Operations Management: Individual Assignment 2 Analysis and Solutions

This document presents a comprehensive solution to an individual assignment in operations management, exploring various critical concepts. The assignment begins by calculating capacity requirements, demonstrating the importance of capacity management in aligning with market demand and business objectives. It delves into forecasting techniques, comparing statistical and judgmental methods, and their application in human resource planning. The solution then computes the Economic Order Quantity (EOQ) and total annual costs, addressing reorder points and inventory management. Furthermore, it provides a scheduling procedure to minimize overstaffing. The assignment concludes by outlining the common quality management principles, such as customer focus and leadership, essential for developing quality output and improving organizational performance. This assignment offers valuable insights into key areas of operations management, providing practical calculations and analyses relevant to real-world business scenarios.

Running head: OPERATIONS MANAGEMENT: : INDIVIDUAL ASSIGNMENT 2 1
Operations Management: Individual Assignment 2
Student’s name
Institutional affiliation

OPERATIONS MANAGEMENT: INDIVIDUAL ASSIGNMENT 2 2
Executive Summary
Operations management has become necessary in planning, scheduling, and utilizing
organizational resources. In this article, various aspects of operations management are
discussed and calculated. In the first section, the computation of the capacity is evident that
define the total system capacity and production situation. The findings show that capacity
management is important in managing the organization’s operations. For instance, capacity
management enhances the prioritizing business objectives and manage market demand.
Statistical and judgmental forecasting ensures the manager balances these techniques to
deliver the HR needs. In other sections, the computation of the economic order quality has
been done to determine the reorder point and avoid unnecessary costs. The managers must
also consider scheduling procedures to minimize overstaffing. However, this can be achieved
through quality management principles that are critical in developing quality output.

OPERATIONS MANAGEMENT: INDIVIDUAL ASSIGNMENT 2 3
Operations Management: Individual Assignment 2
Introduction
Operations management is an important factor to consider when delivering goods and
services to customers successfully. Efficiency, quality, and cost define the success of an
organization. Given the significance of these operations management principles, the paper
focuses on addressing them based on various circumstances (Collier & Evans, 2010).
Forecasting provides an opportunity for operations managers to predict the values of
variables based on demand planning. Capacity management provides the manager an
opportunity to maximize the rate of output depending on time. The capacity management is
important in delivering results.
1.
a. Compute the capacity required
Capacity measurement involves the use of work order that specifies the work required to be
performed for the clients (TeamQuest, 2011). Indeed, any production situation requires setup
time that forms the basis of the total system capacity.
Capacity required (Ci) = Setup time (Si) + [Processing time (Pi) x Order size (Qi)]
Where;
Ci representing the capacity required in units for work order i;
Si represents the changeover or setup time for each work order i
Pi represents the processing time for the work order units
Qi represents the size of order
Therefore; ΣCi = Σ[Si + (Pi x Qi)]
=45+1.2(50) + 30 + 2.0(100)
=335 minutes
b. What percentage of total capacity required is setup time?

OPERATIONS MANAGEMENT: INDIVIDUAL ASSIGNMENT 2 4
The setup time is a percentage of capacity
Setup time=¿ ¿
Setuptime= ( 45+ 30 )
335
¿ 0.2239
¿ 22.39 %
The importance of capacity management in managing the operations
Capacity management has proved critical in helping an organization to manage its
market demand based on the business priority. To this effect, the business can achieve its
capacity by focusing on certain critical processes (TeamQuest, 2011). Studies have
demonstrated that companies which adopt capacity management techniques have achieved
the best return on investment (Nardiello, 2015). For instance, the resource-hungry
applications should be identified thus avoid spending resources on irrelevant activities but use
them efficiently. Good capacity management ensures the management make informed
decisions relating to investments. Without a doubt, capacity management has helped
companies to deliver results. In most cases, it proves significant to understand the past
performance and trends, future business needs, current service delivery, and supporting the IT
infrastructure (Collier & Evans, 2010). Therefore, capacity management ensures the future
and current capacity are addressed cost-effectively.
Capacity management focuses on appropriate information technology capacity. It
helps the company to reduce risks because it can help the management to identify the
sufficient resources for any application. The goal of capacity management is to increase
efficiency. This focuses on the efficient usage of the future and existing resources
(TeamQuest, 2011). The company must avoid offering additional resources whenever the

OPERATIONS MANAGEMENT: INDIVIDUAL ASSIGNMENT 2 5
firm experiences performance challenges. The confident forecast is also important in
managing capacity. This is because, the company needs accurate forecasts to address the
future resource requirements leading to accurate financial estimates (Nardiello, 2015).
Capacity management is against expensive hardware upgrades but values cost effectiveness.
This involves the use of an effective planning to avoid excessive over-capacity.
2. The forecast for Friday's sales using a three-day moving average
Friday= ( 859+906+900 )
3
¿ 888.33
Statistical forecasting and judgment forecasting
Forecasting is important in defining business and human resource planning (Collier &
Evans, 2010). It involves understanding the needs of staff thus define the efforts of human
resources and hiring goals. Importantly, studies indicate that balancing judgmental and
statistical techniques enhance the performance of an organization and deliver the HR needs of
the firm (Shpak, 2017). Judgmental forecasting and statistical forecasting are distinct because
judgmental forecasting method focuses on the expertise and opinions of the people involved
in developing the forecasts, while the statistical forecasting assumes that the future
extrapolates the past. Indisputably, using the past forecasts provide the best opportunity to
understand forecasting leading to productivity. The new forecasts determine the starting point
where to use the statistical comparisons and analyze the business future. Statistics are
relevant in long-term, especially where cyclical variations are evident while business
conditions are constant (Collier & Evans, 2010). Unfortunately, nobody can use mathematical
formula or statistical patterns to predict the industry trends and market conditions.
Statistical forecasting techniques involve the use of different analytical methods. For

OPERATIONS MANAGEMENT: INDIVIDUAL ASSIGNMENT 2 6
instance, trend analysis is important in this technique because it forecasts on historical data to
suggest the forecast level. Importantly, ratio analysis has also become necessary in setting the
staffing levels depending on the relationship between business factors and employees (Shpak,
2017). Regression analysis is used to conduct statistical forecasting. On the other hand,
judgmental forecasting depends on the experience of workers to predict the needs of the
business. This involves the use of inputs to determine the growth of business and worker’s
needs. Since this technique depends on human input, it proves wildly off base or accurate
(Collier & Evans, 2010). Therefore, human judgment addresses the flexibility required for
analyzing the business situation in a short-term. The intuitive factors play a critical role in the
judgmental forecasting. Nonetheless, in practice, both statistical and judgemental forecasting
techniques are combined because they both serve the needs of the organization (Shpak,
2017). The forecasting techniques incorporate the needed strategies and elements to
determine the future performance of the organization.
3. Finding the economic order quantity (EOQ) and the total annual cost
Q¿ √ ( 2 x 15,000 x 60 )
7
Total Cost= 0.5(507)(7)+(15,000/507)(60)
=1775+1775
=$3550
In calculating the reorder point, it is necessary to consider the weekly demand
¿ 15,000
52
¿ 288.5
With the 5-week lead-time, the anticipated units that can be sold would be:
¿ 5 ( 288.5 )

OPERATIONS MANAGEMENT: INDIVIDUAL ASSIGNMENT 2 7
EOQ=1443units
4.
a. The number of orders per year:
Number of orders ( D )
Year ( Q )
¿ 8000
500
¿ 16
b. TC=0.5 ( 500 ) ( 3 ) + 8000
500 ( 30 )
¿ $ 750+$ 480
¿ $ 1230
The ordering cost is $480 and the holding cost is $750
c. √ 2 x 8000 x 30
3
¿ 400
TC=0.5 ( 400 ) ( 3 ) + 8000
400 ( 30 )
¿ $ 600+$ 600
¿ $ 1200
Despite the increasing ordering costs, the holding costs decreases leading to an annual
total savings of about $30
5.
a. Based on the days-off scheduling procedure, the minimum number of employees

OPERATIONS MANAGEMENT: INDIVIDUAL ASSIGNMENT 2 8
needed is 13 as demonstrated below:
Employees Mon Tue Wed Thu Fri Sat
1 6 9 5 7 9 10
2 5 8 5 7 8 9
3 4 7 5 7 7 8
4 4 7 4 6 6 7
5 3 6 4 6 5 6
6 3 6 3 5 4 5
7 2 5 3 5 3 4
8 1 4 2 4 3 4
9 1 4 1 3 2 3
10 0 3 1 3 1 2
11 0 2 0 2 1 2
12 0 1 0 2 0 1
13 0 1 0 1 0 0
The days off are indicated by the colored cells. In fact, the 17th worker would choose
Monday and Tuesday as an alternative option for days off. For the 10th employees,
Monday and Tuesday would be the best alternative for days off while the 11th worker
can choose Monday and Tuesday or Tuesday and Wednesday as the alternative
options for days off. The 12th worker would choose Tuesday and Wednesday or
Thursday and Friday as the alternative options for days off.
b. Based on the schedule in part (a), there are four days which are overstaffed. For
instance, Monday and Wednesday have 3 excess workers, while Thursday and Friday
have one excess staff as demonstrated below:

OPERATIONS MANAGEMENT: INDIVIDUAL ASSIGNMENT 2 9

OPERATIONS MANAGEMENT: INDIVIDUAL ASSIGNMENT 2 10
Employees Mon Tue Wed Thu Fri Sat
1 Y Y Y Y
2 Y Y Y Y
3 Y Y Y Y
4 Y Y Y Y
5 Y Y Y Y
6 Y Y Y Y
7 Y Y Y Y
8 Y Y Y Y
9 Y Y Y Y
10 Y Y Y Y
11 Y Y Y Y Y Y
12 Y Y Y Y
13 Y Y Y Y
Total 9 9 8 8 10 10
6. Common quality management principles used in developing quality
Quality management principles are important rules, norms, values, and beliefs
accepted and used for quality management. These principles have helped organizations in
improving their performance (Kaziliunas, 2010). The leading quality management principles
include improvement, leadership, customer focus, and relationship management, and
evidence-based decision-making, engagement of people, relationship management, and
process approach. The relative significance of these principles depends on the organization
and expected changes. The ISO 9001 are the guiding principles to help in developing quality
standards and managing professionals intending to improve the quality management system
(Paulova & Mlkva, 2011). Indeed, the senior management uses these principles to improve
the performance of their firms. According to studies, the quality principles are founded on the

OPERATIONS MANAGEMENT: INDIVIDUAL ASSIGNMENT 2 11
collective knowledge and experience of experts who developed and maintained the ISO 9000
standards.
Customer focus principle is one of the most important quality principles because
organizations depend on customers (Collier & Evans, 2010). To this effect, the companies
need to understand the needs of customers and meet their requirements thus strive to exceed
the expectations of customers. The customer focus benefits are evident in improving
customer loyalty and repeat business. In fact, none of the principles can increase help an
organization increases market share and revenues compared to customer focus (Paulova &
Mlkva, 2011). This is because; customer focus is obtained through fast and flexible responses
to the emerging opportunities in the markets. Customer focus also increases effectiveness
thus enhances customer satisfaction. This principle applies to different areas like researching.
With customer focus, the company can understand the customer expectations and needs and
systematically manage relationships.
The use of this principle establishes a balanced approach between stakeholders and
satisfying customers. The interested parties include employees, local community, financiers,
suppliers, and owners should embrace a balanced approach. The customer focus principle
measures customer satisfaction and responds to the results (Kaziliunas, 2010). Unlike other
principles like leadership, customer focus ensures the firm’s objectives are linked to the
expectations and needs of customers and communicate these needs throughout the firm.
Leadership is also an important principle because leaders are mandated in establishing
an organization’s direction and purpose. These leaders must maintain and create the internal
environment, which can allow employees to achieve the firm’s objectives (Collier & Evans,
2010). With leadership, activities are aligned, evaluated, and implemented. Leadership
minimizes miscommunication between organizational levels. Unlike the customer focus
principle, leadership ensures people are motivated and understands the objectives and goals

OPERATIONS MANAGEMENT: INDIVIDUAL ASSIGNMENT 2 12
of the organization. The application of leadership principle provides the employees with
sufficient resources, freedom, and training (Collier & Evans, 2010). It ensures people act with
accountability and responsibility. Through this principle, it becomes possible to eliminate
fears and instill trust among the members of the company (Paulova & Mlkva, 2011). Leaders
are mandated to inspire, encourage, and recognize the contributions of people. This action is
essential in improving the performance of other stakeholders because they feel motivated.
The leadership principle is essential in helping the organization to create and sustain
fairness, shared values, and ethical practices within the organization. As such, the
organization can achieve its objectives and avoid preventable legal battles (Collier & Evans,
2010). Similarly, effective leaders consider the needs of stakeholders including employees,
owners, customers, financiers, suppliers, and community. Indeed, leaders ensure the firm
establishes a clear vision to determine its future. This is possible by setting challenging
targets and goals.
Involvement of people is also an important principle in an organization. Customer
focus, leadership, and involvement of people are relevant in maximizing employees’
potentials thus benefits the organization (Al-Ibrahim, 2014). The principle benefits the
organization including creativity and innovation in achieving the firm’s objectives. It allows
the people to become accountable and responsible for their performance (Collier & Evans,
2010). Nonetheless, the employees must remain committed, motivated, and involved to
maximize their performance. Interestingly, through the managers or leaders, the employees
engage in a continual improvement.
According to studies, the involvement of people ensures the employees seek
opportunities thus enhance their experience, competence, and knowledge (Barros, Sampaio,
& Saraiva, 2014). People can identify constraints through the involvement. This principle
works in tandem with the leadership and customer focus principles because people get to

OPERATIONS MANAGEMENT: INDIVIDUAL ASSIGNMENT 2 13
understand their significance and roles in the firm. People can also use the principle to accept
ownership and responsibility for their behaviors and actions (Collier & Evans, 2010).
Therefore, the principle enhances open discussion of issues affecting the organization and
share experience and knowledge.
Conclusion
Efficient management of resources is essential in defining the success of an
organization. As evident in this article, capacity measurement focuses on the use of work
order to meet the expectations of clients. Capacity management ensures the operations
managers understand the market demand depending on the priorities. Predicting the future is
also essential in making strategic decisions. The operations managers use statistical and
judgmental forecasting to enhance performance and deliver the human resource needs. The
operations management involves finding the economic order quantity to avoid wastage.
Based on the findings, increasing ordering costs and minimizing the costs saves the company.
It is thus necessary for the firm to consider scheduling management to avoid using unwanted
resources. Quality management principles have also defined the quality management.