Lecture-1 Core Vs Non-Core functions POL: Petroleum and Oil Lubricants Non Maskable Interpt means Petroleum and

d Oil Lubricants. We cannot control Price or Effect of Prices of Non Maskable Interpt.

Operations Management

There is always a negative change cause the Prices of Non Maskable Interpt (i.e.Petrol Prices). The job of the manager is to minimize this effect.

Production is a core function and all other functions (which are not related to production) all Non-Core functions.

Key Terms Frills: Non Core functions POL: Petroleum and Oil Lubricants JIT: Just in Time

What is Optimal Input? Optimal Input : -Should be Timely Available -Should be Less in Cost -Should Lesson Opportunity cost -Should be of Good quality (i.e. When passed through chemical analysis, should give a good result)

Operations Management-Procedure 1. 2. 3. 4. 5. 6. Procurement/Purchase of Inputs Inventory Management Control on issuance of Raw Material Production (Execution of Core Business Process) Finished Goods Inventory Marketing (Sales + CRM + etc) Or Optimal Procurement of Inputs

1. Procurement/Purchase of Inputs

Optimal Procurement of Inputs can be done through: i. ii. iii. Spot Exchange Analyze and Purchase Contract Purchase

Spot Exchange (Purchasing from first available option, just in time) Usually you have to transact in Cash instead of Credit Costs higher Analyze and Purchase Take sample from all the localities Analyze (Chemical analysis, if necessary) Is the product available at my will or suppliers will? From where I have to purchase? Contract Purchase A Contract is a legal document signed by Vender (Seller) and Vendee (Buyer/Purchaser) When the contract will be signed and from when it will take effect? The contract may be changed by mutual consent of both parties.

2. Raw Material Inventory Management Raw Material Inventory Management is one of the hardest part of operations management. Nowadays it is known as Cry of the day. 3. Control on Issuance of Raw Material Control on Issuance of Raw Material should always be there. For example, if I am having 5% tolerance regarding wastage of raw material, and I issue raw material for 100 units, I should get 95 units as Finished Units. The output/FG should not deviate from the standard. (i.e. Standard Deviation)

Whenever issuing Raw Material to WIP, I must always keep three thing in consideration. 1. No. of components issued 2. No. of components converted into Finished Goods 3. No. of Components wasted

Example: I issued 100 units as RM, I get 90 units as FG, means 10 units must have been wasted. Now I check Wastage, there are only 5 units as wasted. Now the question arises where the remaining 5 units are? I can now question WIP.