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Operations Management Stevenson 11th Edition Test Bank

September 22, 2023
Bill Kimball

On the other hand, insufficient inventory items means the organization cannot meet consumer demand, leading to a loss in revenue. Having too many items in inventory means that the organization has not recovered its costs from sales in time. You should also create a detailed map of the activities required to produce, assemble, and test the product or service before it is delivered to the consumers. Production is the part in the operations system where the inputs get transformed into outputs (products/services). How much long-term capacity and resources the organization will provide to meet consumers’ demand.

Reshoring manufacturing operations will increase control on the supply chain to prevent future crisis’s while also saving significantly on air and ocean freight transportation costs. Refusing to be caught in a global supply chain nightmare again, reshoring initiatives are taking hold and will require additional warehouse capacity. Can recover up to 85% of existing floor space when compared to standard shelving. Warehouses need this additional capacity to meet post-COVID challenges. Combined with pick to light systems and integrated inventory management software, ASRS can help warehouses solve labor challenges and manage unpredictable spikes in demand.

service operations require additional inventory because of the unpredictability of consumer demand.

A systems approach is essential whenever something is being redesigned or improved. As demand for faster delivery rises and companies decentralize their warehouses , inventory visibility throughout the supply chain will take on a new importance. The ability to know, in real time, exactly what inventory is on hand at each warehouse is the key to assigning and filling orders efficiently.

Resources, activities, and time should be adequately integrated toward the achievement of the organization’s goals. If not, uncompleted tasks will pile up, the company will lose valuable time, and important documents may get lost.

Exactly how much more will depend on varying factors, but overall inventory on-hand will increase. For warehouses to survive in this uncertain climate, flexibility is key. Combining an unpredictable supply chain with fluctuating consumer behavior has some industries experiencing unprecedented demand, while demand in other industries is plummeting. The JIC inventory strategy differs from the more recent “just in time” inventory strategy, where companies try to minimize inventory costs by producing the goods after the orders have come in. The service manager has more direct influence on the supply aspects of capacity planning than he or she does on the demand side. There are several things a service manager can do to adjust capacity to fluctuating demand. The managers agreed that each guest who wanted to play tennis should get the chance to play at least once a day for an hour.

Managing Demand & Supply

An operations manager should be able to make necessary forecasts. First, you need to note that operations are cross-departmental. That means an operations manager must work with other departments. There is the chief operating officer and the operations manager.

Thanks to this concept and how well it worked, production management for improving productivity became a hot topic among manufacturers. From the 1950s to the 1960s, it developed into a separate discipline, bringing to life other concepts like Taylorism, production planning, inventory control, etc. With the right inventory management software and a compact storage device, it’s possible to transform a back storeroom into a micro-distribution center. Retailers will look to leverage existing stores to manage growth. Since the e-commerce boom is here to say, so is omni-channel distribution. As the warehouse shifts from picking full cases for retail locations to picking individual items for end customers, they also need to manage multiple delivery options.

service operations require additional inventory because of the unpredictability of consumer demand.

Each plan and option a manager arrives at can be costed, and the best fit for the particular service selected. Managing demand and supply is a key task of the service manager. Although there are two basic strategies for capacity management, the enlightened service manager will, in almost all cases, deviate from these two extremes. To manage the demand, the resort managers made sure that all promotional literature carried a warning to prospective guests that the courts would be crowded in July and August. A reservation system to allocate court time made it possible to steer demand to times when the courts were often not in use.

Strategic Versus Tactical Operations Decisions

A company that uses this strategy typically has difficulty predicting consumer demand or experiences large surges in demand at unpredictable times. A company practicing this strategy essentially incurs higher inventory holding costs in return for a reduction in the number of sales lost due to sold-out inventory. To maximize efficiency, managers examine even peak-time tasks to discover if certain skills are lacking or are inefficiently used. If these skills can be made more productive, the effective capacity of the system can be increased. For example, paramedics and paralegals have significantly increased the productive time of doctors and lawyers.

  • You should always be on the lookout for potential improvements.
  • A careful analysis before the facility is built will show what these items are.
  • Process design determines how the product/service will be produced.
  • How standardized outputs will be is a critical consideration in the system design question.
  • Service operations tend to be more labor-intensive than manufacturing.

Manager B, however, is in charge of handling orders, an information-processing function. The personnel are key-punch operators, EDP specialists, and systems analysts.

How Does Sweetprocess Make Your Life Easier As An Operations Manager?

If all your operations are carried out manually, it can be very tedious. You have to map out business processes and store them manually, continuously track process metrics manually, and your employees will not always follow best practices of the process. On the other hand, the technical component involves selecting equipment and selecting a sequence for various phases of operational production. If demand for the product is so small that it cannot support a dedicated production facility.

This includes everything from production, distribution, shipping, to the delivery of the products. If the consumer is unsatisfied with the product or service or the delivery, the operations manager gets the feedback and forwards the complaint to the relevant departments. An operations manager is involved in the product design process. Apart from these discussed above, operations management also helps boost technological advances within an organization, ensuring that there are correctly functioning processes and ensuring profitability. The operations manager’s job is to ensure that the product is of high quality and meets the consumers’ needs. Operations management is focused on converting resources into quality products and services. More importantly, operations management ensures that every single day-to-day operation in an organization supports and helps to achieve that organization’s unique goals.

service operations require additional inventory because of the unpredictability of consumer demand.

Because each system cannot handle infinite demands, the manager needs to question how much of the peak demand the system must handle. Just what is the appropriate level of service for the delivery system to provide?

Phase 2: Planning Operations, Inventory, And Quality Control

Participating doctors would have admitting privileges at all hospitals. Because of the intangible nature of a service’s output, establishing and measuring capacity levels for a service operation are often highly subjective and qualitative tasks. Because a service cannot be transported, the consumer must be brought to the service delivery system or the system to the consumer. You can easily collaborate with your team and other departments involved throughout the operations process. You can get your team members working together despite their locations. You can easily map out your operations process however you want.

Operations managers know how to communicate, listen, and relate with their colleagues, both on a personal and professional level. They need to show tolerance, understand people’s differences, and resolve conflicts between employees. This unit also ensures that there are laid-down processes that make sure that service-based companies deliver top-notch services to their clients.

The history of operations management is a long one because it dates to ancient times. When Sumerian priests created a system that helped them record inventories, taxes, loans, and other business transactions. Operations management is an integral function of every organization regardless of its size, industry, whether it is service or manufacturing, or whether it is for-profit or not.

Omni-Channel includes letting the customer purchase from anywhere (in-store, online) and delivering the product where they’d like . This also includes the return of the product (ship to return or return in-store). With unpredictable supply chains, manufacturers will need to make space for additional WIP. Since COVID, supply chain hiccups are common, and manufacturers need to be prepared to handle them. When parts are delayed manufactures are left with half finished product waiting to be completed. COVID disrupted the global supply chain in ways no one could predict. As the global supply chain is beginning to stabilize, manufacturers are reevaluating their processes.

Service Operations Require Additional Inventory Because Of The Unpredictability Of Consumer Demand

If the operations manager stays up to date with the latest tech innovations, they can use the innovations to improve internal processes. For example, processes that used to be conducted manually can become efficient automated processes. Good organizational skills are essential for production efficiency and maximum productivity. The operations manager oversees delivery management in an organization.