Operations Management Report: Lean Production, Cost Analysis

This report provides a comprehensive overview of operations management, focusing on key components such as lean production, cost of holding stock, and the assessment of production processes. It delves into the four components of lean production: lean concept, lean planning, lean culture, and lean tools, highlighting their roles in waste reduction and process improvement. The report also analyzes the costs associated with holding stock, including carrying costs, and examines different production processes like project-based, batch, mass, and continuous production. Furthermore, it explores the just-in-time (JIT) approach, emphasizing its role in minimizing costs and improving resource efficiency. The report concludes with recommendations for improving operational activities, emphasizing the importance of skilled workers and efficient resource utilization. The report is supported by references from books and journals.

Business Management - Operations
Management

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................1
2.1 Components of lean production ............................................................................................1
2.2 Cost of holding stock.............................................................................................................1
2.3Assess a production process....................................................................................................2
2.4 Just-in-time ...........................................................................................................................2
2.5 Recommendation...................................................................................................................3
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Operations management refers to the process that mainly focuses on the process that is
being used to manufacture the product in the company (Choi, Chan and Yue, 2016). There are
different stages that is being involved in making particular product. It helps in improving the
productivity of the company. In this various activities are involved that deals from making the
product till the product is served to customers.
Report will include main components of lean production. It also includes cost that is
being incurred in holding stock and the production process. Furthermore, it will include just-in-
time and improvements needed in the production process.
MAIN BODY
2.1 Components of lean production
Lean production is the process that uses different methods that will help in reducing
waste from the company. It mainly emphasizes on reducing waste that is generated while
production. There are four components of lean production are as follows:
Lean Concept:- This component will help in improvement in the reduction of waste. It aims that
less wastage can be done so that productivity will increase and quality product is being provided
to the customer (Hazen and et. al., 2018). It is using different techniques that will help in stop
waste that will improving the flow of production in the company.
Lean Planning:- In this proper planning is made that will help in achieving the company's goal
by linking with the activities of lean that will help in achieving them in the future. This planning
will be made in the form of policy or goal that is needed to fulfilling the objective of the
company.
Lean Culture:- Under this a particular lean process is being implemented in the company that
will help in building positive work culture and emphasizes more growth in the future.
Lean Tools:- This component will use various tools and techniques that is used in reducing
waste from the company (Scott-Jackson and Michie, 2017). These tools will help in achieving
the goals of planning that is being already done.
2.2 Cost of holding stock
This is also known as carrying cost. This is referred to as the total cost incurred while
Carrying the stock from one place to another. It includes four types of factor such as salary and
wages of the workers, expenses that are incurred in storing product, its maintenance and carrying
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Cost. It helps in providing the immediate customer service that will lead to prevent fault in the
production. It includes interest on capital, handling cost, insurance, storage charges etc. This cost
is related to the carrying as well as holding cost that is required to store stock at a particular place
(Chatzoudes, Chatzoglou and Vraimaki, 2015). Every company have to incurred carrying and
holding cost of the company. In this delivery and order cost will remain same. This cost will
include the various forms of cost that is being involved in calculation of stock.
2.3Assess a production process
This process refers to conversion of input into output that gives a final product to the
company. It includes various stages such as availability of raw material, work-in-progess and the
finished product that is obtained in the last stage. There is a supply chain management system
that facilitate easy production in the company (Bilicki and Roeder, Target Brands Inc, 2016).
This helps in providing desirable product to the customers so that it will satisfy their needs and
wants. There are different types of production process such as:
Project based production:- In this production process only one unit is produced at a particular
point of time. This is used for completing large projects. Workers who are working are highly
skilled and efficient to do work in their own field.
Batch Production:- In this similar item is being produced in a group at a particular stage while
production. In this product is passes through various stages of production that will facilitate in
obtaining quality product.
Mass Production:- Product is being produced in a bulk quantity that will help in satisfying the
demand and needs into the market (Cho and Chan, 2015). In this high investment is required to
facilitate availability of machinery for the production.
Continuous Production:- In this production is done whole day without any break in between.
Continuous flow of raw material is there that will provide a finished good.
2.4 Just-in-time
Just-in-time is the approach that will be used in the company for obtaining the product at
the right time, right place and by right person. The aim of this approach is to decrease the cost by
maintaining less stock in the company (Li, Sy and McMurray, 2018). This will help in reducing
unnecessary burden of inventory that is being used in the company (Liao, 2018). Its main
objective is to increase the stock inventory and help in reducing the holding cost of the company.
This will help in providing efficient and effective use of resources by reducing wastage in the
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company. In this large stock carrying is to be eliminated by the company and helps in increasing
the carrying cost of the company. JIT emphasizes on proper understanding between the
manufacturer and the supplier. Just-in-time is appropriate in the given business situation that will
be helpful for the future course of action. It involves many operations that will help in evaluating
the service that is being provided in the future.
2.5 Recommendation
Production process that is being used by the company are helpful but need some
improvement that will be helpful for future course of action (Henderson, Goldring and Simeon-
Dubach, 2019). Operational activity can be improved as utilization of proper resources will help
in reducing waste of the company. It should be recommended that these improvements will help
in involving more technical workers that will help in providing efficiency in the work.
CONCLUSION
As per the study it can be said that there are mainly different components that will help in
lean production. These components will help in reducing waste from the company. As reducing
waste will help in saving cost of the company. Company have to pay carrying and handling cost
that will be incurred and pay various forms of cost in it. Just-in-time is the strategy that will help
in providing right product, at the right time and at the right place. This will help in facilitating
easy availability of stock that will be helpful for the business. There are several production
process that is being used for the purpose of providing various forms that will be included in it.
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REFERENCES
Books and Journal
Bilicki, E. and Roeder, R., Target Brands Inc, 2016. Operations dashboard. U.S. Patent
9,280,777.
Chatzoudes, D., Chatzoglou, P. and Vraimaki, E., 2015. The central role of knowledge
management in business operations: Developing a new conceptual framework. Business
Process Management Journal, 21(5), pp.1117-1139.
Cho, V. and Chan, A., 2015. An integrative framework of comparing SaaS adoption for core and
non-core business operations: An empirical study on Hong Kong industries. Information
systems frontiers. 17(3).pp.629-644.
Choi, T.M., Chan, H.K. and Yue, X., 2016. Recent development in big data analytics for
business operations and risk management. IEEE transactions on cybernetics. 47(1). pp.81-
92.
Hazen, B.T and et. al., 2018. Back in business: Operations research in support of big data
analytics for operations and supply chain management. Annals of Operations
Research.270(1-2).pp.201-211.
Henderson, M.K., Goldring, K. and Simeon-Dubach, D., 2019. Advancing professionalization of
biobank business operations: Performance and utilization. Biopreservation and
biobanking.17(3).pp.213-218.
Li, L., Sy, M. and McMurray, A., 2018. Blockchain Innovation and Its Impact on Business
Banking Operations. Advances in Parallel Computing.29.pp.583-598.
Liao, J., 2018, August. Research on the Influence of Third-Party Payments on the Business
Operations of Commercial Banks. In 2018 International Conference on Management,
Economics, Education and Social Sciences (MEESS 2018). Atlantis Press.
Scott-Jackson, W. and Michie, J., 2017. Culture and Business Operations: How the Gulf Arab
Leadership Style Impacts a Contingent Human Resource Management. In Business and
Society in the Middle East (pp. 31-47). Palgrave Macmillan, Cham.
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