Operation management

Question 1

This question based on research  about IKEA  write an essay about your research into an operations concept and its application to a business situation.

€¢ State the operations concept and explain its meaning and relevance. €¢ State two (2) important areas of knowledge about the concept, preferably from recent research. €¢ Briefly explain a real business situation where your concept can be applied. €¢ Explain the most important management tasks in this business situation and the effect that the operations concept has on those tasks.

Question 2  Answer either Section A or Section B

A. How realistic are the assumptions of the Economic Order Quantity (EOQ) model? Discuss how the issues of safety stock can be incorporated in EOQ and re-order point (RP) while ordering inventory. Do you think the model is still used in practice? If not, what model is mostly used while ordering inventory?

OR

B. Demand is variable at all times. An organisation can select from alternatives to manage demand in order to better meet the needs of the business and its customers. The other way organisations can manage the balance between demand and capacity is to consider different ways of managing capacity. Which approaches to demand management would you favour using in a ski resort hotel. Include in your discussion methods for changing the pattern of demand such as pricing, advertising, and scheduling.

Question 3  Answer either Section C or Section D

C. Christie Levine is the manager of the Instant Paper Clip Office Supply Company. The company attempts to gain an advantage over its competitors by providing quality customer service, which includes prompt delivery of orders by truck or van and always being able to meet customer demand from its stock. In order to achieve this degree of customer service, it must stock a large volume of items on a daily basis at a central warehouse and at three retail stores in the city and suburbs. Christie maintains these inventory levels by borrowing cash on a regular basis from the bank. She estimates that for the coming fiscal year the company’s demand for cash to pay for inventory will be $17,000 per day for 305 working days. Any money she borrows during the year must be repaid with interest by the end of the year. The annual interest rate currently charged by the bank is 9%. Any time Christie takes out a loan to purchase inventory, the bank charges the company a loan origination fee of $1,200 plus 2.25% annually of the amount borrowed.

Christie often uses EOQ analysis to determine optimal amounts of inventory to order for different office supplies. Now she is wondering if she can use the same type of analysis to determine an optimal borrowing policy. This requires careful interpretation of the information given above to correctly identify ordering costs, holding costs and total costs. Determine the amount of the loan Christie should borrow from the bank, the total annual cost of the company’s borrowing policy, and the number of loans the company should obtain during the year. Also determine the level of cash on hand at which the company should apply for a new loan given that it takes 15 days for a loan to be processed by the bank. Using Excel, include graphs in your answer that illustrate the relationships between ordering cost’, holding cost’, and total cost’. Remember to show all working in your answer.

Suppose the bank offers Christie a discount as follows. On any loan amount equal to or greater than $500,000, the bank will lower the origination fee from 2.25% to 2.00%. What would be the company’s optimal amount borrowed?

OR

D. Reducing design complexity is a principle that applies just as much to service as to manufactured products. For example, television programmes are made increasingly with a worldwide market in mind. However, most television audiences around the world have a distinct preference for programmes which respect their regional tastes, culture and of course language. The challenge facing global programme makers therefore is to try to achieve the economies which come as a result of high-volume production while allowing programmes to be customised for different markets.

For example, take the programme Art Attack!’ made for the Disney Channel, a children’s TV channel shown around the world. In 2001, 216 episodes of the show were made in six different language versions. About 60% of each show is common across all versions. Shots without speaking or where the presenter’s face is not visible are shot separately. If a simple cardboard model is being made, all versions will share the scenes where the presenter’s hands only are visible. Commentary in the appropriate language is over-dubbed onto the scenes which are edited seamlessly with other shots of the appropriate presenter. The final product will have the head and shoulders of Brazilian, French, Italian, German or Spanish presenters flawlessly mixed with the same pair of (British) hands constructing the model. The result is that local viewers in each market see the show as their own. Even though presenters are flown into the UK production studios, the cost of making each episode is only about one third of producing separate programmes for each market.

(1) How does the concept of modularisation apply to this example? (2) What do you think are the similarities between what this company did and how motor vehicle manufacturers design their products?

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Order Descriptiondo paraphrasing for this plan below
THE PLAN:

Coursework plan for (Operation Management)
Introduction: The introduction to this assignment will include a description of the main business objectives, product and consumers. Also, it will explain important factors that influence the business and its market demand. Follow this by putting the purposes of this essay.

Section 1: This section will describe in detail the inputs (radicchio, materials, machines, staff and facilities), the outputs (Radicchio for supermarkets, wholesales and process, skilled staff and rich soil) and transformation process (Cutting, packing, labelling, conveying) supported by an appropriate diagram.

Section 2: This section will describe the five operations performance objectives for the macro-operation: how company maintain quality assurance through the whole processes, control the average speed of all process stages, the company dependability to provide just in time product, to which extent flexibility is available in the processes and finally the operation costs.

Section 3: If assuming good season and weather condition, in this section will firstly calculate the actual working hours for each team crew (17 worker plus supervisor) to identify how many radicchios produce in each hour as well as hours per day. Normally working hours for each worker per day is about 8 hours plus 5% personal needs and 2% breakdown so, the actual working hour per day is about 93% from all working day after deducted the 7% of breaks. Time will be converted from seconds to hours to calculate the actual outputs per hours. Second, calculate the actual number of radicchio and how many trays will need for each market (supermarkets, wholesales and industrial process) to determine the total number of radicchio and trays need as operation outputs. Third, the overall operation divided in to several tasks (micro-operation) such as cutting, picking, packing, labelling and conveying where each task responsible by identify number of workers. Moreover, each micro-operation has inputs, transforming process and outputs supported by an appropriate diagram. In this section, the capability per hour for each tasks will be calculate to determine the number of radicchio produce per hour. Then, multiply the capability per hour and number of workers in each tasks to calculate the processing capacity per hour. Next, multiply the capability per hour and working hours for each worker to calculate the overall capacity per day. After that, the outputs will be analysed by comparing the overall capacity per day and the total work capacity to decide if there is a need for extra time to cover total working capacity. Finally, calculate the utilisation by divide the overall capacity by total working capacity for each micro-operation to measure the effectiveness from overall operations. Several problems occur when calculate capacity will be mentioned.

Section 4: this section will present different calculations and scenarios that might affect the balanced capacity like increasing in demands. For example, if demand is increase in one of operation period which will affect the overall outputs (shortage), Chase aggregate plan may be used by adjust number of worker in each task. Reason for using this plan is that radicchio can’t be on stock for long period and should be store in special condition. Also, calculate point of departure.

Section 5: this section will present the important challenges that might face the HR management in the company such as labour leaves of absence, staff healthy and safety, compensation and training staff. Also, it will discuss the challenges that might occur related to 6 rigs such as machine breakdown, control system, assisting and cleaning when stuck on mud.

Section 6: this section explain how variations in the weather will influence the capacity of operation. Period of dry and hot weather (in summer) can be consider as normal condition where the radicchio thrive and demand rising rapidly but problems may occur that radicchio need to be storage quickly in cool store. On the contrary, when the weather is wet several obstacles occur such as the average picking rate will slow by up to 25% because of mud slowing the process, rigs getting stuck and a general deterioration in morale of the crew. The capacity and demand will also affect and calculation will show how the overall outputs will decrease in this condition.