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Name ID SUBJECT COURSE CODE SUBMITTED TO

Khizer Sikander BBM-F1304-0057 OPERATIONAL MANAGEMENT FM3201 MR. ZAHARI

The following assignment reflects the dynamically active relationship between the Government and foreign investors. The steps adopted by the Malaysian Government to increase the foreign investment and sustain current investors. The advantages of setting up operations in Malaysia in accordance to Panasonic Corporation. The types of inventories have also been identifies as well as the Inventory Management Models that need to be adopted for maximization of resources. The process of planning has also been concentrated upon. (Karimi M.S./2009)

Question 1: When people want to invest in any business the main motive in profit, hence we can say that Investors look for profit in order to gain better profit a large and growing market is required. Hence the countries that receive the most Foreign Investment are the ones having a lot of consumers who are willing to pay and who have the ability to buy. This is the reason why foreign investors rather go and invest in developed countries and not take the risk for developing economies. In accordance to the world investment report 2012 China and USA got the highest Foreign Investment. (Levine R. /2012) In accordance to the generation perspective the steps taken by the Malaysian government to attract Panasonic Corporation are: Government Incentives: The Malaysian Government has been supporting the Panasonic Corporation since 44 years when they first started their operation in Malaysia. The incentive that Panasonic enjoys include the Industrial Building Allowance plus Deduction on Audit Fee, sometimes the government in order to go up the economic ladder makes the foreign investment policies easier to keep up with so that their country can get more and more

foreign exchange. The hub shift of Panasonic to Shah-Alam, Selangor, Malaysia had a positive effect on the overall Malaysian economy. High Skilled Labor with Multi Language Capabilities: The basis of Malaysias institutional framework was laid down by the British Colonial System, it provides the protection every business needs. Malaysian Government is caught the eye of Panasonic Corporation because the strategic managers observed that man power is easily available at nominal rates and that the worker are skilful and have an advantage to the language factor as worker would be able to work easily in a diversified multi linguist environment. For Panasonic Corporation being a global market competitor it need to have maximum utilization of resources and that would only be possible is the company has cooperative employees and who know what their task is. Political Stability: Malaysias holds a highly stable business environment. It is also a safe one for investing, thanks to a desirable level of political, economics and policy stability that minimizes political risk. The ruling Government of Malaysia is the longest serving, freely elected Government in the world. It is important to note that Malaysian is a very safe place for investors. Malaysias security apparatus is one the best in the region. Malaysia with the help of America now is the regional center for anti - terrorism. Excellent security and preventive laws assures all who come to Melaka will have peace of mind. Localization Strategy: Malaysia is the most strategically sound location as it is center of South East Asia, due to Malaysias location it is considered to be a cost-competitive location for investors who are planning to set up offshore operations for the manufacture of advanced technological products for regional and international markets. Panasonic Corporation chose Malaysia as is a market-oriented economy and because of the pro-business Government policies. Malaysian Government offered a dynamic and vibrant business environment with the ideal basics needed for growth and profits. Panasonic Corporation may have set up their operations hub in Malaysia as it is close by to their supplying and receiving rout. It is easily accessible by all. (Karl S/2001)

Success in Previous Venture: Panasonic Corporation set up their operations hub here in Malaysia as their venture had been a success before and they had been carrying out their operation since last 44 year with the support of the Malaysian Government, hence considering their past successes in Malaysia Panasonic decided to expand their operations in Malaysia. Ease in Transportation: The transportation facilities available in Malaysia are up the standard for attracting foreign investors Malaysia's transportation system is very good and of a high standard after years and years of development. Due to the developed transportation facilities, the movement of merchandise and people has improved the commercial activity of the country. In Malaysia there are various kinds of transport available: rails, roads, ship, and air. Panasonic Corporation observed that they would not have any problems when it comes to carrying out operating activities as the due to the effective transportation the chances of delay in raw material would be quite low. Cooperative Economic and Trade Policies: Political Stability and corporation by the government by easing up the trade and economic policies ensures that investor can safely make strategic plans for their companies. Panasonic Corporation had the support of the government hence they decided to expand in order to retain Panasonic as an investor the government of Malaysia eased us some of the trade policies and gave out some economic amendment as incentive and as looking into these and other above mentioned factors the Panasonic Corporation successfully shifted their operation in Malaysia as an expansion. (Sulong Z. /2005)

QUESTION 2: INVENTORY: The raw materials, work-in-process goods and completely finished goods that are considered to be a part of a business's assets that are ready or will be ready. After analyzing Panasonics Corporations operation the four types of inventory that would be required world be: Raw material inventory: Unprocessed material that is usually purchased and has not yet gone through the transformation process. Walles J.H. (2009) on page. 217 said that: As noted, the physical inputs at the start of a production process are typically called raw material inventory. This could represent bar stock that is cut up and then molded into sheets of copper then later processed further to make circuit boards used in different electronic products. Work-in-process (WIP) inventory Product which has gone through the transformations process of becoming a usable product, but still has not been finalized. The inventory between the start and end points of a production channel is called work in process. Since the production cycle begins and until the last stage WIP is as all the product in between excluding the final stock stage. Finished-goods inventory: Once the products has been gone through the process of quality control and are now ready to be shipped. Amount of manufactured products in hand that await the scale to customers.

Maintenance, repair, operating inventory: Supplies necessary to keep machinery maintained, processes run effectively, facilities to ensure maximum efficiency, and office operations running without any delay. These items do not fall in the production process, but are essential to ensure the smooth running of operations of the organization. They include things such as lubricating oil for machines and janitorial cleaning products, they also include: the changing of printer toner cartridges and other office supplies.

INVENTORY MANAGEMENT MODELS are used to specify the size and placement of stocked goods. Inventory management is required at different department within a corporate structure or within multiple locations of a supply network to protect the effective and efficient flow of production against the random delay. (Nawaz M.A. /2010) Just In Time: It can be observed that the model of Just in Time may have been adopted by the Corporation. JIT is a system of managing operations with little or no idle inventories, or no delays in time, between one process and the next. It seeks to produce instantaneously, with perfect quality, and with no waste. It applies equally to running a chemical plant, a hospital, a management consulting firm, etc. By implementing JIT, we can discover several hidden problems as well: by reducing stocks of raw materials, we may discover problems related to the quality of suppliers, or whether they deliver on time. By reducing work-in-progress, we may discover a high level of scrap and re-work. (Stevenson/2010/OM: An Asia Perspective)

Goal: The ultimate goal of JIT is a balanced system. Achieves a smooth, rapid flow ofmaterials through the system.

Economic Order Quantity: Economic order quantity is an inventory strategy that seeks to identify and maintain the ideal balance between the holding costs associated with an inventory and the ordering costs that are incurred with that inventory. The ideal situation for the seller is to be able to create inventory that is used to fill pending customer orders without remaining in the inventory for extended periods of time. Assuming that the materials needed to manufacture the items for inventory arrive in a timely manner, are processed efficiently, and are placed in a finished goods inventory within a reasonable period of time, inventory cost can be reduced significantly. Keeping the standing inventory as close to zero as possible not only helps to minimize tax debt, but also allows the vendor to operate without the need to rent, lease, or otherwise operate warehouse space for a larger inventory. If Panasonic achieves the ideal economic order quantity it can save a significant amount of money over the course of a year. (Erlenkotter D. /1989/) Goal: The goal of the economic order quantity strategy is to identify the point at which the ordering costs and the Storage-cost associated with an inventory are at the lowest point possible. Keeping in mind the fulfillment of demand in a timely-manner.

Question 3: Material Requirement Planning:


Manufacturing information systems have helped companies simplify, automate and integrate many of the activities needed to produce products of all kinds. They are also used to help plan the types of materials needed in the production process which is called Materials Requirement Planning. The basic inputs of the MRP system include Bills of Materials, Master Production Schedule and Inventory Control. The output includes a planned orders. (R. Thomas/1990)

Manufacturing Resource Planning (MRPII)


MRP II was developed with all the features of MRP, however due to additional needs of the manufacturer other elements were required in addition to those present in MRP. Therefore essentially MRPII is MRP but with more added, signifying that we are concentrating upon the manufacturing resources (e.g. people, machines, storage), rather than limiting ourselves to the planning of materials requirements. (John N. /1993)

Enterprise Resource Planning (ERP)


ERP a further development of MRPII. When using the Enterprise Resource Planning (ERP) many of the processes are included within the manufacturing resource. What ERP really does is organize standardize and modify a businesss processes data. The software transforms transactional data into useful information and collates the data so that it can be analyzed. In this way all the transactional data becomes the information that companies can use to support business decisions. ERP is the technological backbone of e-business an enterprise wide transaction framework with links into:

Comparison and Differentiation: MRP does not take into consideration the shop floor and capacity requirements primarily focusing on materials. This effects the quality of the informations and results that the system produces. Secondly the output information that is produced from the system relies on accurate data that is required to be inputted. Problems also arise from orders that have been completed but have not yet been completed by the bookings; this affects the day to day operations. Finally there is no integration with other business functions in the planning process and no software extensions offered. In comparison to MRP which focused on materials, MRPII went a step further by

integrating all manufacturing processes including human relations and finance. Feedback from the shop floor is also another important development from the original MRP. MRPII has allowed the possibility to trace work in progress through all the different levels within the schedule. Software bugs or viruses can cause the system to crash and this would disrupt the businesses operations, therefore it will still have flaws. ERP in comparison has a common database management system which has accurate and consistent data with a good reporting system. By improving the decision making process there is now better control of the organization hence reducing time results in cost saving opportunities.

Conclusion:
In conclusion Malaysia is a country which attracts a lot of Foreign Investment such that in the case of Panasonic who supported throughout the years of it investment in Malaysia hence it made Malaysia its Head Quarters due to a lot of attractive factor held by the country and support by the government. A company in order to run need to provide to its respective demand in order to do so raw-material is required. To maximize the resources certain inventory management models need to implemented such as: EQO, JIT, EPQ, etc. Manufacturing systems have been introduced to improve the inventory management process. E.g.: MRP, MRP ll & ERP.

REFERENCES & BIBLIOGRAPHY:


1. Karimi, M.S. and Yusof, Z. (2009). FDI and Economic Growth in Malaysia, Universiti Malaysia Sabah. 2. Demirguc-Kunt, Aslie. & Levine, R. (2012). Stock market development and financial intermediaries: Stylized facts, The World Bank Economic Review 3. Hooi, H.L. (2008). The Impact of Foreign Direct Investment on the Growth. International Applied Economics and Management Letters. 4. Stevenson, William J. and Sum Chee Chuong, (2010) Operations Management: An Asian Perspective, (9th edition) published: McGrawHill/Irwin 5. Erlenkotter, D. (1989) An Early Classic Misplaced: Ford W. Harriss Economic Order Quantity Model of 1915, Management Science 35:7, pp. 898900. 6. Virendra P., (2010). Inventory Management, Production and Operations Management, CA: Stanford University Press. 7. Karl S., (2001) Recent FDI trends, implications for developing countries and policy challenges, paper presented to the OECD Global Forum on International Investment. 8. Michal J. Trebilcock and Robert Howse. (1995), The Regulation of International Trade (First Edition). Stanford Research Publications. 9. Khan, R.E.A. and Nawaz, M.A. (2010).Economic Determinants of Foreign Direct Investment in Pakistan". J. Economics-Karachi. 10. O'Brien, Marakas (2008) Management Information Systems, New York, McGraw-Hill/Irwin, page 296. 11. Vollmann, T., Berry, W., Whybark, D.C. and Jacobs, F.R. (2004), Manufacturing Planning and Control Systems for Supply Chain Management, McGrawHill/Irwin. Burr Ridge, IL. 12. Kehoe, D.F. and Boughton, N.J. (2001), New Paradigms In Planning And Control Across Manufacturing Supply Chains: The Utilization of Internet Technologies, International Journal of Operations and Production Management, Vol. 21. 13. www.mida.gov.my

14. John N. Petroff, (1993). Handbook of MRP II/JIT Integration and Implementation, Publication: Prentice Hall 15. Andreas D., Alf Kimms, (1998). Beyond Manufacturing Resource Planning (MRPII): Advanced Models and Methods for Production Planning, Publication: Springer Verlag. 16. R. Thomas Wright, (1990), Manufacturing Systems, Goodheart-Willcox Co. 17. Sulong, Z. and Harjito, D.A. (2005). "Linkages Between Foreign Direct Investment and its Determinants in Malaysia". (Vol. 10.). Journal Economic Development Economic Studies Developing Countries (Page: 1-11).