INVENTORY AND ORDERING DECISIONS

Running head: INVENTORY AND ORDERING DECISIONS 1
INVENTORY AND ORDERING DECISIONS
Name
Institution

INVENTORY AND ORDERING DECISIONS 2
INVENTORY AND ORDERING DECISIONS
Operations Management
ABC manufacturing as had challenges in terms of deciding the competitive pricing of its
products, understanding the prices that customers are willing to pay for the products, dealing
with the heightened competition, ensuring the reliability of their products and manufacturing
processes. The firm has also had a loophole in its supply chain process, and there is a need to
decide on the methods to use in sourcing for products demanded by the customers.
To begin with, operations management has to deal with internal issues before extending
attention to the competition. The company has to ensure the products presented to the market are
of top quality and are reliable (Baldwin et al., 2013). The company has reliability challenges with
its motor products and valves. As the operations manager, these two components need to
approach from the manufacturing perspective, whereby the production processes will be
evaluated for efficiency ad effectiveness. A root cause analysis will be done to expose the points
at which the production process is impacting the reliability of the product negatively. The aim
will be to optimize the process to realize the optimal reliability speculated by the product design
department. Once these points and processes are identified, the concept of lean manufacturing
will be implemented to eliminate wastes since, in most cases, waste adds up to production
process inefficiencies that ultimately reduce the reliability coefficient (Acharyaa, 2011).
Once the processes are operating at optimal status, the operations management team will
revisit the product design in unison with the product development team to ensure that all design
specifications can be imparted on the product using the existing production techniques. One of
the most common factors that reduce reliability is difficult production methods that make it

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impossible to impart all the specifications designated on a product. After these two
implementations, the product and production process reliabilities will have improved, and this is
key in customer satisfaction.
After handling internal processes, the next concern will be human resource competency.
ABC depends on skilled personnel who work together to generate the final output, which is the
product that satisfies customer needs. As such, there is a need to have enough human resources
in all sections of the production and business process. To ensure optimal performance from
personnel, an accountability checklist will be designed and used to check the quality and
efficiency. Along with this implementation, the working hours for personnel in constantly
engaging tasks will be reduced from 8 hours to 7 hours in a bid to eliminate the errors that come
about when personnel are tired and suffering from fatigue. Using the work hours and hours
required to produce a particular number of products, operations management will calculate the
number of personnel required and liaise with the human resource department to bring on board
the necessary human resources (Baumers et al., 2011). In doing this human resource planning,
the capacity utilization will be kept at optimal levels, and the company will operate much more
smoothly.
Last but not least, the company will need to know how to competitively price its products
and how much demand they need to meet (Hinterhuber & Liozu, 2012). Pricing, if done
correctly, can improve the revenue returns for the company and can give the company a
competitive advantage over other stakeholders in the same line of business. To begin with, the
operations management team will conduct a demand analysis using current and past sales data to
predict the number of units for each product that is expected to be sold over the next period. The

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demand will then be factored into production planning to obtain resources to produce a slightly
large number of products (Nagle & Muller, 2017).
Using the financial department, operations management will analyze the financial
statements to determine the revenue used up in producing a particular product. The value
obtained thereof will be used to determine the number of units that need to be sold to recover the
revenue used in the product and start making a profit. Operations management will then
compare the prices of the product in the market as offered by other companies or individuals
before determining the price at which it will offer its products. From within the range of prices
already in the market, operations management will pick certain values and use them to compute
for returns while factoring in the volume of sales that is possible at each specific price. Then pick
the price, which is competitive in the market and will earn the company significant profits.
The last but very important thing that operations management needs to do is to make sure
that the operating efficiencies established within teams will not be lost in the transition of
product from on team or prices to the next. To achieve this, the operations manager will establish
cross-functional teams that will serve to establish and maintain cohesiveness in the production
process. The concepts of lean production will be implemented across the entire production
process to eliminate all the wastes of lean (Panwa et al., 2015). All these strategies will see to it
that ABC operates at very high efficiency and has several advantages over its competitors. Once
the company offers better quality products, more reliable services, and more client satisfaction,
sales will surely incline on an upward graph. The operations management should, therefore, do
every that needs to be done to get an advantage over the competition (Singh, 2012). As an
operations manager, I would focus on the previously discussed points, which are human resource