and workings, services associated with production, and inspection processes of production and management. The systematic measurement of the quality against requirements through a proper system and provided associated feedback allows the organization to keep the record of defects as it arises. Product users or customers determine the suitable quality not the society in general therefore organizations cannot compare the performances of each other as the standards against which quality and defects are measured may differ. 2) Best suited quality control method The design and production of furniture is an art and only specialize people can perform this task; therefore all the quality control methods are not appropriate to adopt. To make the merger a success and to keep control on supplies quality and overall PFSW management, quality assurance and total quality management methods are best to adopt and will provide best possible results. Quality assurance will provide a total control on quality, Fiana concerned about unreliable delivery of timer packs from its supplier will no longer be a source of problem for Fiana as quality assurance will provide the check on quality of supplies. When quality assurance is supported by TQM, then they make an absolute advantage over quality to the firm which PFSW needed for keeping the quality high of produced sofas. 3) Factors that could influence the levels of stock held by PFSW. The levels of stock held by PFWS could be influenced by different factors such as: Quality problems Quality of raw materials affects the quality of whole process and the end product, therefore strong hold on quality check could affect the levels of stock held by PFWS as quality checks ensure the quality of the produced product. Interest level Sale of furniture is highly dependent on the housing industry, as interest rate increases demand for housing decreases and so does the demand for new furniture. Therefore level of stocks are highly affected the prevailing interest level in the market. Customer satisfaction Level of customer satisfaction determines the company’s performance level therefore it could had impact levels of stock held by PFSW as customers feel more satisfied when the company is performing in a good way. Customer demand variation Levels of stock are highly affected by the variation in demand; the trends in the market are the determinants of ultimate sale which could have been affected the levels of stock held by PFSW. Lead time variation Variation in lead time that is the mismatch between the initiation and execution of a process which could have been one of the factors affected the levels of stock. Cost of expediting Cost of expediting is the extra cost incurred in the business process, which effects the overall budget of the business plus it also shrinks the level of profit therefore it could have been one of the reason to affect stock levels. Probability of order cancellation Probability of order cancellation is another factor which could have been affected the levels of stock, when the probability is high it affects the level of stock negatively as order cancellation is a loss for the company. 4) IT improves the performance level of an organization by integrating effective communication tools, electronic storage, and data safety mechanism in the current work environment. It allows the organization to work efficiently, IT deals with computer applications on which nearly each organization depends. A company’s stock situation primarily depends on the performance of the company and evolution of IT in the business processes has improved the flow of work performances to an unexpected level therefore IT plays a very important role in improving the current stock situation of the firm. d) Castle cycles 1) Profit For Year 2009 Sales (76*14,500) 1102,000 Variable cost (40*14,500) (580,000) Fixed cost (330,000) Total profit 192,000 Profit for year 2010 Sales (76*10,000) 760,000 Variable cost (41*10,000) (410,000) Fixed cost (300,000) Total profit 50,000 Castle Cycles capacity utilisation rate has fallen from 72% in 2009 to 55% in 2010 Capacity utilisation is calculated using the following formula: In 2009, the Capacity utilisation is: In 2010, the capacity utilization is: 3) Capacity utilization reflects an organization’s capability to use its installed productive capacity, this fall in capacity utilization has affected badly to the profit levels of the company as profits have been fallen significantly and unexpectedly. Capacity utilization determines the level of performance, and the higher the capacity of the firm, the better it is able to use its resources. As the capacity of the firm has reduced from 72.5% to 55.56% from 2009 to 2010, the profitability of the firm has also reduced 192,000 to 50,000. Therefore it shows that the reduction in capacity of the firm has reduced the profitability of the firm. 4) Factors which castle cycles should consider Current financial performance Level of customer satisfaction Competitors offering 5) As variable costs seemed to be increase in years 2009 and 2010 therefore Mel’s suggestion could have worked as overstaffing could have been considered as one of the factor of increase in variable factor, so there was a possibility that decrease in number of employees may decrease the VC without impacting the profit levels, but it could have also resulted in de-motivation of employees and could result in low performances. Whereas James suggestion of adopting new models could have resulted in the form of innovations and new horizons of growth but it is very risky for the organization to adopt new ways at such a crucial stage. Reference list Gaither, N., (1984), Production and operations management: A problem-solving and decision-making approach, 2nd edn, Dryden Press, Chicago, USA. Hall, E., (1989), ‘Just-in-Time Management: A Critical Assessment’, The Academy of Management Executive, Vol. 3, No. 4, pp. 315-318. Read More