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Published by R Abdullah Azad

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Categories:Types, School Work
Published by: R Abdullah Azad on Feb 03, 2013
Copyright:Attribution Non-commercial


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Q 1:
Explain the basic competitive priorities considered whileformulating operations strategy by a firm?
Operations strategy reflects the long-term goals of an organisation inits corporate strategy, a clear understanding of the operating advantages and agood cross functional coordination between functional areas of marketing,production, finance, and human resources departments are required. Operatingadvantages depend on its processes and competitive priorities considered whileestablishing the capabilities. The basic competitive priorities are: Cost, Quality, Time, Flexibility
Cost is one of the primary considerations while marketing a product or aservice. Being a low cost producer, the product accepted by the customer offerssustainability and can outperform competitors. Lower price and better quality of a product will ensure higher demand and higher profitability. To estimate theactual cost of production, the operations manager must address labour,materials, scrap generations, overhead and other initial costof design and development, etc.
Quality is defined by the customer. The operations manager looks intotwo important aspects namely high performance design and consistent quality.High performance design includes superior features, greater durability,convenience to services, etc where as consistent design measures the frequencywith which the product meets its design specifications and performs best.
Faster delivery time, on-time delivery, and speedy development cycle arethe time factors that operations strategy looks into. Faster delivery time is thetime lapsed between the customer order and the delivery. On-time delivery isthe frequency with which the product is delivered on time. The developmentspeed is the elapsed time from the idea generation up to the final design andproduction of products.
Flexibility is the ability to provide a wide variety of products, and itmeasures how fast the manufacturer can convert its process line used for oneproduct to produce another product after making the required changes. The twotypes of flexibilities are: Customisation Volume flexibility.
While customisation is the ability of the firm to satisfy the specific needs of eachits customer, the volume flexibility is the ability to accelerate or decelerate therate of production to handle the fluctuations in demand. For example, theproduction of fertilisers of different specifications and applications.
Q 2:a. List the benefits of forecastingb. Explain the significance of plant location decision.
a)Forecasting basically helps to overcome the uncertainty about the demandand thus provides a workable solution. Without the forecast, no productionfunction can be taken up. Hence, it can be stated that forecasting helps to:
Improve employee relations
Improve materials management
Get better use of capital and facilities
Improve customer serviceb)Location identification for an organisation is an important strategic leveldecision taken by the top management. It involves planning and managementof the plant location. Location decisions are strategic decisions that bind theorganisation to a certain place. Hence utmost care has to be taken while
selecting the location. Location decisions are made on the basis of parameterswhich make it suitable for various considerations of suppliers and markets.While locating a plant, the following long range forecasting needs are to beconsidered:
 The company’s expansion plan and policy
Diversification plan for the products
Changing market conditions
 The changing sources of raw materials
Many other factors that influence the choice of the locationdecision. The main concern of the operations manager will be the extent of flexibilityhe/she has. This can be determined by raising such questions like:
What is the volume of production of different products?
What operations have to be outsourced?
How to deal with surge or decline in demand?
What will be the growth potential in that place?Materials need to be stocked and moved to various locations for operationsand today it is common to see plants being operated at multiple locations.Since decisions have long term implications, thorough analysis andinvolvement of senior managers from all departments is essential.Multiplications for manufacturing and distribution to exploit situations of supplier availability or market requirements are now a common practiceamong Indian companies. This trend in the recent times has lead to Indiancompanies being called by a new name, ‘Indian MNCs’.
After studying this unit, you should be able to:
explain the significance of location decision
list the various factors influencing plant location
describe the general and special factors that influence the plant location
analyse the various rating methods
Location Planning Process:
Planning is the most important function of management, especially, when we have to deal with lands, buildings, andmachineries. Lands, buildings and machineries are costly and once fixedcannot be moved easily. Planning, therefore, requires a lot of thought, datagathering, and estimates for the future. These considerations are vital for thesuccess of any firm.
Planning the location of the plant:
 The various factors that affect theeconomics of competing locations which helps in choosing the most optimallocation. Factors influencing plant location can be broadly divided into twotypes namely: general factors and special factors.
General factors:
 The general factors that influence the plant location arelisted as follows:
Availability of land:
Availability of land plays an important role indetermining the plant location. On several occasions, our plans, calculationsand forecasts suggest a particular area as the best to start an organisation.However, availability of land may be in question. In such cases, we will haveto choose the second best location.
Availability of inputs:
While choosing a plant location, it is veryimportant for the organisation to get the labour at the right time and goodquality raw materials. The plant should be located:
Near to the raw material source
At the market place
Close to the market when universally available, so as to minimise thetransportation cost.
Closeness to market places:
Organisations can choose to locate theplant near to the customers’ market or far from them, depending upon theproduct they produce. It is advisable to locate the plant near to the marketplace, when:
 The projected life of the product is low
 The transportation cost is high
 The products are delicate and susceptible to spoilage
After sales services have to be prompt The advantages of locating the plant near to the market place are:
Consistent supply of goods to the customers
Reduction of the cost of transportation
Communication facilities:
Communication facility is also an importantfactor which influences the location of a plant. Regions with goodcommunication facilities namely postal and telecommunication links shouldbe given priority for the selection of sites.
Infrastructure plays a prominent role in deciding thelocation. The basic infrastructures needed in any organisation are:
For example, industries which run day and night requirecontinuous power supply. So, they should be located near the power stationsand should ensure continuous power supply throughout the year.
For example, process industries such as, paper, chemical, andcement, require continuous water supply in large amount. So, such processindustries need to be located near the source of water supply.
Waste disposal:
For example, for process industries such as, paper andsugarcane industries, facility for disposal of waste is the key factor.
 Transport facility is a must for facility location and layout of location of the plant. Timely supply of raw materials to the company andsupply of finished goods to the customers is an important factor. The basicmodes of transportation are by air, road, rail, water, and pipeline. The choiceof location should be made depending on these basic modes. Cost of transportation is also an important criterion for plant location.
Government support:
 The factors that demand additional attention forplant location are the policies of the state governments and local bodiesconcerning labour laws, building codes, and safety.
Housing and recreation:
Housing and recreation factors also influencethe plant location. Locating a plant with or near to the facilities of goodschools, housing and recreation for employees will have a greater impact onthe organisation. These factors seem to be unimportant, but there is adifference as they motivate the employees and hence the location decisions.
Special factors:
 The special factors that influence the plant location are:
Economic stability – outside investments
Cultural factors
 Joint ventures – support of big time players.
Location decision sequence:
Location decisions start from the nationallevel, and move to the site level after moving through regional level and thecommunity level. This means that, first the country of choice is to be

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