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Sample On

OPERATION MANAGEMENT IN
BUSINESS

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TABLE OF CONTENTS
INTRODUCTION ...........................................................................................................................4
TASK 1 ............................................................................................................................................4
Necessity of operations management in the business ............................................................ 4
Operations functions of the organization ............................................................................... 5
Evaluation of operations management by using the process model....................................... 6
Significance of the Three Es .................................................................................................. 7
Impact of the tension between cost minimization and quality maximization ........................ 7
Significance of five performance objectives .......................................................................... 8
TASK 2 ............................................................................................................................................9
Assessment of linear programming and critical path. ........................................................... 9
Need of operational planning and control ............................................................................ 10
Layout for Furniture Company ............................................................................................ 10
Network planning and critical path analysis ....................................................................... 11
Quality management techniques to improve operation in the selected organization ........... 12
CONCLUSION ..............................................................................................................................12
REFERENCES ..............................................................................................................................14

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LIST OF FIGURES

Illustration Index
Illustration 1: Gantt Chart ..............................................................................................................11
Illustration 2: Critical path analysis ...............................................................................................12

LIST OF TABLES

Index of Tables
Table 1: Network planning ............................................................................................................11

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INTRODUCTION
Operations management deals with various functions of production and operations within
a business unit. It focuses on developing and managing the company's operations in order to
generate the quality products while maintaining the time frame (Shim and Siegel, 2009). The
production services of the company needs to be properly designed and controlled to acquire the
desired results. The modern competitive environment demands the effective command on the
operational excellence. The current report provides the understanding about operations of a
business and it significance (Hugos, 2011). It develops the insight about the different tools and
techniques of production management. The furniture business is expanding on the global bases.
Thus, the quality and standard of the products and services are expected to match the demands.
Innovation and development are the integral part of production process (Wagen and
Goonetilleke, 2007). The report develops the significant evaluation of the operational
management and control.

TASK 1
Necessity of operations management in the business
Operation management is the very crucial part of the business operations. Every
manufacturing company focuses on developing the effective means of production process in
order to deliver the quality products to its consumers. This helps the company in minimizing the
defects and wastage while focusing on the cost optimization (Slack, Jones and Johnston, 2013).
The purpose of Operations management is to deliver the quality products to the consumer while
developing the effectiveness of the internal business operations.

The furniture business, deals with the manufacturing and supplying of its products and
services around the world (Wild, 2002). This needs the efficiency of work management while
managing the production time to meet the consumer demands. The operation management within
the industry focuses on managing the product quality, process management, production layout
and supply chain. The elements of the business operation makes it crucial for the business
growth and development. It helps in integrating he overall business operations while developing

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the effective link between the tactical and operational level management (Sadler and Hines,
2002). The core products of the business are managed by the operations' department while the
issues related to its sales and promotion is management by the middle level management. The
research and development departments tries to find the possibility of product development
(Bagchi and Skjoett, 2002). Thus, as observed the overall business operations are integrated
through the efficiency of production management.

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Operations functions of the organization
Operations management is the process that deals with the efficiency of converting raw-
materials into finished product. The term describes the integration of various functions to achieve
the business goals of development and growth (Berkes, 2009). The major operation functions
are:

Production process selection: The production process deals with managing the
production system and schedules in order to deliver the maximum output while managing
the product quality. It helps the company in deciding the best possible process to meet the
business demand and develop the desired layout (Akyildiz and et. al., 2008). The process
of the operations are focused on the company goals and objectives.
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Capacity planning: This is a very crucial decision for the business unit. This function of
operation deals with the decisions regarding the maximum output production while
developing the quality aspects (Pinkerton, 2011). The furniture businesses focuses on
mass production in order to achieve the maximum sales thus capacity planning helps the
company in deciding about the current and future planning for the growth and
development of the organization.

Quality assurance and cost control: The current competition in the environment focuses
on maintaining the product quality (Haimes, 2005). This helps in managing the
production process and development in order to achieve the desired objectives. Every
business organization focuses on producing the quality products while minimizing the
cost of production in the environment. This helps the company in managing the profit
margin within the business (Zhixiao and Longzhi, 2011).

Inventory management: The production of products and services are not the only motive
of the company. The effective management of inventory and stock is significant for the
profit maximization (Geng, 2004). The furniture production leads to high storage
capacity as it requires large storage space. Thus, the most effective means of managing
the inventory is through economic order quantity. This strategy helps the companies in
managing the ordering cost and holding cost (Johnston, 2005).

Supply chain management: Supply chain delivers the effective means of production and
control within the organization (Jones and Robinson, 2012). The lower level of supply
chain management helps the company in managing the product distribution and
maximizing the product delivery to the ultimate consumers. While upper supply chain
helped the company in delivering raw materials while facilitating the production process
(Kloppenborg, 2011). The delay in the either one coult result in low demand.

Evaluation of operations management by using the process model


Every business organization adopts various process for the production or goods and
services. These process helps the company in transforming the raw material into finished
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products. The process adopted by the organization reflects its internal strength and process
integration (Rotchanakitumnuai, 2013). The various models accepted by various organizations
are open and closed system, Probabilistic theory, deterministic theory etc. All these theories
helps the organizations in developing the defective growth prospects by analyzing the future
development modes. The Probabilistic theory focuses on sales forecast in order to produce
products and services as per the futuristic approach (Schneider, 2003). Moreover, every company
needs to develop the effective integration with the external environment in order to produce and
manage the internal strength of the company. Thus, the furniture business is highly accustomed
to the open and close system (Slack, Chambers and Johnston, 2007).

The process of the manufacturing for every business unit follows the symmetrical process of
acquisition of raw material, process management, transforming raw material into finished goods
and finally sales and distribution of the goods.

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The optimum condition provides the effective growth prospects in the market. The
transformation process in the second step focuses on minimizing the defects while assuring the
quality of products and services. The quick and advances process develops the high demand in
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the market (Vaidya and et.al., 2013). The final step deals with sales and distribution which
focuses on minimizing the transportation cost while minimizing the risk of product damage or
loss. Thus, every organization develops the effective system of distribution to reach the ultimate
consumers.

Significance of the Three Es

The analysis of the furniture industry helps in developing the understanding that Three
E's reflects the internal health of an organization (Young, 2009). The company tends to grow and
develop while maintaining the elements of economy, efficiency and effectiveness. These factors
provide the effective demand for products and services within the economy while developing the
performance measurements sources. The mentioned elements can be described as:

Economy: This element focuses on managing the economic cost of production for the
company thus providing the products at the considerable price to the consumers (Slack,
Jones and Johnston, 2013). In order to develop this the organization focuses on product
acquisition at the minimum cost from the supplier. This helps in reducing the purchase
cost. Moreover, the economic process of production helps in maintaining the cost of
production for the origination (Wagen and Goonetilleke, 2007). All this help in managing
the cost and quality of products.

Efficiency: This element focuses on developing the smart way of operation thus
minimizing the cost, time and wastage of production. The organizations adopting this
measure acquires the effective achievement n the market. This helps the company in
developing the differential method to create an edge in the market (Sadler and Hines,
2002). The operations of the furniture companies are managed and maintained through
effectivity on product quality and minimization of wastage.

Effectiveness: this element focuses on creating the effective means of production system
where the products are produced such that it helps the company in satisfying the

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consumer expectations. The quality and product features are designed and developed to
meet the consumer expectations (Bagchi and Skjoett, 2002). These products thus helps
the company in creating their own demand. Thus, effectivity highly contributes towards
sales maximization.

Impact of the tension between cost minimization and quality maximization


Every business unit focuses on developing the most effective and unique equation of cost
minimization and quality maximization. This equation is the most helpful source of developing
the high growth prospects for the business units. The cost of production is the crucial part of the
production process as this results in increasing the cost of productions in the market (Zhixiao and
Longzhi, 2011). For the furniture business the cost of production of sofa, chair or table may be
included in the sales prices for covering the cost of production. In these instances the product
quality is compromised.

The tension between cost and quality has been observed from ages in the market. These
are the two most crucial factors of business development. The high level of competition has
developed the large rage of close substitutes for the buyers (Jones and Robinson, 2012). The
production firms thus focuses on producing the quality products while minimizing the cot of
product to fight back the competition. Every organization has developed its own unique
equation of cost and quantity. The cost cutting measures may be low cost raw material,
ineffective protection process or low quality machinery. These factors help the company in
minimizing the cost but the quality deteriorates simultaneously (Slack, Chambers and Johnston,
2007). However high quality products demands high purchase cost to acquire the best quality
raw material, advances machinery and talented workforce. All these factors leads in increasing
the cost of protection but managing high quality products.

Thus, as observed the tension between quality maximization and cost minimization is
high. The ignorance of this factor leads to fall in sales and demand (Vaidya and et.al., 2013).
Thus, every business unit creates its own standards of production and quality in order to manage

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the cost and quality of the products. The furniture businesses focuses on maintaining the product
quality through high product variety and cost efficiency.

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Significance of five performance objectives


The five performance objectives for the furniture business are:

Cost: The cost of the product is the first feature that grabs the consumer attention. The
wide options in the market helps the consumers in selection of products on the basis of
cost and quality (The 4 E's of Excellence. 2013). Thus, cot minimization is the key focus
of every business unit. The ignorance of cost factor leads to fall in demand.

Dependability: The integration of business functions is the very important function of the
operation management. Every business function is dependent on another. This creates an
integrated way of working while managing the cost efficiency and work distribution. The
business unit complete each task in order to attain the quality and objective. This helps in
developing the effective environment in the organization.
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Flexibility: The mass production system has been replaced by the flexible production
system, where business unit focuses on the quantity of the products while maintaining the
unique quality of each (Kloppenborg, 2011). This flexible system helps in developing the
process while analyzing the possibility of improvements.

Quality: This is the most crucial part of management which focuses on developing the
high quality products at minimum cost. The cited organization also focuses on the same
in order to develop the demand in the market.

Speed: The cost and quality factors are accustomed to the speed of production and
assembling. If the production system takes long time in delivering the products to the
consumers, it leads in developing the fall in demand thus the furniture companies has
developed the system of managing the time frame for production.

TASK 2
Assessment of linear programming and critical path.
Linear programming is the mathematical tool to develop the effective situation of cost
minimization and profit maximization. This technique helps the organization in creating the
effective understanding of the limited variables of production. The cited origination must apply
this method in order to develop the effective techniques of allocating the proper resources to
required activities (Linear Programming: Introduction. 2012). Three elements that determine the
result, are variables, objective function and the constraint. Constraints helps in developing the
functions that will aid in determining the results on which the production decisions will be made.
Objective functions are developed to know the basic purpose of the operations. These can be
either cost minimization or profit maximization. On the basis of this the company is able to boost
its competency along with attaining the competitive edge (Pinkerton, 2011).

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Critical path analysis on the other hand is the process of determining the best and most
effective way of completing an operation. This method focuses on dividing the whole operation
into small tasks thus developing effective measure of operating the activities in an time based
measure. The tasks are divided into time based activities which are interdependent. This method
focuses on reducing cost and time for accomplishment of each and every task. This method
provides the minimum duration for completing the task (Bagchi and Skjoett, 2002). This method
helps in developing the effective method of operations management and development.

Need of operational planning and control


Operational planning is the process of planning for achievement of strategic goals of the
firm. For a furniture manufacturing firm, operational planning is very essential to be performed
as it provides different types of milestones as well as conditions of success. Not only that but it
also explains how the strategic plan has to be implemented during a specific time period (Wild,
2002). However, operational planning and control over organizational activities is very crucial
due to many reasons.

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There is an utter need for operational planning in every manufacturing firm because it
provides base for specific activities to be performed. But without proper control over activities of
business operations, objectives can never be fulfilled. Therefore, appropriate measures like Total
Quality Management, Quality circles and ISO 9000 are some tools through quality of
manufactured goods can be maintained. Operational planning is also very essential to forecast
future demands of customers (Berkes, 2009). But effective and powerful forecast sometimes
even cannot meet firm's objectives, therefore, it is ideal for the firm to make short term planning
which can assist the furniture manufacturing firm to acquire their desired goals and objectives.
Short term planning must be made in such a way that meet demands in appropriate manner.

Layout for Furniture Company


Layout of the organization refers to the systematic arrangements of the production
processes in order to develop the effective production program. The focus of the layout plan is in
arranging the resources of the company in such a manner that it enhances the production process
by minimizing the time of moving the resources and arranging the machinery (Akyildiz and et.
al., 2008). For a furniture company the process layout will be an effective method where the raw
material are feeded in the process where they are developed and drafted into required shapes and
sizes. The huge wooden logs cannot be moved and adjusted thus the layout should provide the
effective means of arrangements where the raw material once feeded in the system the final
products is obtained without many obstacles. Various furniture may be produces by adopting the
batch production system within the organization. However, the process layout will be the best
suited technique for every production system (Jones and Robinson, 2012).

Network planning and critical path analysis


The network path given below describes the effective means of producing the dining
table for the consumers to meet the demands. This table shows the activities involved in the
process along with the schedule that it will follow.

Name Activity Activity order Time (Days) Predecessor


Activity

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A Raw-material Procurement - 4 0

B Layout Development A 2 1

C Design finalization A 1 1

D Making blueprint B 2 1,2

E Transforming process C 8 4

F Polishing and final touch C 4 4

G Quality check F 2 5,6

H Warehousing G

Table 1: Network planning

Illustration 1: Gantt Chart

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Illustration 2:
Critical path analysis

Quality management techniques to improve operation in the selected organization


In order to improve the quality of business operations, there are various techniques which
have been derived. The most suitable technique to improve the efficiency of operations is Total
Quality Management (TQM). Under this method, the management creates strategies for making
continuous improvements in the performance of operations at every level and in all the areas of
responsibilities (Total Quality Management (TQM). 2014). As per the approach, the quality in
operations is defined according to the requirement of customers. The top level management
possess the direct responsibilities to set standards for maintaining quality and ensures that those
the operations are performed by satisfying those quality standards. After making the quality
standards, they are analyzed in systematic manner to measure the improvements in work process.
Various fundamental techniques are considered while formulating standards to bring in the
efficiency in existing operations of company (Wagen and Goonetilleke, 2007). It is a very
efficient technique because under this method, all the departments and work level are improved
to bring efficiency in operations.

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CONCLUSION
From the following report, it has been concluded that operation management in business
plays a very important role in the working of company. The nature and importance of operational
management has been demonstrated along with its link with the strategic planning. The detailed
understanding has been made regarding organizing a typical production process. The relevant
techniques to the production of an operational plan has been taken into consideration wherein the
approach of quality management has been described for better understanding. It helps in
providing the effective understanding about what the organizations need to follow in order to
achieve the efficient organizational growth in the economy. The report reflects the need and
relevance of the production system for the furniture industry.

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REFERENCES
Books and Journal
Shim. K. J. and Siegel, G. J., 2009. Operations Management. Barron's Educational Series.

Slack, N., Jones, B. A. and Johnston, R., 2013. Operations Management. Pearson Education.

Wagen, D. V. L. and Goonetilleke, A., 2007. Hospitality Management: Strategy and Operations.
2nd ed. Pearson Education Australia.

Wild, R., 2002. Operations Management. Cengage Learning EMEA.

Sadler, I. and Hines, P., 2002. Strategic operations planning process for manufacturers with a
supply chain focus: concepts and a meat processing application. Supply Chain
Management: An International Journal. 7(4). pp.225 241.

Hugos, M., 2011. Essentials of Supply Chain Management. 3rd ed. John Wiley & Sons

Bagchi, P. and Skjoett, T., 2002. Integration of information technology and organizations in a
supply chain. The International Journal of Logistics Management. 14(1). pp.89-108.

Berkes, F., 2009. Evolution of co-management: Role of knowledge generation, bridging


organizations and social learning. Journal of environmental management. 90(5). pp.1692-
1702.

Akyildiz, I. F. and et. al., 2008. A survey on spectrum management in cognitive radio networks.
Communications Magazine, IEEE. 46(4). pp.40-48.

Pinkerton, E., 2011. Co-operative management of local fisheries: new directions for improved
management and community development. UBC Press.

Haimes, Y. Y., 2005. Risk modeling, assessment, and management (Vol. 40). John Wiley &
Sons.

Zhixiao, L. and Longzhi, L., 2011. Challenge and strategy of the wastewater treatment process
selection from the point of operation management. Water and Wastewater Engineering.
37(11). pp.25-31.

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