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Operation Management Master - Essay Example
Q1) A supplier provides parts to a manufacturing company that demands JIT deliveries. At the present time it takes 6 hours to make a round-trip between the supplier's warehouse and the customer, including loading, travel and unloading time. The lot size is 12 pallet loads on a truck, and the manufacturer uses 2 pallets per hour.
You can reduce your costs but reducing the necessary costs may prevent you from running your business.
What is the next option The next option is naturally as you might have guessed is to sell more number of units. Suppose the profit per unit is $5.If you sell 100 units per day your profit would be $5*100 i.e. $500 profit. Now suppose you sell double the number of units i.e. 200 units per day then your profit would be $5*200 i.e. $1000 .Alas it is not as simple as it seems; to double the number of units you sell you have to manufacture twice the number of units which will have its own costs. Your operations have to be perfect in order to satisfy your customer requirement and give you credibility in the market so that you can get more orders. If you commit any mistakes your reputation may be harmed and that may prove to be a deterrent in your getting more contracts and at the same time you cannot limit yourself to produce only a certain number of units as that way you will never grow, your competitors will get ahead of you and will eventually make better offers than you and you may even loose what you have. ...