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Logistics and Operations Management - Essay Example

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Logistics and Operations Management

Replacement Costs on the rise due to poor quality
Quality Costs
Cost of control
Prevention costs include Quality planning and Engineering, New product review, Product and process design, Process control, Cost of Burn in tests, Quality training and workforce development.
Appraisal costs include Testing and Inspection.
Cost of Failure of control
Internal failure costs include Scrap, Rework, Retest, Failure Analysis, down time, Yield losses and down grading.
External failure costs include Warranty Charges, Complaint adjustment, Returned product/material and Liability costs.

Q2. In consideration of your response to part 1 and your experience in Aerials,

i. Propose and explain what options a business and/or a supply chain has to cope with fluctuating demand.
Options
1. Make or Buy decisions
The most popular decision that a Business takes to cope with the fluctuating demand is whether to Make or Buy. A business must analyze their various costs of production involved in producing a product and compare it with cost of buying the product from an external supplier. If the cost of buying is less than cost of producing the product, then companies can opt for buying the product. This could be extended to each phase of the production cycle.

2. Forecasting Demand
Companies plan and forecast the demand according to the future needs of the market. Forecasting demand assists in decision making with respect to investment in plant and machinery, market planning and future sales. Some of the popular forecasting methods include
Time series methods
Judgmental Techniques
Causal methods (Econometric forecasting)

3. Quality management
Companies strive to achieve quality standards like ISO 22000:2005, Six sigma, Deming awards...
A business must analyze their various costs of production involved in producing a product and compare it with cost of buying the product from an external supplier. If the cost of buying is less than cost of producing the product, then companies can opt for buying the product. This could be extended to each phase of the production cycle.
Companies plan and forecast the demand according to the future needs of the market. Forecasting demand assists in decision making with respect to investment in plant and machinery, market planning and future sales. Some of the popular forecasting methods include
Companies strive to achieve quality standards like ISO 22000:2005, Six sigma, Deming awards etc. Total quality management along with Japanese techniques is widely practiced ensuring the continuous delivering of quality products. Nowadays a product without quality cannot exist in the market i.e. if a company is surviving, then quality is inbuilt. Quality forms the basis of survival of a company or a business nowadays. Quality audits and a lot of quality management practices are a means to ensure that the customer receives good quality product.
Inventory control is a planned approach of determining what to order, when to order and how to order and how much to stock so that costs associated with buying and storing are optimal without interrupting production and sale ...Show more

Summary

Purchase or Production cost becomes significant when availing price discounts. The cost per unit held in inventory will suffer a loss due to high price discounts that the company has to provide its buyer to move its products
Ordering or procurement or acquisition or Replenishment cost including Transportation costs…
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