PPT3201 W5
PPT3201 W5
PPT3201 W5
OPERATIONS
MANAGEMENT
PPT 3201:
PRINCIPLES OF AGRIBUSINESS
MANAGEMENT
Introduction
Production Processes
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Plant design
How to design the plant
Steps
Location
Where to locate the facilities
Choosing the best location for new facilities
Several factors need to be considered
Production Planning
Ensures the efficient operation of the firm over a specified period of time.
Basic inputs of production plan:
1.
Customer orders
2.
Sales forecasts
The inputs determine the size of the workforce, inventories and material
purchases.
The basic for a master schedule that is used to produce purchase orders and
work orders.
Production Control
Steps in controlling operations
Quality Control
The ultimate measure of a firms production is quality products produced.
1.
2.
Quality control
3.
Quality inspection
4.
to identify any discrepancies that may exist between the standard and the
actual performance
5.
6.
7.
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Inventory Management
Inventory management is primarily about specifying the size and placement of
stocked goods.
Inventories such as parts and materials, work in progress (WIP) - partly
completed, finished goods.
Inventory Management
Reasons to hold
inventory
1.
2.
3.
Inventory Control
2.
TC = CC + OC
Definition
The amount of orders that minimizes total variable
costs required to order and hold inventory.
Assumptions
- Demand rate is constant
- No constraints on lot size
- Only relevant costs are holding and ordering/setup
- Decisions for items are independent from other
items
- No uncertainty in lead time or supply
Formula
Q
Place an
order
Inventory level
Average
inventory
Q/2
EOQ = 2CoD/Ch
Time
T = Q/D
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EOQ Costs
EOQ Example 1
3000
A product that cost RM60/unit has expected weekly demand of 18 units. Order
processing costs are RM45/unit and the holding cost fraction is 25 percent of
purchase price.
2000
1000
Ordering costs = ordering costs X no. of
orders per period
= Co X D/Q
|
50
|
100
|
150
|
200
|
250
|
300
|
350
|
400
EOQ Calculation
EOQ Example 2
= ChQ/2 + CoD/Q
= (15 x 75)/2 + (45 x 936)/75
= RM1,124
22
EOQ Calculation
EOQ =
2CoD/Ch
= 2 x 25 x 2000
0.2 x 60
= 100,000
12
= 91.287 tonnes
23
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Purchasing
"The process by which a company (or other organization)
contracts with third parties to obtain the goods and services
required to fulfil its business objectives in the most timely and
cost-effective manner.
Determining the right time at which to make purchases and the
right quantity to buy can have a major impact on a firms
success.
The purchasing activities must be coordinated with those of
inventory control and production management.
Major considerations in making purchasing decisions:
Procurement
Definitions
The process of deciding what, when, and how much to purchase, the act of
purchasing it, and the process of ensuring that what is required is received on time
in the quantity and quality specified.
The acquisition of appropriate goods and/or services at the best possible total
cost of ownership to meet the needs of the purchaser in terms of quality and
quantity, time, and location.
quality
quantity
suppliers dependability
price
Procurement Systems
MRP
The program for production scheduling, inventory control, the scheduling of
purchase orders.
To ensure the materials are available when required, to reduce the firms
inventory and to assist in scheduling purchasing and manufacturing
operations.
Benefits of MRP
1.
2.
3.
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EDI
Just-In-Time
EDI MRP links the manufacturer with its suppliers through a computerized
information transfer system
The system improves purchasing and inventory management by cutting
paperwork, lead times and input errors and inventory accounting
Purchasing
It is a single part of procurement.
It is the act of buying (from a administrative / financial
perspective) the service or good to be procured.
It refers to get something in exchange for money.