IB Business and Management Operations Management Production Planning

Views:
 
Category: Education
     
 

Presentation Description

IB Business and Management Operations Management 5.7 Production Planning

Comments

Presentation Transcript

PowerPoint Presentation:

IB Business and Management .com IB Business and Management T he IB Diploma Business and Management course delivered IN STYLE , ONLINE . ©

PowerPoint Presentation:

z Production planning 5.7

PowerPoint Presentation:

z Stock or inventory Unsold goods Components used in the production approach Stock control Be able to hold sufficient quantities of raw materials, work in progress & finished goods in order to enable production & sales of goods to continue uninterrupted jit jic Costs of getting it wrong

PowerPoint Presentation:

z Forms of Stock Manufacturing businesses will hold stocks in three forms: Types of stock Raw materials and components Work in progress Finished goods Purchased from outside suppliers and held in stock until they are used in the production process At any one time the production process will be converting raw materials and components into finished goods Having been through the complete production process goods may be held in stock until sold and dispatched to the customer

PowerPoint Presentation:

z Stock-holding costs Types of stock Opportunity cost Storage costs Risk of wastage and obsolescence Working capital tied up in stocks could be put to another best alternative use (paying off loans, suppliers or buying new equipment Stocks have to be held in secure warehouses. Often they will need specialised equipment (e.g. refrigerators), staff will need to be employed to guard these and they will need to be insured If stocks are not used or sold as rapidly as expected there is an increasing danger of goods deteriorating or becoming outdated – they will then only be sold at a much lower price

PowerPoint Presentation:

z Costs of not holding enough stocks Types of stock Lost sales Idle production resources Special orders could be expensive If firms are unable to supply customer ‘from stock’ then sales could be lost to firms that hold higher stock levels. This might lead to future lost orders too. Small order quantities If stocks of raw materials & components run out then production will have to stop, leaving expensive equipment idle and labour with nothing to do – costs of lost output can be considerable If an urgent order is given to a supplier to deliver additional stock due to shortages, then extra costs may be incurred in administration of the order and special delivery charges Keeping low stock levels may mean only ordering goods and supplies in small quantities. The larger the size of the delivery, the higher will be the average stock level held. By ordering in small quantities purchasing economies of scale will be reduced.

PowerPoint Presentation:

z Just in time Minimize the cost of holding stock Goods are made to order Absolute min. amount of stock held to meet prevailing level of demand Excellent communication Strong supplier relationships Component parts often delivered just as about to enter production process Batch vs. flow??? Pros &cons???

PowerPoint Presentation:

z Just in case Additional stock acts as a contingency plan Increase in demand Breakdown in the production process or supply chain Increased storage capacity Inventory mgmt systems Pros &cons??? Just in case Just in time advantages disadvantages Summary notes embedded in ibbuusinessandmanagement.com

PowerPoint Presentation:

time # of stocks; e.g. tonnes of flour z Buffer stock Re-order level Max. stock Re-order quantity Stock control methods HL Lead time Re-order level: level of stocks at which new supplies are ordered Amount re-ordered Safety stock in case of sudden ↑ in demand Time taken from ordering to supplies arriving Stock-out. Unexpected order & so ↑ ed usage

PowerPoint Presentation:

time # of stocks; e.g. tonnes of flour z Buffer stock Re-order level Max. stock Re-order quantity Stock control methods HL Lead time Stock out! New stocks Time period where either production ceases and /or run out of this good to sell

PowerPoint Presentation:

z Appropriateness of stock control method Lifo & fifo stock valuation & scm HL How perishable is the product? Limited shelf life: jit as buffer stocks perish Can scm relationships be guaranteed? jit demands a very strong & stable relationship between supplier & manufacturer Nissan contracts: 24 hours notice, 24-7 Available & suitable warehousing? jic demands this jic amazon & zappos ba Economies of scale?

PowerPoint Presentation:

z Just In Case & Economies Of Scale -Appropriateness of stock control method HL

PowerPoint Presentation:

z Just In Case & Economies Of Scale -Appropriateness of stock control method HL

PowerPoint Presentation:

z Outsourcing & subcontracting HL use independent suppliers rather than undertake the activities themselves Interestingly, these 3 firms, engaged in intense competition with each other, all subcontract the same company to actually manufacture there sports shoes.

PowerPoint Presentation:

z Capacity utilisation Current output level Maximum output level Capacity utilisation is the proportion of maximum output capacity currently being achieved. X 100 HL

PowerPoint Presentation:

z Make or buy decisions A cost-benefit analysis HL Expected sale volume Q fc avc Price per unit P (Charged by supplier) ct b P x q ct m Fc + ( avc x q) The cost to buy is determined by the price charged by the subcontractor/supplier and the quantity of the product demanded by the firm The cost to buy is determined by the fixed costs of production, such as factory rent, and the variable costs, such as direct labour, associated with the quantity of the product supplied by the firm Quantitative and qualitative factors will be considered in make or buy decisions

PowerPoint Presentation:

z Make or buy decisions HL

PowerPoint Presentation:

z Make or buy decisions HL