Techniques Employed in Planning and Controlling Operations Management

TECHNIQUES EMPLOYED IN PLANNING AND CONTROLLING OPERATIONS MANAGEMENT 

 

Technique employed in planning and controlling operations management are classified into two categories:a. Operations Research (OR)
Other tools and techniques.
Let us first take O.R, as planning and controlling technique for operations management
Meaning and essential characteristics of OR
Various quantitative techniques are integrated into a new discipline, normally known as “Operations Research” (OR)
Operations research, to a considerable extent, is a product of World War II. It involves the application of the methods of the physical scientist and the engineer to economic and commercial problems, made possible by the development of rapid computing machines.
Following is cited a simple and logical definition of OR:
OR is the application of specific methods, tools and techniques to operations of system with optimum solution to the problems.
In simple words, OR might be defined as quantitative common sense for obtaining optimum solution to business problems.
The essential characteristics of OR as applied to decision – making are as follows:
i. OR emphasizes on mathematical models – the logical presentation of a problem.
ii. It incorporates in the model those variables in a problem that appear to be most important to its solution.
iii. It quantifies variables to the extent possible; since only quantifiable data can be inserted into the model to yield measurable results.
iv. OR emphasizes on goals in a problem area and develops measures of effectiveness in determining whether a given solution shows promise of achieving those goals. 
 
Special tools or techniques of OR
Construction of mathematical models is the central tools or OR. However, OR, in itself, includes many techniques which are briefly described below.
(i) Linear Programming (LP)
The problem confronting any management is to decide the manner in which the limited resources of the organization are to be allocated among different uses – so as to maximize the attainment of organizational objectives.
Linear programming is a mathematical technique used for the purpose of allocation of limited resources in an optimum manner. The word linear means that relationships handled are those which are represented by straight – lines; and the word programming means making decisions systematically.
Therefore, LP is the maximization (or minimization) of a linear function of variables subject to a constraint of linear inequalities.
The technique is applicable in production planning, transportation, warehousing, location etc, as these are problem creating areas.
ii. Inventory Planning and Control
The key concept in inventory planning and control is the calculation of Economic Order Quantity (EOQ) which is given by the following formula:
Q =
Where,            Q         = economic order quantity
U         = quantity (units) purchased, in a year
P          = cost f placing on order
S          = Annual cost of storage of one unit
Suppose           U         = 1600 units a year; p = $ 100;
S          = Rs.8; then
R         =
= 200 units
Economic order quantity refers to the size of the order, which gives maximum economy in purchasing any material.
iii. Just-In-Time Inventory System: (JIT)
JIT inventory method also known as zero inventory or stockless production is very popular in Japan. In this system, the supplier delivers the components and parts to the production line, Just-in-time to be assembled.
For the JIT method to work, the following requirements must be fulfilled:
The quality of parts must be very high; as a single defective part could hold up the assembly line.
There must be dependable relationships with suppliers.
The suppliers should be located near the company, with dependable transportation being available.

iv. Distribution Logistics
Distribution logistics treats the entire logistics of a business· – from sales forecasting to shipping finished goods – as a single system. The goals is to optimize the total costs of the system in operation; while furnishing a desired level of customer service and meeting the constraint of limited inventory levels.
By optimizing total costs in a broad area of operation, the system might show that it would be cheaper to use more expensive transportation on occasion, rather than to carry high inventories.
(Logistics means the practical organization that is needed to make a complicated plan successful, when a Jot of people and equipment is involved).

Limitation of Operations Research
Despite its utility in solving managerial problems, OR suffers from the following limitations.
OR calls for a high order of mathematics. Managers are long away from fully using the mathematics that is available.
OR has limited usefulness in decision making areas which involve a large number of qualitative factors.
There is usefully lack of information which is needed to make OR useful in practice. People find that the information which they need about certain variables is not available.
There is a gap between practicing managers and trained operations researchers. Managers lack knowledge of mathematics; operations researchers lack an understanding of managerial problems.
OR Techniques are costly and many problems are not important enough to justify this cost.
 
b. Other tools and techniques
Besides OR and its applications; some other techniques employed in planning and controlling operations management are described below.
i. PERT/CPM
A detailed account of PERT/CPM is given in chapter 26.
 
ii. Value Engineering
A product can be improved and its cost lowered through value engineering; which consists of analyzing the operation of the product or service; estimating the value of each operation; and attempting to improve that operation by trying to keep cost slow at each step.
 
iii. Work Simplification
Work simplification is the process of obtaining the participation of workers, in simplifying their work. Training sessions are conducted to teach concepts and principles of techniques such as time and motion studies, work-flow analyses, and the layout of the work situation.

iv. Quality circles
The concept of quality control circles or quality circles was developed in Japan during early 1960 and widely used in the U.S.A. during later 1970 and early 1980.

A quality circle is a small group of employee (say five to ten) belonging to the same work unit; who meet frequently with their supervisor (known as quality circle leader) to identify, discuss and solve work related problems of their work unit.

Point of comments
There may be a number of quality circles in an organization; with a coordinator to co-ordinate the working of various quality circles.

Quality circles provide opportunities for interaction among people. People given suggestions for effective improvements in their work- unit performance. The excellent work performed by quality circles is also rewarded.

v. CAD I CAM and MAP
Product design and manufacturing have changed greatly in recent years because of the application of computer technology.

CAD (Computer Aided Design) CAM (Computer Aided Manufacturing) help engineers to design products much more quickly than they could do with the traditional paper and pencil approach.

Automobile companies have developed what is called MAP (Manufacturing Automation Protocol), which is a network of machines and various office devices hooked together.