Term Paper: Operations Management Production

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[. . .] It can work well when every section is performing at its peak. Cellular manufacturing for that matter avoids the limitations of both process flow assembly line and job shop. Everything is carried out in cells and these special cells contain all equipment to produce a product from scratch. However the cost may often be high because of installment of similar machinery in every cell and extensive expertise is required.

There are two commonly known inventory systems i.e. dependent demand and independent demand inventories. Dependent demand refers to the demand of components that make up the actual product, in other words, when the demand for a product increases, it leads to dependent demand of its various parts. Independent demand on the other hand is independent of demand for other goods or parts. The inventory systems for both therefore are based on similar lines. A dependent demand inventory system is flexible in nature and changes with a change in the demand for the actual final product. Independent demand inventory system is based on mathematical calculations and usually there are certain important things to keep in mind while managing this type of inventory. The most important questions with regard to inventory management are when to order and what quantity to order. These questions can be answered with the help of small calculation and mathematical computations. A continuous review system should exist and in an independent demand inventory we take into account Inventory position (IP), Backorders (BO), ON-hand inventory (OH) and Reorder point (R). Operation managers are required to update inventory regularly and place new orders as soon as OH reaches R. IP=OH+SR-BO where SR stands for order placed but not yet received. Inventory position is checked after each withdrawal. A simple calculation below can help us understand this:

In this case Reorder point is 70, On hand inventory is 40 and SR=45 and BO =0

Calculating IP;

IP=OH+SR-BO and this is equal to: = 40+45-0=85.

Since IP>R

No new orders need to be placed.

Aggregate planning refers to the strategy whereby a firm manages various aspects of planning at one time. This can significantly reduce the time spent of management of each aspect including inventory, employees' appraisal retention, hiring and firing, plus placing orders, checking backorders etc. Usually firms need to check various planning functions with every change in demand for a product. To minimize the time it takes, they adopt aggregate planning strategies, which can be of three types, active, reactive and mixed.

Employee's performance is one of the main factors influencing the decision to promote or demote his ranking in the firm. Performance is what determines whether the person qualifies for a raise or not and should he be rewarded for his hard work or reproached for lack of effort. In any case, performance is the key. This has given rise to many different methods and strategies of progress evaluation, better known as performance appraisal.

Performance appraisal can be defined as "a structured formal interaction between a subordinate and supervisor, that usually takes the form of a periodic interview (annual or semi-annual), in which the work performance of the subordinate is examined and discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development" (Introduction: Performance Appraisal). With correct performance appraisal techniques, we can determine how much effort does a particular employee put in and then he/she can be rewarded accordingly. The new strategies in this connection have given rise to the concept of paying for performance, which means that employees' rewards must be tied to his performance. Greater the hard work better should be the rewards.

However pay scale is not the only factor that determines and affects an employee's performance. Motivation, self-esteem, confidence in oneself and other personality attributes as well as external factors also play a vital role in determining the performance of an employee and the payment or rewards that he or she might deserve.

Recent developments in the field of management and performance-based evaluation systems provide conclusive evidence of the fact that the understanding of the urgent need to motivate and reward employees based on their performance is augmenting over time. For this reason, a firm needs to have a proper performance appraisal and reward system. Often this may require a change in the company culture since culture affects motivation level, reward expectation and quality of performance in an organization. If the culture is such that every employee feels he would be paid according to the effort he/she has made, then the quality of his/her would improve considerably and motivation would also be higher.


Cellular manufacturing as a foundation for lean manufacturing. Publication: IIE Solutions; Date: 06/01/2002;

Flynn, Barbara B.; Sakakibara, Sadao; Schroeder, Roger G., Relationship between JIT and TQM: practices and performance. Vol. 38, Academy of Management Journal, 10-01-1995, pp 1325(36)

Chen H. Chung, Balancing The Two Dimensions Of Time For Time-Based Competition. Vol. 11, Journal of Managerial Issues, 09-01-1999, pp 299-314

Introduction to performance appraisal. Retrieved April 11, 2003 at http://www.performance-appraisal.com/intro.htm

Tulgan B. (2001). Real pay for performance. Journal of business strategy, page 19. Copyright - 2001 Thomson Financial, Inc. All Rights Reserved. COPYRIGHT 2001 Faulkner & Gray, Inc.

Gryna, F.M., "Quality Costs" in Juran, J.M. & Gryna, F.M. (1988, 4th Ed.), Juran's Quality Control Handbook, McGraw-Hill 1988 [END OF PREVIEW]

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