unit-4 operations and management (1)_95cac295-b2cd-40b8-8031-82b825fdcbf5

Unit 4: Operations and Management

Success Criteria

• Effective Resource Management: Explain how to manage resources to produce goods and services.

• Production vs. Productivity: Differentiate between production and productivity with an oral example.

• Inventory Holding Reasons:

  • 1. To meet customer demand.

  • 2. Economies of scale from bulk purchasing.

• Benefits of Increasing Efficiency:

  • 1. Higher productivity through automation.

  • 2. Improved employee skills.

• Lean Production: Explain and identify lean production methods such as just-in-time (JIT) and Kaizen, including the benefits.

Group Work

• Discuss the answers to given questions as instructed by the teacher.

Definitions and Key Concepts

• Production: The transformation of inputs (land, labor, capital, enterprise) into goods and services.

• Productivity: Measure of efficiency calculated as Outputs/Inputs.

• Inventories: Include raw materials, work-in-progress, and finished goods.

Improving Labour Productivity

• How to improve:

  • Increase output without adding workers.

  • Maintain output with fewer workers.

  • Increase worker productivity through:

    • Skill enhancement.

    • Motivation improvement.

    • Automation and technology adoption.

    • Better managerial decisions.

Types of Inventories

• Input: Raw materials, consumables, maintenance items.

• Process: Work in progress.

• Output: Finished goods, defects, unsold goods.

Costs of Holding Inventory

• Warehouse Costs: Leasing or purchasing space.

• Handling Costs: Moving inventory.

• Shrinkage Costs: Damaged/lost goods.

• Insurance Costs: Coverage for losses.

• Obsolescence Costs: Outdated stock.

• Opportunity Costs: Capital tied up in inventory.

Reasons to Hold Inventories

1. Ensure finished goods are available to meet customer demand.

2. Benefit from bulk purchasing discounts leading to lower unit costs.

3. Ensure raw materials are available for uninterrupted production.

Lean Production Techniques

• Just-In-Time (JIT): Reducing inventory by ensuring materials arrive as needed.

• Kaizen: Continuous improvement involving employee input to enhance processes.

• Benefits:

  • Faster product launches.

  • Increased quality.

  • Reduced waste of resources.

Quality in Production

• Quality Assurance Methods:

  • Quality Control: Checking quality at the end; cost-effective but may miss root causes.

  • Quality Assurance: Setting standards for each stage; better long-term efficiency but more training required.

  • Total Quality Management (TQM): Focus on quality at every production stage to eliminate faults.

• Importance of Quality: Align products with customer expectations, ensuring reliability and satisfaction.

Technology in Production

• Automation and Mechanization: Increased efficiency and reduced labor costs.

• CAD and CAM: Computer-aided design/manufacturing streamline production.

• CIM: Integrates CAD and CAM for enhanced operational efficiency.

Location Decisions in Manufacturing

• Factors influencing location:

  • Cost of site, labor costs, transport costs, market potential, government incentives, legal regulations.

• Reasons for relocating businesses overseas include cost reduction and market proximity.

Break-Even Analysis

• Definitions:

  • Fixed Costs: Do not change with output.

  • Variable Costs: Change with output.

  • Break-Even Point: Where total costs equal total revenue.

• Formulas for calculations:

  • Breakeven Level = Total Fixed Costs / Contribution per Unit.

• Advantages: Assists in decision-making for pricing and location.

• Disadvantages: Assumptions may not hold; costs separated into fixed/variable can be challenging.