OPERATIONS MANAGEMENT (EXAM) Essay Example | Topics and Well Written Essays - 2500 words

OPERATIONS MANAGEMENT (EXAM) - Essay Example Holding inventory can improve customer service while maintaining independence of the supply chain. The major disadvantage of holding inventory is that it is expensive. The average carrying cost of inventory across all manufacturing is 25-35% of its value. Higher carrying costs result in decreased profits for the firm. In other words, holding inventory is a non-value adding cost. Value of holding inventory is an opportunity cost for the firm where the money is stagnant and not invested. Above all, inventory deteriorates; it becomes obsolete, lost or stolen. Holding inventory increases the firm's risks. The EOQ model minimizes the sum of holding and ordering costs. The model assumes that there is only one product involved. The annual demand is assumed as even and constant throughout the year and the demand requirements are known. Lead time is assumed as fixed and non-varying where each order is received in a single delivery. EOQ further assumes no quantity discounts. c. The inventory control manager of a car factory issues orders for tyres which cost '48 each. He has estimated that stock holding costs about 25% per year while the administration costs about '150 for each order. Given that demand for tyres is reasonable steady throughout the year at 20,000 per month, estimate the EOQ for these tyres. Modelling approach to inventory has advantages in business such as being easy to understand and use, giving good guidelines for order size and easy to implement and automate. Models can find other values such as costs and cycle lengths, encourages stability and allows different circumstances/situations. Question 4 a. Discuss why the design of jobs is an important aspect of operations management. Job design describes the tasks, methods, responsibilities and environment used by individuals to do their work. It finds the best possible way of doing a job. The objectives of job design involves meeting the productivity, quality and other goals of the organisation as well as making the job safe, satisfying and rewarding for the individual. These objectives are extensions of the fundamental task of an operations manager who is responsible for all aspects of the organisation's products and the processes used to make them. Managing operations directly affects performance of an organisation; job design is one of the strategies that would improve performance. b. Chronologically, there has been a series of approaches to job design over the last 100 years. Select any two of the major approaches and discuss the important features of each approach, together with advantages and disadvantages. Job Rotation is an approach of job design where the job each person does is rotated in a certain period so that people do not get into a rut of doing the same specialised job all the time. The advantage of job rotation is that it can give people more varied work and a broader range of skills. The disadvantage of job rotation is that it only gives a temporary improvement as people soon feel they are being switched around a series of equally boring jobs. Job