6.

What have you learnt from operational Management and how it is going to impact

your professional career? (2123033018)

I was highly interested in this ‘Production and Operations Management’ course even before

the class was started. Since, I’ve completed my bachelors in Industrial and Production

Engineering, I’ve thought the lessons will be more or less same. But you proved me wrong

and I learnt new things in each and every class. The classes were conducted more from a

management and planning perspective and that is the one thing that was missing from my

previous knowledge. I’m really glad that we got you as our lecturer in this course.

Learning Outcomes and Impact on My Professional Career:

 Lecture 01: I got to learn how operations department contribute to the organization

and what are the skills an operations manager should possess. Now I know in which

skills I should work on to get an upper hand on my professional career.

 Lecture 02: After this class, now I’ll be able to calculate productivity of any process

or production system. And this will help me in evaluating and controlling the process

at my very own workplace.

 Lecture 03: Here I learnt about various forecasting methods and their

appropriateness. It will help me to identify which forecasting technique should be

used in which situation. As I move onto middle management position, I’ll need to

forecast the demand and plan accordingly. This learning will help me there

undoubtedly.

 Lecture 04: Knowledge on strategic capacity planning will help me to understand the

financial perspectives and parameters associated with production management, for

example how much I’ll have to produce for reaching the break-even and which option

I should choose while making a major capital machinery purchase investment. This

knowledge will definitely help me while taking strategic decision.

 Lecture 05: Having experience in manufacturing industries, I know that most the

capital gets stuck in the inventory and making waste in the process. So, inventory

management is very crucial for keeping your operation profitable. This lecture

provides knowledge on how much we should order at a time to achieve economies of

scale. Though I had this learning earlier, it was nice to have a recap of this important

topic.

 Lecture 06: One of the most important things to consider while launching business or

setting up a new operation is process selection. You need to identify which process

layout suits your production system and build the manufacturing site accordingly.

After this lecture I’ve clear idea on the process layout and will be able to choose the

correct one for my business. Besides, this lecture also covered the inclusion of

automation which also enlighten me on when and where to install automation.

 Lecture 07: Last nut not the least, I learned about facility layout. I’ve always

wondered how the line planning is done in the garments industries. After learning

how workstations are assigned in a facility, my idea became clear on this. It will help

me if I choose to build my career as a planner.

This course will help me in my career life in various aspect. Such as after

completing my MBA course if I want to join in the Supply chain management sector then

I will be needing Strategic Capacity Planning, Inventory management, Process selection

which I have learnt throughout the course.

The most important key factors that I learnt from the course is Forecasting, Planning.

inventory managing, production cost managing and lastly decision making. This

important factor will be needing throughout my career life. So, it can be said that this

course will impact my professional life.

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4. Identify the improvements or changes occurred to any organization by applying

any scopes of operation management.

Operations and supply chain management's one of the challenging problem areas

is inventory management. And inventory management is one of the major scopes that

falls under operations management. In order to meet customer demand, businesses must

keep inventory in warehouses. Yet, keeping inventory costs money that is frozen and

subject to loss. Finding the number of inventories that will satisfy demand while

preventing overstocks is the goal of inventory management.

This response provides an inventory management case study for an assembling industry.

It is suggested that inventory management be used to reduce stock levels and that an

agent system be used to automate inventory management procedures.

Problem Background:

The company’s data on sales, inventories in warehouses were analysed for the period of

2014. The data analysis of previous year’s microchip quantity fluctuation revealed that

there were items in stock with no sale in 2014. The results for these items were the

following: 16.69 % of total inventories (at the end of 2014) in warehouse did not have

any movement that year, 3.95 % of total inventories reduced their quantity due to

expiration of time, 5.13 % of total inventories having no sale for the year of 2014

increased their quantity due to production of new ones. In addition, there were some

items, whose assembled quantity was higher than the sold one, meanwhile having big

amount of inventory in stock (Fig. 3). There were also items, whose inventory level was

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high, meanwhile company assembled new ones, therefore inventory level was higher than

the quantity of annual sales at the end of 2014 (Fig. 3).

The Proposed Solution:

In order to improve the existing situation of company’s inventory control, it was

proposed, firstly, to use inventory management for inventory control, and secondly, to

apply agent system for inventory management. Effective inventory management consists

of ABC classification, demand forecasting algorithms and replenishment policies.

Meanwhile, an agent system can provide automatization of inventory management and

timely react to demand deviation from the forecasted demand, by making corrections on

replenishment policies. The proposed system can be used in two modes: completely

autonomous mode, when an agent performs all of the inventory management operations:

ABC classification, future demand forecasting, replenishment policy definition and

assembling order making, or it works as a decision support system for a human inventory

manager performing all the mentioned activities except ordering by providing the

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achieved results to an inventory manager and he decides whether to accept or not these

recommendations.

A. ABC Classification

ABC classification (or ABC analysis) is a basic supply chain technique, often carried out

by inventory controllers/materials managers, and the starting point in inventory control.

This classification allows assigning priorities to management time and financial

resources. The ABC analysis is based on the Pareto analysis, which says that 20 % of the

items contribute to 80 % of sales. It implies that a small portion of items in inventory

contribute to maximum sales (Table I).

The results of ABC classification for the analysed company by total annual revenue is

presented in Table II.

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B. Demand Forecasting Methods

The inventory level graph with forecasting results for one class A microchip is shown in

Fig. 5. The calculations of forecasting accuracy measures have given the appropriate

forecasting algorithm for this kind of microchip. The above-mentioned forecasting

methods have been applied to all company’s microchips.

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C. Replenishment Policies

Having forecasted demand, it is possible to calculate safety stock and reorder points for

every microchip (see Table III).

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The experiment has shown the following results: company’s average inventory level is

6964 pcs; the average inventory level proposed by the agent system is 5405 pcs. At the

end of May 2015, inventory levels had the following results: the lowest inventory level

was typical of the agent-based inventory management system (due to timely reaction to

demand comparison), the highest one was shown by company’s data. Agent-based

inventory management system showed the best results in comparison with simple

inventory management application and real data.

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Conclusion:

Inventory management is essential to every company, having inventories. Companies

need to have stock, but in such amount to avoid out-of-stock and overstock situations.

Inventory management can improve company’s inventory control existing situation and

decrease costs of the company. Agent system, in turn, proposes the automation of this

process, it can support several forecasting methods and it reacts to changes in the

environment.

In this solution, the existing inventory management situation is analysed, twofold

improvement is proposed – to use inventory management with the aim to decrease

company’s inventory level and holding costs by avoiding overstocks and to apply the

agent system in order to automate the inventory management processes and to timely

react to demand deviations from the forecasted demand by making corrections in

replenishment policies. According to experiments, it can be concluded that timely

reaction to changes in the environment can propose better results. This can be done by a

human or decision support system comparing the forecasted demand with real and

making corrections in orders, or this can be done by an agent as it is proposed here.

Reference:

1. Darya Plinere1, Arkady Borisov2, Case Study on Inventory Management

Improvement; 1, 2 Riga Technical University