Free «Mid Term – Operations and Supply Management» Essay Sample

Supply chain management can be defined as the systematic designing of internal operations of an organization and improvement of the systems, concerned with the creation and delivery of the firm’s primary products and services. It also entails the management of interconnected businesses that are involved in the provision of various goods and services as required by the customers. The objective of supply chain management involves the monitoring and execution of activities with the sole objective of creating positive net value in the firm’s performance and synchronizing the firm’s demand with supply as a measure of evaluating performance. Generally, it is majorly focused with the management of the entire organization system that is charged with the responsibility of production of goods and services (Cahon & Terwiesch, 2013).

Significance of Supply Chain Management (SCM)

Supply chain management plays a very vital role in the development and growth of most organizations and industries. Some of the positive contributions include the following:

  1. It aids in the overall growth and enhancements of the firm’s competencies. This is evidenced from the fact that organizations are becoming more efficient in their service delivery to their potential customers. This is very crucial since it assists in boosting the overall image and prestige of the concerned organization.
  2. Through the enhanced form of network systems created, it has become easier to share information very easily through the use of various networks such as social sites and the World Wide Web, (www). This has proved to be very efficient since a lot of important information is properly shared and collaboration enhanced.
  3. It facilitates the effective use of resources in the organization so as to avoid any instances of unnecessary wastages that eventually result to further incurrent of costs and expenses.
  4. It enhances proper and administration of the rules and procedures that are usually tailored in certain ways to assist in the achievement of specific set goals and objectives of the organization. This ensures that roles and responsibilities are clearly spelt out and defined, delegation is applied where appropriate and employees are treated with equality and fairness at all times in the course of their duties.

Furthermore, supply chain management could be enhanced through the use of various ways and methods that may include the following:



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a) Developing sufficient knowledge and skills that is required in the project management and programs.

b) Exploring globalization, its effects on the organization and establishing various ways that could lead the organization into the global market.

c) Gaining insight into what the general environment provides into the firm. This could be in form of labor recruitment to assist in the various operation of the business so as to increase profitability and enhance growth.

d) Establishing sufficient methods that relate to quality management as well as the production of the required goods and services to meet the customers’ needs and demand on time.

e) Through learning of others issues like outsourcing that enhance and promote expertise in the organization and familiarizing with how natural and non-natural disasters could impact on the general performance of the organization. 

Supply Operation Answers

1) Little’s law, this refers to a defined mathematical theory relating to queuing system in an organization. This law usually states that the long-term average number of customers present in a stable environment system usually equal to the average long-term effective annual rate which is multiplied by the average time a customer spends within the system.

2) The significance of the pipeline inventory is to keep track of the inflow and outflow of stock in the organization. This serves to ensure that inventory is well-accounted for without having any incurmbarances that could mean extra costs for the entire organization.

3) Process utilization refers to the process that integrates empirical studies that majorly dwells on the continuous improvement of resource utilization to the organization research with a view of integrating and assessing the various numerous processes in an organization.

  1. Utilization of resources refers to the use of actual total amount of available resources in an organization compared against the budgeted or planned resources. This is usually carried out for various specific reasons and is measured as a percentage.
  2. Implied utilization refers to the standard measure of any existing mismatch between the demand of the customers to a particular good and the process capacity available at the time. It is usually evaluated using the formula; Demand Rate/Process Capacity.

4) Activity time refers to the standard time that is or has been allocated to a specific or particular event. It relates to the time allocated to certain event to take place effectively. Capacity time relate to the time that is allocated to come up with or produce certain goods and services.

  1. For instance, we may have example such as J.I.T (Just in Time) and J.I.C (Just in Case). Cycle time can be defined as the period that is needed to complete one round or cycle of an operation or a job, and is usually geared towards establishing the starting and ending points of operations so as to establish the actual duration of time taken.

5) Worker based assembly line refers to the collection line of employees who have been assigned various duties and responsibilities and they entirely rely or depend on their effort to get the work done. Machine based assembly line relies on the use of modern plant and machinery to get any work done. This method is very efficient since the processes are executed faster through facilitating time saving and management.

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6) Idle time refer to the nonproductive time when employees are off duty. It refers to the time when employees tend to do their own businesses other than that of the organization. Its importance is that, it allows time to the employees so that they can also relax their minds and body after a long day’s work.

7) Line balancing refers to a system in which everything is equal and balanced in the organization. For instance, employees are doing the same magnitude of work without overburdening others unnecessarily. The achievement of this is that, it promotes peace and cohesion in the organization which leads to greater productivity that in turn results to higher profitability.

8) A break down structure is a mechanism instigated to mitigate problems of organizational structures. It usually provides the relevant foundation on which evaluation and performance of the organization can be gauged.

Solutions to the Operations and Supply Problems

(a) Proof Smart Inc.

(i) Determination of sales in year 2007

Gross margin=45%, implying that the gross markup will be 9.09%

Gross markup=cost of goods/sales



(ii) Inventory turns for year 2007

Inventory turns=total sales/365 days

      $26,038,331/365 days

=71,337 turns.

(b) Comfy Shoes Inc.

(i) Implied utilization of attendant in service D

        Implied utilization=demand rate/process capacity

          Therefore, 20 customers/25% of 74 minutes


(ii) Resource with highest implied utilization

 Resource A=20/45% OF 12 minutes=3.703

 Resource B=20/10%OF 24minutes=8.33

 Resource C=20/20% OF 34minutes=2.94

 Resource D=20/25% OF 74 minutes=1.08

 Conclusion: Resource B has the highest implied utilization rate as compared to the others.

(iii) Anticipated increase in demand would result in higher utilization rates which could thereby lead to the need of hiring more attendants and thus incurring of other extra cost. A positive contribution though, would be that customers would increase which probably boosts the profitability of the business as a whole.

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(c) Mr. K’s Hair Salon

a) The bottle neck of the process is server 3 because, with the continuous activity being carried out, the rate of activity efficiency will tend to diminish as time goes by up to considerably lower levels.

(b) Process capacity based on the bottle neck,

       20/ {25-5} =nil…This is because at the bottle neck point the result is zero due to declining efficiency in the activity.

(c) Amount of idle time available in the process,

        Idle time=1-{demand/mean time}=1-{20/12.5}=-0.6

(d) Utilization of server 2,

          Utilization=demand/mean average time}


(e) Average utilization of the servers.

Total demand=20 customers/1 hour=20


(f) Direct labor costs=labor rate per hour*labor hours


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Numbers of customers to be served per hour include,

                     $18/3=6 customers.


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