NATURE OF DECISION MAKING

KEY AREAS OF DECISION MAKING in operations management: 

KEY AREAS OF DECISION MAKING in operations management BY- Aparajita Chatterjee

OPERATIONS MANAGER AND DECISION MAKING: 

OPERATIONS MANAGER AND DECISION MAKING The role of an Operations Manager is very important for successful production of goods or services. An Operations Manager needs to think and plan, effective and efficient strategies that ensure the increased profit, stability and growth of the company. His main role is of decision maker he decides about the various operations of the firm.

DECISION MAKING: 

DECISION MAKING DECISION MAKING The act of choosing one alternative from among a set of alternatives. DECISION-MAKING PROCESS Identify the problem Develop appropriate alternatives Choose and justify the best alternative Evaluated the alternatives on basis of feasibility, effectiveness, and consequences Implement the recommendation (Put it into practice)

Problems in operations management: 

Problems in operations management What resources will be needed, and in what amounts? When will each resource be needed? Where will the work be done? How will the product or service be designed? Who will do the work?

Key decision areas: 

Key decision areas Plant capacity Plant location Plant layout Product design Materials management Inventory control Strategic Decisions Production Planning Production Controlling Routine Decisions

Routine decisions: 

Routine decisions

Production planning: 

Production planning Production planning decides about the resources the firm will require for its manufacturing operations and allocates these resources to produce the desired output. It sets framework and schedules for production operations. It also provides alternative production strategies in case of emergency.

Production control: 

Production control Production control assures that whether the planned performance is in conformity with the actual performance. Production control serves the interest of both producer and consumer as it minimizes the wastage and provides consumer the desired product. It ensures timely supply of raw material and avoids delay in production process.

Strategic decisions: 

Strategic decisions

Plant capacity: 

Plant capacity Is the maximum productive capability of a firm usually expressed in volume of output per unit time. Need for capacity planning decision: Too much capacity can cause the inventory level to rise. Too little capacity cause loss of customers to competitors It is the first step when a firm decides to produce new or increase its number of products. Location and process technology are also decided on basis of plant capacity decision *Capacity Utilization=Actual Capacity/Design Capacity *Capacity Efficiency=Actual Capacity/Effective Capacity

Selection of plant location: 

Selection of plant location Refers to the establishment of a plant at a particular place, so that it can either maximize its profit and minimize its costs. Importance of selecting a good plant location : Success of an enterprise depends on this decision as it is concerned with maximizing profits. Plant which is located near to its potential market flourishes very fast makes high profits, cuts down costs like transportation, it also helps the firm to identify consumer demand and capture the market before its competitors.

Selection of plant layout: 

Selection of plant layout Is the physical location or configuration of department, work centers, and equipment in the conversion process. Importance of selecting a good plant layout : Plant layouts are selected on basis of type of workflows the plant undertake. A good layout leads to efficient and optimum use of machines, labor and capital by minimizing per unit production time and maintaining a proper balance between various departments . Leads to efficient use of floor space facilitating operations, maintenance, service and supervision.

Product design : 

Product design Refers to determination of shape, standard and pattern of the product. Important decisions related to product design: Design of product and production cost: A well designed, top quality product with high price is not acceptable to consumers. So once the preliminary design of product is ready, the design engineer should work for improvement so that cost of production is minimized.

PowerPoint Presentation: 

Designing for volume production: Intermittent processes can adopt themselves to changes in design of the product. But in continuous production designing requires more attention. Points to remember while designing in continuous production are: The production process must be sequential and integrated. Exact size of components or parts must be available so that they may fit properly in assembly line.

Materials management: 

Materials management It refers to all planning, organizing and control activities associated with the flow of materials into and through an organization. It’s a key decision area because: Around 70% of capital is invested in materials and well planned and well designed materials management operations can lead to saving in the capital expenditure. It assures timely supply of raw material and better utilization of labor and equipment. Slight change in material costs will exert a great impact on firms profit picture.

Inventory management: 

Inventory management Is activities that maintain stocks of raw material, work in process, finished products or supplies. It’s a key decision area because: It helps organization to get right amount of stock at exact time of need. It helps to protect against fluctuations of demand as it ensures that it has sufficient amount of inventory to fulfill the unforeseen demand Protection against fluctuations of output as it helps to reduce the gap between actual and scheduled production.

PowerPoint Presentation: 

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