Operations Management in Public Policy

This assignment delves into the crucial role of operations management within public sector policy and practice alignment. It examines scholarly articles and research, analyzing how operational strategies impact policy effectiveness and implementation. The analysis focuses on a local government context, drawing insights from case studies and practical examples.

Operational and Project Management
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TABLE OF CONTENTS
INTRODUCTION................................................................................................................................3
QUESTION 1.......................................................................................................................................3
a.) Calculate the EOQ and the total annual cost of boxes................................................................3
b) Using the schedule of prices advises the company how much to order each time in order to
reduce the total annual cost of the boxes.........................................................................................4
c) Key benefits provided by the JIT approach to inventory.............................................................4
QUESTION 2.......................................................................................................................................5
a) Assessment of the contribution and business value of MillerEaE’s four product lines during
the past financial year and develop recommendations for the future..............................................5
QUESTION 3.......................................................................................................................................6
a) Development of manpower plan and creating a human resources budget for the total costs......6
b). Assessment of whether the company should consider new online system offer or not..............7
QUESTION 4.......................................................................................................................................8
a) Calculating the total financial cost per year resulting from the current level of EaE300 defects
arising at the Thailand Factory........................................................................................................8
b) Assessment of business value of Chen’s request.........................................................................8
c) Assessment of business value of Palusuk’s request.....................................................................8
CONCLUSION....................................................................................................................................9
References..........................................................................................................................................10
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INTRODUCTION
Production and operation management is the process that combines and transforms different
resources which are used in the operation and production subsystem with the aim of adding value in
the products and services (Hazlett, McAdam and Walker, 2013). It is method where different types
of resources use as an input and transform into the expected outcomes. The purpose of production
and operation management is to provide right quality at right time in appropriate quantity to the
services users. The present research is based on production and operation management and to
understand this, MillerEaE Group case study is taking into the consideration. It is a private limited
company, East Anglian Electricals Ltd in 1996 by Tony Hammond and Roland Miller. It has
manufactured dishwasher, washing machine, a large commercial washing machine and range
cooker. It has faced various issues like unable to manage inventory level, more defects in the
products, customer dissatisfaction etc.
QUESTION 1
a.) Calculate the EOQ and the total annual cost of boxes
Economic order quantity (EOQ) is the order quantity that reduces the total holding costs and
ordering costs. It is one of the oldest production scheduling models. It is used when demand for a
good is constant over the year and each new order is delivering completely when inventory level
reaches to zero (Phan and Chambers, 2013). With the help of this model, it becomes easy to
minimize the total cost of inventory management. Ordering costs come in those costs which apply
in buying additional inventories. It includes the costing of placing the order, transportation costs etc.
On the other hand, carrying cost can be defined as that cost that incurred to hold the present
inventory. It covers storage costs, spoilage cost etc. So total inventory cost can be said as sum of
ordering and holding costs (Peng and Lai, 2012).
As per the give case study, it has found that MillerEaE Group has manufactured major
household appliances. Factory situated in Thailand has used 2500 cardboard boxes a month to send the
finished products to customers. Storage costs of these boxes are 20 pounds per box per year and
ordering costs are £86.00 (Ashby, Leat and Hudson-Smith, 2012). For this, EOQ can be calculated by
following formula (Understanding Production and Operations Management, 2016):
EOQ = √ (2*D*S/H)
Here,
D = Annual required quantity of boxes = 2500*12 = 30,000 units
S = Cost per order of box = £86.00
H= Annual carrying cost per unit = 20% per box per year = 0.20*1.20
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EOQ = √ [(2*30000*86)/ 0.20*1.20]
EOQ = 4636.80 = 4640 units
Total annual cost of boxes = (D/EOQ)*S + (EOQ/2)*H + Cs
= (30,000/4640)*86 + (4640/2)*0.24 + 30,000*1.20
= £37112.83
Total annual cost of boxes = £37112.83
b) Using the schedule of prices advises the company how much to order each time in order to
reduce the total annual cost of the boxes
Number of order to be place each time will be = annual demand / units of boxes
Number of order to be place each time = (2500*12)/50 = 600 units each time
Number of order to be place each time = 600 units each time
c) Key benefits provided by the JIT approach to inventory
Just in Time is an inventory related model that allows the organizations to minimize their
overhead expenses and ensure that require inventory available to production of the goods. With the
application of this, it will become easy for MillerEaE Group to manage current stock in appropriate
manner (Azhashemi, 2012). Key benefits that will be provided by the JIT to the organization are as
follows:
Less space require: JIT model will reduce the need of too much warehouses or space to
store the finished goods. It will minimize the amount of storage to buy or rent a new store area.
Save money from this may be invest in the other areas of business.
Reduce waste: With the application of JIT, probability of damaging or obsolete of products in
the storage will reduce. This again saves money by preventing investment to store unnecessary old
stock in warehouse (Bamford and Forrester, 2010).
Require small investments: JIT system will be worked as an ideal model for MillerEaE Group.
Organizations will not needed too much amount to buy huge amount of stock in a single time. By
ordering stocks whenever require will maintain cash flow of the business.
Better supply chain management: The following model will able to the firm to handle its
supply chains and manage it more effective and efficient manner. By this, the costing of final goods
will reduce and it will make the products more affordable. It will lead to gain large market share and
survive in the market place (Besterfield and et.al., 2011).
Lower warehouse costs: Storing excess inventory cost requires lot of money and it increases
other costing of the organizations. It leads to rise costing of warehouse which increase the blocking
of capital. To overcome this situation, firm can use JIT system because it decreases carrying costing
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and minimize the number of the warehouses that needed to be maintaining by MillerEaE Group.
Therefore, it brings the reduction in the warehouse costing of the company in effective manner
(Bititci and et.al., 2012).
Better customer satisfaction: When company usage the traditional methods of inventory
management and control, it can end up with huge amount of unused and unsold items which simply
go to waste. In this situation, MillerEaE Group reduces prices of that unsold inventory just to get
earn money and it minimize perceived value of the firm's other products. With the application of
just-in-time inventory model, it will be easy to decrease reduces this waste and helps in to respond
more quickly to meet the needs of the customers in more effective manner. The result of this
activity is delivering better customer satisfaction (Bahmani-Firouzi and Azizipanah-Abarghooee,
2014).
QUESTION 2
a) Assessment of the contribution and business value of MillerEaE’s four product lines during the
past financial year and develop recommendations for the future.
From the available information of MillerEaE Group financial sources, it has found that
EaE100, EaE200c, EaE200i and EaE300 have contributed to increase business values in terms of
increase market share (Edmonds, 2011).
EaE100 2013 2014 2015
UK 26 25 24
Europe 18 20 19
Scandinavia 31 32 29
North America 7 7 6
Rest of World 8 9 10
EaE200c 2013 2014 2015
UK 23 27 32
Europe 7 12 16
Scandinavia 12 22 25
North America 2 3 5
Rest of World 2 5 9
EaE200i 2013 2014 2015
UK 8 25 37
Europe 2 4 7
Scandinavia 7 13 16
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North America 3 5 8
Rest of World 6 7 9
EaE300 2013 2014 2015
UK 6 4 2
Europe 8 7 5
Scandinavia 10 8 8
North America 4 3 3
Rest of World 5 3 2
From the above mentioned table, it can be seen that EaE100, EaE200i and EaE200c have
increased marked shared of the organization in 2013, 2014 and 2015 on continuous basis. It has led
to raised volume of the goods and revenue. It has also minimized direct costs of all three product
lines. But EaE300 has continuously decreased market share of company in range cooker segment.
In all three years, the sales of the products have decreased with value of revenue. Along with this,
direct costs related to this have also diminished. So, it can be analysed from the above discussion,
the overall contribution of four products line of MillerEaE Group has raised business value in terms
of market share, sales of goods and revenue (Gunasekaran and Ngai, 2012).
Recommendations for future:
Above enlisted performance of past financial years of MillerEaE Group shows the three
product lines are doing well in the market. But EaE300 range cooker needs improvement. For this,
it has recommended to the company to use effective promotion techniques for marketing of the
goods in different market. Along with this, organization should focus on more research and
development of the products so that it becomes easy to grab the attention of the customers
(Holmström and Romme, 2012).
QUESTION 3
a) Development of manpower plan and creating a human resources budget for the total costs
By seen average workload expected each week during all 12 months, it has important for
MillerEaE Group to develop a manpower plan (Hajmohammad and et.al, 2013). For this, human
resource action plan and budget for it is as follows:
Period Month Average
workload
expected
Number of
permanent
Number of
temporary
Budget for
permanent
Budget for
temporary
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each week
during:
staff staff staff in £ staff in £
Q1 Jan 90 1 1 583.33 75
Feb 130 1 1 583.33 75
Mar 190 1.5 1 874.99 75
Q2 Apr 280 2 2 1166.66 150
May 300 2 1 1166.66 75
Jun 320 2.5 2 1458.32 150
Q3 Jul 340 2 3 1166.66 225
Aug 350 2 3 1166.66 225
Sep 310 1.5 3 874.99 225
Q4 Oct 180 1.5 1 874.99 75
Nov 120 1 1 583.33 75
Dec 100 1 1 583.33 75
Sum £11083.25 £1500
From the above mentioned combination of permanent and temporary staff hired for each
quarter, it has found that one permanent staff has considered in the plan. Along with this, temporary staff
only hire for one month. The total budget of human resource development plan for temporary staff is
£1500 and permanent staff is £11083.25 (Hill and Hill, 2012).
b). Assessment of whether the company should consider new online system offer or not.
From the given case study, it has found that MillerEaE Group has faced the issue regarding
increase number of complaints and disappointing reviews in consumer magazines. In this context, it
has important to bring the improvement in the quality of products to reduce such kind of problems
in more effective manner. For this, it has required to raise investment level in this area by adopting
new online system. By doing this, it can be easy to enhance productivity level of each and every
staff members by 50% as compared to previous productivity level. As per the case study, it has
determined that organization has finalized to investment £100,000 to improve the manufacturing
environment (Kumaraswamy, 2011). Company should adopt new online system to bring the
improvement productivity of each staff members. It will be feasible for business because it has
under budget of the firm. Fixed cost of this new system will be £40,000 which has to pay only for
one time. Along with this, it maintenance or support costing will be £6000 per annum. So, per
month cost of maintenance will be £500 which will be very less and under the budget of venture.
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Therefore, MillerEaE Group should be considered this offer and implement it within the
organization to raise productivity of staff (Singhal and Singhal, 2012).
QUESTION 4
a) Calculating the total financial cost per year resulting from the current level of EaE300 defects
arising at the Thailand Factory
From the given case study, it has found that company has started EaE300 range cooker. It has
set to inspect 20% out of the 40 units manufactured each week. About 4% of the items inspected so
not meet the set performance standards. They have returned to the manufacturing areas for
repairing. The costing of rework has about to £400. But when the products have shipped and
mistakes detected at the customers ends then total average cost of replacing the cooker came to
about £1200 (Lewis and Brown, 2012).
In this situation, calculation of total financial cost per year because of current level of defects
in EaE300 is as follows:
20% of 40 units = 8 units inspected per week
Total number of inspected items/year = 50*8 = 400 units/years
4% of the inspected items have not meet set performance standards = 400*0.04 = 16units/year
defective
Costing of repairing those products =16*400 = £6400.
Total financial cost per year will = £ 6400 + £ 1200 = £7600 per year
b) Assessment of business value of Chen’s request
Per the given case study, Chen immediately has proposed for a £100,000 investment to
improve the manufacturing environment. This should, he argued, reduce manufacturing defects to
2%. But, this plan has not valuable because total financial cost per year regarding repairing defects
is £7600 per years. It has less as compared to the proposed investment level. So, the business value
of Chen’s request has not appropriate (Rogers, 2011).
c) Assessment of business value of Palusuk’s request
As per the given case study, it has determined that Palusuk asked for permission to recruit two
new Quality Control Inspectors. He argued this would enable his staff to inspect 50% of the
production run each week and detect many more defective units before they were shipped (Wright,
2011). The increase in employment costs would be about £16,000 per year. On the basis of this,
business value of Palusuk is as follows:
4% of inspected item cost = £400.
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Now, after appointing two new quality control inspectors, inspection of the items will increase by
50%. In this situation, cost will be £4600 per unit.
The total costing on per year basis will £4600*12 = £55200.
Increase employment cost will be £16000 per year which is already given (Barlow, 2015).
Therefore, business value of Palusuk: £55200-£16000 = £39200.
CONCLUSION
From the above research, it can be concluded that it has important for a venture to cater the
needs of customers by delivering various services and goods. To add value in the services for
consumer and solve their issues have the part of production and operation. Both has dependent on
each other. It has defined a process of just transformation of inputs into outputs via a process. On
the other hand, with the help of Economic Order Quantity, right number of units have produced or
ordered. Further, there have different kinds of benefits delivered to MillerEaE Group after the use of
JIT system. It has improved various aspects of the organization (Nayab, 2013). From the financial
information of company, it has determined that four product lines of venture has increased business
values in terms of reducing direct costs, raise revenue and market share. It has recommended to the
firm to use effective marketing and selling strategies to enhanced sales and market share with the
time.
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REFERENCES
Books and Journals
Ashby, A., Leat, M. and Hudson-Smith, M., 2012. Making connections: a review of supply chain
management and sustainability literature. Supply Chain Management: An International
Journal. 17(5). pp.497-516.
Azhashemi, M., 2012. Operations Management in Context. Routledge.
Bahmani-Firouzi, B. and Azizipanah-Abarghooee, R., 2014. Optimal sizing of battery energy
storage for micro-grid operation management using a new improved bat algorithm.
International Journal of Electrical Power & Energy Systems. 56. pp.42-54.
Bamford, D. and Forrester, P., 2010. Essential Guide to Operations Management: Concepts and
Case Notes. John Wiley & Sons.
Besterfield, D. H. and et.al., 2011. Total Quality Management. Pearson Education India.
Bititci, U. and et.al., 2012. Performance measurement: Challenges for tomorrow*. International
Journal of Management Reviews. 14(3). pp.305-327.
Edmonds, J., 2011. Managing successful change. Industrial and Commercial Training. 43(6). pp.
349–353.
Gunasekaran, A. and Ngai, E.W., 2012. The future of operations management: an outlook and
analysis. International Journal of Production Economics. 135(2). pp.687-701.
Hajmohammad, S. and et.al., 2013. Lean management and supply management: their role in green
practices and performance. Journal of Cleaner Production. 39. pp.312-320.
Hazlett, S.A., McAdam, R. and Walker, T., 2013. The role of operations management in public
sector policy and practice alignment: a local government analysis. Production Planning &
Control. 24(10-11). pp.988-1001.
Hill, A. and Hill, T., 2012. Operations management. Palgrave Macmillan.
Holmström, J. and Romme, A.G.L., 2012. Guest editorial: Five steps towards exploring the future of
operations management. Operations Management Research. 5(1-2). pp.37-42.
Kumaraswamy, M., 2011. Editorial: integrating “infrastructure project management” with its “built
asset management. Built Environment Project and Asset Management. 1(1). pp.5 – 13.
Lewis, M.A. and Brown, A.D., 2012. How different is professional service operations
management?. Journal of Operations Management. 30(1). pp.1-11.
Peng, D.X. and Lai, F., 2012. Using partial least squares in operations management research: A
practical guideline and summary of past research. Journal of Operations Management. 30(6).
pp.467-480.
Phan, P. and Chambers, C., 2013. Advancing theory in entrepreneurship from the lens of operations
management. Production and Operations Management. 22(6). pp.1423-1428.
Rogers, B., 2011. The value of work‐based projects in management education. Industrial and
Commercial Training. 43(6). pp. 335–342.
Singhal, K. and Singhal, J., 2012. Imperatives of the science of operations and supply-chain
management. Journal of Operations Management. 30(3). pp.237-244.
Slack, N., 2015. Operations strategy. John Wiley & Sons, Ltd.
Wright, N., 2011. A journey towards organisation development. Industrial and Commercial
Training. 43(7). pp. 422–430.
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Online
Nayab, N., 2013. Why Should You Use JIT?. [Online]. Available through:
<http://www.brighthubpm.com/monitoring-projects/72083-why-should-you-use-jit/ >.
[Assessed on 27th June 2016].
Understanding Production and Operations Management. 2016. ?. [Online]. Available through: <
http://www.managementstudyguide.com/production-and-operations-management.htm>.
[Assessed on 27th June 2016].
Barlow, P., 2015. Just in Time (JIT) Advantages and Disadvantages. [Online]. Available through: <
https://www.babington.co.uk/blog/accounting-blog/just-in-time-advantages-and-
disadvantages/>. [Assessed on 27th June 2016].
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