Step IV
Identify supplier • Look through yellow pages/publications by trade associations, and seek quotations from suitable suppliers.
1. 2. 3. 4. Price and discount offered Quality of materials Sales terms & conditions e.g payment terms After sale service and warranty 5. Lead time i.e the time between orders and delivery Delivery terms e.g free transportation Reliability of supplier
• Therefore, the bill of materials for a unit of cookies will be:
Ingredient Flour Amount Required/Cookies 0.02 kg
Margarine
Sugar Eggs Water
0.005 kg
0.01 kg 0.04 of an eggs (1 egg for 25 cookies) 0.005 litre
P.I > 1 = business running efficiently P.I < 1 = business running inefficiing
Symbol Type of Activities
Operation
Description
Activities that modify, transform or give values to the output
Step III
• Estimate the raw material requirement by multiplying the bill of materials with the total number of cookies to be produced monthly. • The number of units to be produced must be based on the sales forecast in the marketing plan.
Step II
• Prepare a bill of materials required for a unit of product.
Ingredient Amount required for 100 cookies Flour 2 kg Margarine 0.5 kg
Sugar Eggs Water 1 kg 4 units 0.5 litre
OPERATION MANAGEMENT
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TRANSFORMATION PROCESS SERVICES OR PRODUCTS
2. Productivity Index
T otal Value of Output Productivi Index ty T otal Value of Input
The productivity index (P.I) can be more or less than 1.
910 days 35 ' tudung' per day 26
35 hours 5 ' tudung' per hour 7
Purchasing of „tudung‟ materials Storage of „tudung‟ materials Cutting of raw materials to size. i.e large, medium and small Quality inspection Transport the materials that have been cut to tailor‟s table
6. 7.
Capacity Planning
• The capacity of any production operation refers to the amount of output that can be produced within a specified time. • It is a method to calculate machinery and manpower requirements so that production demand based on sales forecast can be met.
• If sales forecast is 520 units of ‘tudung’ per month. • If working days per month is assumed to be 26 days per month, the daily production rate is:
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The materials required for the month:
Ingredient Flour Margarine Sugar Eggs Water Amount Required/Month 0.02kg/unit x 52,500 = 1050kg 0.005kg/unit x 52,500 = 2025kg 0.01kg/unit x 52,500 = 525kg 0.04/unit x 52,500 = 2100 units 0.005litre/unit x 52,500 = 262.5 litre
Sewing by tailors
Ironing
Packaging
Storage before shipping out
Activity: ‘Tudung’ cutting If one cutter can cut 1 ‘tudung’ in 1/3 hour, the reciprocal of this is: = the cutter’s capacity to cut per hour = 3 ‘tudung’ per hour Therefore, the number of cutter required is: = Production capacity per hour/cutter’s capacity per hour = 5/3 = 1.67 (needs 2 cutters)
Transportation
Inspection Delay
When materials are transported from one point to another.
Measures standard of the in-process material, finished product or services When in-process material is restrained in a location waiting for next activity
Step I
Identify and list all the raw materials required to manufacture the product or provide the service.
– Restaurant: the raw materials required depend on the menu for the day – Cleaning service: the materials required include consumable items like detergents and scrubbing pads. – Retail business: fresh goods, sundry goods, canned goods.
Example: If the forecast demand per month is 50,000 units of cookies. If the amount of stock at the end of the month is 5% of the amount.
50,000 5%(50,000) 50,000 2,500 52,500 cookies/mo nth
Storage
When in-process materials or finished products are stored in the storage area.
4. Material Requirement Planning
Step I : Identify and list down the raw materials required Step II : Prepare the bill of materials Step III: Calculate the quantity of raw material required Step IV: Identify supplier