Capacity and Inventory Management for Call-Us Plumbing Supply

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Question 1: CAPACITY (55 marks total)
1.1 Explain ‘capacity planning’ in the context of operations management. (5 marks)
Capacity planning includes a goal of a business firm for manufacturing lots of goods within a
specific time period. In addition, as per the market demand, the capacity planning is changing
towards manufacturing process. In this way, a capability for accomplishing corporate objectives
within a specific time period of time to produce and store products in a specific location is
additionally recognized as capacity of a biasness firm. However, the operational management of
a business firm is making marketing plan to find proper utilization of the produced products. In
addition, goal of the operational management includes several operations of a business firm, for
example, Time Management, Storage of products and Distribution channels. Moreover, the
operational management is an essential portion of firm’s capability.
1.2 Describe and explain 3 factors that are to be taken into consideration in terms of
effective capacity management and design in Call-Us Plumbing Supply company(5
marks each = 15marks)
1. Supply and Demand:
Supply defines total number of produced goods that would be supplied within allocated time
period by an organization and demand concludes the most preferred products that rarely
available at the marketplace. In addition, a business should make only demanding products to
increase competitive advantage.
2. Management Style:
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The management style of a business firm is highly influenced by the employee performance
including skills and abilities. The Manager of business firm must have following skills:
 Excellent communication skills
 Friendly Behavior
 Time management
 Decision Making
 Co-operative
 Motivational
The working style of the employees can be measured by active support of the managers in the
workplace. Moreover, with the support of effective management skills, the employees can
produce high quality products under tight deadline to earn more revenue.
3. Machineries:
In order to increase the productivity, the leaders of a business firm should provide advanced
machinery to their workers. In addition, the employees of a business firm can update themselves
time to time by advanced machinery. Due to technical errors, the machineries might generate
difficulties for the workers of a business firm and in that case, the management should hire
qualified technicians to repair the defected machineries.
1.3 Calculate the capacity utilization rate of their production (5 marks)
Capacity utilization rate= actual capacity/potential capacity* 100
=300,000/458,333* 100
=0.065*100
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=65.45%
1.4 Describe the three (3) capacity or production planning strategies [5 marks each =15]
1. Lead Strategy:
In case of a business firm manufactures extra goods excluding the estimation rate that is
termed as lead strategy, for example, a business firm manufacture 2,000 shirts in a whole
financial year and unexpectedly the market demand amplified. In that case, a business
firm should focus on the market demand and produce more 500 shirts in a year. Besides
that, if the demand quickly reduced then the current clients stop purchasing the shirts by
mentioning different excuses like, poor quality or high price.
2. Match Strategy:
The match strategy includes comparable produced goods of a business firm. In addition, primary
objective of the match strategy covers high revenue and manufacture only a certain range of
products that can increase the profitability of a business firm.
3. Lag Strategy:
Lag strategy mainly incudes an increasing and conservative capacity of a company. In addition, a
company like Apple offers expensive and highly equipped products to the customers for
increasing the demand that is termed as Lag strategy.
1.5 Constructat least three (3) capacity or production planning strategies to Call-
Us Plumbing Supply for improvement(5 marks each=15 marks)
1) Lead Strategy
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