Approaches to Logistics Analysis - Case Study Example

Logistics al Affiliation) Section Approaches in the exercise The approaches that was used in the simulationexercise in the manufacturing of aerials was that of the customer satisfaction and the attaining of 53,000 by the end of twelve weeks. In the approaches that were used in the study, the objectives that were set were not met and only a management of achieving a percentage of 83 of consumer satisfaction which had dropped very much from the initial objective that was a deflection from the objective of the group. In the approaches, the group managed to achieve extremely low pounds of profit at the end of the twelve weeks than that which was in the objectives. The group achieved 98.435 instead of the planned 53000 pounds. In the analysis there was failure in achieving the objectives that were set by the group. The approaches otherwise could be adjusted to bring out the desired results due to the objectives that were aimed by the group The objectives that were set by the group was to achieve during the month of running the company was the performance measures that will allow the ability to deliver the products on time and keep customers satisfied by the number and amount of penalties that they paid. The objective was however not achieved due to the factors that the group did not consider. The important aspects that was neglected by the group in the approach includes forecasting, planning and also ordering of enough inventory that was needed in the production to have just in time delivery to the orders that were give. The group did not order enough during the first three weeks and led to suffering of the inventory especially raw materials. Since the group was bound by own raw materials available in their inventory, the group could not produce more than the minimum quantity even if the demand that week required it to. Thus the group did not manage the inventory as well it should have been managed. 1.1. Strength and weakness of the approach 1.1.1 Strengths The strengths that the group managed is together with coinciding with the actual peak in the last month of the game which was luck in the trying to chase the week. Due to the unfulfilled orders in the approaches, high unit cost and penalty charges, the group ran bankrupt. A strength came when after the situation there was plan of the next move which was done carefully and this enabled the coming out of the bankruptcy in the next one week and even came up with a profit in the week. 1.1.2 Weaknesses The approach that was used in the study by the group had numerous weaknesses that came with lack of achieving of the objectives. The idea by the group to chase the peak was a big mistake. The group could have been prepared for the study and not chase time. The group also did not order any material for the first few week which led to more spending. As a result of not foreseeing the consequences the group incurred high cost which was about 37000 pounds and resulted into low inventory. The inventories that the group had was the bound of their capacity and this made the inability to manufacture most that the minimum amount of parts that they had and more of that because of the lack of finished goods, the group was not able to deliver on time and complete the orders that were there to satisfy the demand by the consumers that was fluctuating. There was also missing of orders due to lack of enough finished good stocks. Another weakness that the group came with is that they were not able to meet the demands of the consumers that were changing. The inability led to the loss of the revenue that the group would have received from the fulfilled orders and also there was increment of penalty charges. 1.1.3 Reasons for difficulties The huge time that was spent in planning and arguing on the fall of the peak made it difficult for the group to produce a schedule resulting to the chasing of the peak. Moreover, the group did not utilize the extra shifts even if there was need to meet the demands because of the high levels of unit costs. In some weeks, there was production of extremely small quantities which let to high unit costs. This was because of the low levels of inventory that was held from the beginning of the game. Thus, there was no management of capacity to its fullest potential and when considered along with the bad forecasting and inventory management, we failed to achieve the objectives we set out to achieve. There was need of more shifts of day and night or the day and the evening shifts, there was also unit cost that was to be considered in order to the most in the added shifts. The shifts though were not utilized. Failure in achieving the objectives also came due to lack of order of enough during the first three weeks resulting to suffering of the inventory mostly in the raw materials. There was bound to use only the available raw materials in the inventory and there was no possibility to produce more than the minimum quality even in the need by the demand. This lead to the lesson to keep enough inventory. Another problem that the group experienced in the activity is that there was no production by the group in week 13. The lack of production led to the group having higher production cost from the fixed cos that was there. The group also made a selection to only use night shift in week 15. The choice led to higher production cost that in the day shifts. In the ordering of the raw materials, there was no order between week 13 to 15 and also the group did not use the just in time raw material concept. This lead to the group not having enough raw materials for production in week 16 and 17. The lack of the achieving the objectives was also due to lack of fully utilizing the capacity due to the lack of the inventories. The lack of fully utilizing the capacity lead to the issues that were associated of not forecasting, planning and not ordering enough inventory. The group did not realize and did not plan with the money that they had and this made them to go bankrupt in week 18. 1.1.4 Payment of penalties and means of avoiding the penalties The group paid very many penalties due to the fact that they did not deliver numerous orders and also there was loss of revenue due to the penalties that were paid due to the failed deliveries. The penalties that were paid could be avoided when the group could maintain a steady supply of the products that were demanded throughout the period. The penalties also could be avoided when there was the keeping of a reasonable levels of inventory both in the raw materials and the finished products and also not trying to chase the increasing of demand by the attempt to forecast and predict the week in which the demand will be peak. In the avoiding of the penalties, the group should have the production done in all weeks and also select to produce during day shift as the base of production due to the lowest production cost. The ordering of the raw materials should also be done in all weeks to make them available for the production in all the weeks. The penalty due to the group being bankrupt could be avoided by the group realizing the cash that they had before they could order and produce. When the cash could not be enough for order and production, the group could get more money from the bank. The team that was involved in the approach was Aeroco which stated objectives to make in the production. The final worth of the team was a customer satisfaction of 83.6 and a profit of 98.435 pounds. 2. Master production schedule In the weeks that the production took place, there was low demand of the goods that were produced in the periods between 25-27 week and after that there occurred an increase in the demand and there was need to increase the production to meet the demands by the consumers. Using the accounts the raw materials are needed to be available for production of the goods even at the low demand times such that there is no deficit in the production due to lack of enough raw materials in the peak times. Finished stock account week task description 25-27 Reduce the stock that is brought forward The stock that is produced should be maintained Reduce inventory cost The stock that is brought forward between the weeks should be reduced since the demand for the product is not high as compared to the past weeks. The reduction of the stock carried forward will reduce wastage. The stock produced satisfy the wants of the consumers and the stock that is brought forward becomes more. The inventory cost increases making the production cost to rise affecting the demand of the product 28-35 Increase the stock produced Increase the closing stock in the weeks Reduce the inventory cost This period is the peak and the demand of the product becomes high. The increase in the production of stock will make the meeting of the demand Due to the increase in the demand of the product more closing stock will ensure that there is no shortage in the market. The reduction of the inventory cost will enable the reduction of the production cost that will make the reliability of the product price to the consumers. Manufacturing and production accounts week task description 25-27 Reduce the direct costs Maintain the indirect costs Production cost Reduce the unit cost Indirect costs in the production should be reduced such that those such as labor are reduced due to the low production at the time. The material cost should also be reduced which will result to the general reduction in the direct totals The materials cost should be reduce since it result to the incurring of extra expenses when the demand of the products are low The indirect costs should be maintained that will make the production not to go extremely low to meet the demands. The production costs should be reduced since the demand of the product at the time is low and high production cost will lead to losses Reduction of unit cost will be due to the low demand of the product at the time. 28-35 Maintain the direct costs Increase indirect cost Increase the unit cost The direct costs in the business should be maintained despite the increase in the demand of the product as this will result to desired revenue The indirect costs such as labor costs should be increase to increase the production of the products which at the time have high demand The unit cost should be increased as the demand of the product at the moment is high and many of the consumers need to satisfy their wants Raw material account week Task description 25 Maintain the raw material that is produced The consumption and demand at this point is low as compared to the previous weeks but the stock that is produced is maintained such that there is no deficit to the consumers when demand rises. 26 Maintain the raw material that is purchased The purchase of the raw materials will make the business run out of stock during the peak production periods 27 Increase the raw materials that are purchased The raw materials that is used in production has increased and this makes more of of the raw materials needed to make the production and supply stable due to the increased demand. 28 Maintain the raw materials purchased There is increase in the raw materials that are carried forward in the production and the purchases should be maintained such that there are no wastages in the production. 29 Reduce the raw material purchased The raw materials that are carried forward increases and the production and the demand of the product are at equilibrium and the increase in raw materials will increase the costs but not affect demand. 31 Increase the raw material purchase The production will have used more of the raw materials ant the ones that are carried forward may not be enough in the production to meet the demands that are constant. 32 Maintain the raw material purchase The maintain will be due to the balance in the demand and the production that occurs and production of more will lead to wastage. 33 Increase the raw materials The demand of the product will have increased and more of the production is needed to satisfy the demands of the consumers. 34 Maintain the raw material purchased The consumption is not affected and the same quantity of the good is needed. 35 Maintain the purchase The demand of the consumers are able to be satisfied with the production and the raw materials that are purchased 2.1 Meeting the demand of the consumers Through the preparation of the master production schedule, there is planning in the schedule that are medium range to long range and also the strategic capacity planning (Dauten and Valentine, 1968). The firm will use the strategy in the ensuring that there is sufficient capacity to satisfy the demand forecast and also to come up with the best plans in the scope of meeting the demand. The production will minimize the cost of production and aims in the maximizing of profits for the company involved (Lawrence and Klimberg, 2010). This allows for the supply to meet the demands of the consumers. The schedule also maximize the customer services and this allows for the determination of the demands of the consumers and work towards achieving the demands through supplying them with the goods. An objective of the production schedule is the minimizing the changes that occur in the production rate. When the production rate is maintained there is low probability in the occurrence deficit in the market. The maintenance of the rate makes the demand of the consumers to be met. The planning also maximizes the full utilization of the resources and the equipment in the company leading to more production. The more production enables the consumer to obtain the goods they need hence their satisfaction. Logistic in preparation of master production schedule The preparation of the schedule helps in the smoothening of the demand signals. The schedule will indicate the peaks that the supply needs to be increased. The indication can cause problems in the planning the activities in a business and inefficiency (Dauten and Valentine, 1968). The show of the demand helps the producers to optimize the production process with the aim of satisfying the demands of the consumers. The schedule enables lead time and enable the producers to book deliveries in the future. The lead time comes when there is less of manufacturing leading to lack of stock to supply. The schedule will enable the solving the problem in the fluctuation of stock (Lawrence and Klimberg, 2010). The schedule is very useful in the production company as it focuses on the production by the company but not the demand of the consumers. It allows for the protection of the lead time and also help the company to know when the consumers need the good most. MPS acts as a tool used in communication by a business. The schedule communicates on the manufacturing plans of the business. The schedule is always available in the system of the business and it easily communicates on what can be done in the manufacturing of products in the business The supply chain in a business needs the schedule in the prioritizing requirements (McKinley, Lee, and Duffy, 1965). When the requirements change, the business will be faced with problems since they will not be able to maintain the supply of the goods that are needed due to the changes. The schedule helps in the stabilization of production in a firm. The schedule is planned such that very minimal errors occur in the production as there will be ideas by the different stakeholders that are involve in the formulation of the schedule Section 2. Non-manufacturing environment logistics and management Provision services is a non-manufacturing environment in which proper management and logistics are needed in the planning of a business. The environment also requires forecasting to come up with the right strategies for better competition in the market and also proper utilization of resources that they have in the company (Orlicky, 1975). 3.1 Forecasting in non-manufacturing environment Non-manufacturing environment is that environment that mainly offers services to the consumers. There is need by the industries in the environment to maintain standard costs for the services that they offer. The maintenance of the standard cost will involve the creating of standards that are adjusted during the frozen periods. The standards also will require continuous update due to the changes that occur in the environment (Bratt, 1958). Different logistics can be used in the environment with the inclusion of capacity management which involves the management of information technology in the ensuring that the IT used in the current is able to meet the requirements both the current and also in the future (Dauten and Valentine, 1968). Inventory management is also a logistic that is used in the environment to manage the demand of the services (McKinley, Lee, and Duffy, 1965). The logistic involve the purchasing plan of a company in the consideration of the current demand and the future changes that are likely to occur in the demand. In the setting of standards, the principle of forecasting is key in the determination of the risks and the uncertainties that are able to affect the standards. Forecasting in provision of services as a non-manufacturing business environment involves the planning of the expenditure for a given period of time and what is brought as revenue in the business after the time (Bratt, 1958). Forecasting in the environment will also entail the process that the company will use in the providing the services and how to promote the services offered. Forecasting in the environment involves the preparation for any outcome, the bad and the good from the services and the people that the services reach (Bratt, 1958). The forecasting also should aim in the changing the way the services are offered or improve on the services and also increase the reach out to the consumers through different methods (Hanke and Reitsch, 1981). Forecasting in the environment comes with risks and uncertanities.in the carrying out forecasting in the business, there is need to include the uncertainties that are linked to the forecast such that when the risks and uncertainties occur, the data that the company has still remains dated and relevant to be used in the business (McKinley, Lee, and Duffy, 1965). For the success of forecasting in the environment, there is need to keep the customers terms updated (Armbruster and Kempf, 2012). The terms will enable the company to be able to convince the consumers with the services that they offer since the customers will be aware of the terms and the conditions in which the services are offered. The terms that the customers need update on will include those that are to do with credit terms in the services. Forecasting in the environment entails the planning of discounts before the time the discounts come to be offered to the consumers. The service providers can have promotional discounts for its customers during some seasons and also have the clearance markdowns at the time when there are no seasons (Armbruster and Kempf, 2012). The discount will make the consumers feel of care by the service providers and enable them need more of the services that are offered to them. The discount enables the service providers to plan the inventory that they need at that time and also the markdown percentage and also they will be able to calculate the inventories that they are able to bring into the business at a given time. Forecasting in the provision of services also need much of involvement in the workers that serves the company (Armbruster and Kempf, 2012). The involvement will enable the comparison of the forecasting by the directors with much evaluation on the terms and the services that are offered. The involvement will make the management to receive reports that are got from the field that allows the improvement and also adjustment in the services that are offered. Non-manufacturing environment will not be able to work well and achieve the objectives when the company that provide that services do not well known themselves and the consumers in which the services they offer (Armbruster and Kempf, 2012). The knowledge on the consumers will include the knowledge on the payment habits they have and that which the industry desires to be used. The knowledge will also enable the company to focus even of the small stuff that they might think important in the provision of the services (Orlicky, 1975). In forecasting in the environment, there is need to compare the satisfaction of the consumers in the last time the forecast was done to enable the comparison of the past and the present. Forecasting in the service environment is important in that the providers will be able to determine the amount and probability of future income and the resources that are needed in the achieving the goals (Bratt, 1958). The companies also will use the information that are got to achieve the goals that they have hence the consumers will be satisfied with the services that they are offered. Forecasting ensures that the demands by the consumers are met and they also benefit from the constant provision of the services (Gessner, 1986). When the service provider is new in the environment, forecasting will enable the promotion of the business. It will make the identification of the risks and also the potentials in the market for proper provision of the services and face the competition that is existing in the market (Mather and Plossl, 1978). In the success in the environment, there is need for the estimation of the financial requirement in the provision of the services (Hanke and Reitsch, 1981). The adequate finance in the market will enable the survival of the business in the market. The other importance of forecasting in the non-manufacturing environment include smooth and continuous working and provision of services, correctness of management decisions, success in the business, plan formulation and co-operation and co-ordination (McKinley, Lee, and Duffy, 1965). The finance is what will be used in the forecasting to plan for other logistics since in the capacity management, forecasting will allow the determination of the right IT to be used in the provision of the services (Orlicky, 1975). Inventory management will also be affected by the finance in inventory since there will be ability to purchase what is needed for production due to forecasting. Forecasting as a logistic in the non-manufacturing environment comes with limitation since there are those aspects that are not easy to predict (Gessner, 1986). Technology has affected forecasting in the businesses since there is continuous in the change and the long term prediction and planning for the services environment will be forced to be changing regularly when there are changes in the technology. References Armbruster, D. and Kempf, K. (2012). Decision policies for production networks. London: Springer. Bratt, E. (1958). Business forecasting. New York: McGraw-Hill. Dauten, C. and Valentine, L. (1968). Business cycles and forecasting. Cincinnati: South-western Pub. Co. Gessner, R. (1986). Master production schedule planning. New York: Wiley. Hanke, J. and Reitsch, A. (1981). Business forecasting. Boston: Allyn and Bacon. Jaber, M. (2009). Inventory management. Boca Raton: CRC Press. Lawrence, K. and Klimberg, R. (2010). Advances in business and management forecasting. Bingley: Emerald. Mather, H. and Plossl, G. (1978). The master production schedule. Atlanta, Ga.: Mather & Plossl. McKinley, D., Lee, M. and Duffy, H. (1965). Forecasting business conditions. New York]: Banking Education Committee, American Bankers Association. Muller, M. (2003). Essentials of inventory management. New York: AMACOM. Orlicky, J. (1975). Material requirements planning. New York: McGraw-Hill. Silk, L. (1963). Forecasting business trends. New York: McGraw-Hill. Yu-Lee, R. (2002). Essentials of capacity management. New York: Wiley. Read More