4 important areas of operations control Purchasing,Inventory Control, Scheduling, and
Quality Control.
Purchasing
➔ all the activities that involved in obtaining required materials, supplies, components, and parts
from other firms.
◆ Objective of purchasing: ensure that required materials are available when they are
needed, in proper amounts, & at minimum cost.
● The choice of suppliers should result from careful analysis of a # of factors:
○ Price. - Quality. - Shipping Costs
○ Reliability. - Credit terms
Inventory Control
➔ the process of managing inventories in such a way as to minimise inventory costs, including
both holding costs and potential stock-out costs.
● Operations managers are concerned w/ 3 types of inventories:
○ Raw-materials inventory- consists of materials that will be part of the product
during the production process.
○ Work in process inventory- consists of partially completed products.
○ Finished goods inventory- consists of completed goods.
● e/ type of inventory has a holding cost, or storage cost, & a stock-out cost(cost of running
out of inventory).
Most sophisticated methods of inventory control used today is materials requirements planning:
Materials Requirements Planning: a computerised system that integrates production planning &
inventory control.
Just-in-time Inventory (JIIT system): a system designed to ensure that materials or supplies arrive
at a facility just when they are needed so that storage & holding costs are minimised.
Scheduling
➔ Process of ensuring that materials & other resources are at the right place at the right time.
◆ Routing- the sequence of workstations that the materials will follow.
◆ Timing- specifics when the materials will arrive at each station & how long they will
remain there.
◆ Follow-up- monitoring schedules to ensure that the work flow according to the
schedule.
Quality Control
➔ The process of ensuring that goods & services are produced in accordance w/ design
specifications.
◆ Major objective of quality control: see that the organisation lives up to the
standards it has set for itself on quality.
● Malcolm Baldrige National Quality Award: an award given by the President of U.S to
organisations judged to be outstanding in specific managerial tasks that lead to improved
quality for both products & services.
● Over the years, more & more managers have realised that quality = essential “ingredient” of
the good or service being produced, & that this view of quality provides several benefits:
○ The number of defects decreases, which causes profits to increase.
○ Making products/completing services right the first time reduces many of the rejects
& much of the rework..
Improving Quality through Employee Participation:
● Quality Circle- a team of employees who meet on company time to solve problems of
product quality.
● Inspection- the examination of the quality of work-in-process
● Total Quality Management (TQM) (both internal & external)
Quality Control.
Purchasing
➔ all the activities that involved in obtaining required materials, supplies, components, and parts
from other firms.
◆ Objective of purchasing: ensure that required materials are available when they are
needed, in proper amounts, & at minimum cost.
● The choice of suppliers should result from careful analysis of a # of factors:
○ Price. - Quality. - Shipping Costs
○ Reliability. - Credit terms
Inventory Control
➔ the process of managing inventories in such a way as to minimise inventory costs, including
both holding costs and potential stock-out costs.
● Operations managers are concerned w/ 3 types of inventories:
○ Raw-materials inventory- consists of materials that will be part of the product
during the production process.
○ Work in process inventory- consists of partially completed products.
○ Finished goods inventory- consists of completed goods.
● e/ type of inventory has a holding cost, or storage cost, & a stock-out cost(cost of running
out of inventory).
Most sophisticated methods of inventory control used today is materials requirements planning:
Materials Requirements Planning: a computerised system that integrates production planning &
inventory control.
Just-in-time Inventory (JIIT system): a system designed to ensure that materials or supplies arrive
at a facility just when they are needed so that storage & holding costs are minimised.
Scheduling
➔ Process of ensuring that materials & other resources are at the right place at the right time.
◆ Routing- the sequence of workstations that the materials will follow.
◆ Timing- specifics when the materials will arrive at each station & how long they will
remain there.
◆ Follow-up- monitoring schedules to ensure that the work flow according to the
schedule.
Quality Control
➔ The process of ensuring that goods & services are produced in accordance w/ design
specifications.
◆ Major objective of quality control: see that the organisation lives up to the
standards it has set for itself on quality.
● Malcolm Baldrige National Quality Award: an award given by the President of U.S to
organisations judged to be outstanding in specific managerial tasks that lead to improved
quality for both products & services.
● Over the years, more & more managers have realised that quality = essential “ingredient” of
the good or service being produced, & that this view of quality provides several benefits:
○ The number of defects decreases, which causes profits to increase.
○ Making products/completing services right the first time reduces many of the rejects
& much of the rework..
Improving Quality through Employee Participation:
● Quality Circle- a team of employees who meet on company time to solve problems of
product quality.
● Inspection- the examination of the quality of work-in-process
● Total Quality Management (TQM) (both internal & external)
