Operations Management Report: Location, Inventory, and Quality

This report delves into key aspects of operations management, focusing on strategies for a startup. It begins with a location strategy analysis, comparing New York and London using the factor rating method to determine the optimal city for market entry, considering factors like market size, purchasing behaviors, economic strength, and cost of doing business. The report then moves on to inventory management, proposing tactics such as recycling to eliminate waste, extensive marketing to reduce variability, and manufacturing quality products to improve throughput. Finally, it examines quality concepts, detailing the costs of prevention, appraisal, internal failure, and external failure, while also highlighting customer focus and continuous improvement as key strategies to reduce quality-related costs. The report provides a comprehensive overview of operations management principles and their practical application.

Running head: OPERATIONS MANAGEMENT 1
Operations Management
Student’s Name
Institution
Date

OPERATIONS MANAGEMENT 2
1 Location Strategy
The two cities that will be selected in this case are New York and London. The two cities are
in different countries and inhabited by people who have different consumer behaviors and
purchasing trends (Smith, 2016). The four key success factors for the product that will be
introduced to the markets of the two cities are;
a. Big size of the market.
b. Good purchasing behaviors.
c. A strong economy.
d. A favorable cost of doing business (Quain, 2018).
The six steps of the factor rating method
i. Relevant factors: The relevant factors, in this case, are the size of the market, the
purchasing behaviors of the people in the two cities, the economy of each of the
cities, the logistics of each city, and the cost of doing business in each of the cities
(Elkins, 2017).
ii. Assigning a weight to each factor: Each of the factors will be given five points.
iii. The rating scale for the factors: The rating scale that will be used in this case will be
the five-point scale (strongly agree (5), agree (4), neutral (3), disagree (2), and
strongly disagree (1)).
iv. Score each location on each factor based on the scale
New York London

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Big size of the
market
Strongly Agree Agree
Good purchasing
behaviors
Strongly Agree Agree
A strong economy Strongly Agree Agree
A favorable cost of
doing business
Agree Strongly Agree
v. Multiply the scores by the weights for each factor and total the weighted scores for
each location
New York: (5+5+5+4+) X 5 = 95
London: (4+4+4+5+) X 5 = 85
vi. Make a recommendation
Based on the calculations, New York has scored a higher number, and therefore it is the selected
city for the product (Raridniya, 2015).
2 Inventory Management
a. Eliminate waste
The tactic that will be used in this case is recycling. The products that are sold in this case are
robot vacuum cleaners, and they are manufactured using plastic and metal. Plastic and metals are
materials that have qualified to be recycled (Wild, 2017). To make sure that the organization
does not waste some of its essential raw materials, it will implement reverse logistics to make

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sure that after the life of the machines has expired, the customers can channel them back to the
company to be recycled. The company will establish centers and points where the customers can
send their already used products, and it will give an offer to the customers; either to receive a
small payment or add a specific amount of money and receive another new robot vacuum
cleaner.
b. Remove variability
The tactic that will be used in this case is extensive marketing. Consistency in business can
only be promoted if there is a ready market (Gallino, Moreno, & Stamatopoulos, 2016). The
company cannot manufacture goods continuously without a market to sell its products.
Therefore, marketing extensively means that there will be a ready market and that will promote
consistency in manufacturing goods.
c. Improve throughput.
The tactic that will be used in this case is the manufacturing of quality products. With the
extensive marketing tactic, increasing the quality of the products will mean that the company has
a ready market for quality products. Quality is likely to attract more customers, and that means
that the company will also need to manufacture more products.
3 Concepts of quality
The relationship between the costs of quality to the organization.
a. Prevention Costs

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The organization incurs this cost to make sure that there is no quality problem (The Global
Voice of Quality, 2019). The cost comes in place to make sure that the process of manufacturing
goods is not affected by any factor.
b. Appraisal Costs
The cost is used to prevent a quality problem from occurring. However, the cost takes a
different perspective as opposed to the first. The reason behind it is because it deals with
inspections and it makes sure that goods that get to the company and goods that leave the
company have met the required quality standards.
c. Internal Failure Costs
Internal failure cost is the cost that the organization incurs when there are defective products.
The cost that is involved in this case is the cost of reworking on the defects or substitutes to the
defects.
d. External Failure Costs
The external failure cost deals with defective products but from a different perspective. In
this case, the defective product has already reached the market, and the company has to recall it
and at the same time cover different costs (Accounting Tools, 2018).
Concepts of quality that will be used to reduce the costs of quality
The concepts of quality that can be used in this case are customer focus and continuous
improvements. When an organization focuses on customers, it manufactures goods that are in
line with the needs of the customers. On the other hand, continuous improvements help an

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organization to improve the quality of its products, and that reduces the costs of quality in
different ways.
References
Accounting Tools. (2018). Quality Costs. Retrieved from
https://www.accountingtools.com/articles/what-are-quality-costs.html
Elkins, K. (2017). How much it costs to live in two of the world’s most expensive cities: London
and NYC. Retrieved from https://www.cnbc.com/2017/04/13/the-cost-of-living
breakdown-between-London-and-nyc.html
Gallino, S., Moreno, A., & Stamatopoulos, I. (2016). Channel integration, sales dispersion, and
inventory management. Management Science, 63(9), 2813-2831.
Quain, S. (2018). Key Business Success Factors. Retrieved from
https://smallbusiness.chron.com/key-business-success-factors-2787.html.
Raridniya, G. (2015). London vs. New York: How Do Their Property Markets Compare?
Retrieved from https://www.mansionglobal.com/articles/london-vs-new-york-how-do
their-property-markets-compare-15361
Smith, E. (2016). New York or London? Retrieved from
https://www.telegraph.co.uk/business/sme-management/new-york-or-london/
The Global Voice of Quality. (2019). WHAT IS TOTAL QUALITY MANAGEMENT (TQM)?
Retrieved from https://asq.org/quality-resources/total-quality-management

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Wild, T. (2017). Best practice in inventory management. London: Routledge.