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PGDBA Semester II Post Graduate Diploma in Business Administration - Semester 2 MB 0044 - Production and Operation Management ASSIGNMENT- Set 1

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Q1. Explain the basic competitive priorities considered while formulating operations strategy by a firm?

Answer: Operations stategy reflects the long-term goals of an organisation in its corporate strategy. To achive good results, a clear understanding of the operating advantages and a good cross functional coordination between functional areas of marketing, production, finance, and human resources departments are required. Operating advantages depend on its processes and competitive priorities considered while establishing the capabilities. The basic competitive priorities are: Cost Quality Time Flexibility

1. Cost Cost is one of the primary considerations while marketing a product or a service. Being a low cost producer, the product accepted by the customer offers sustainability and can outperform competitors. Lower price and better quality of a product will ensure higher demand and higher profitability. To estimate the actual cost of production, the operations manager must address labour, materials, scrap generations, overhead and other initial cost of design and development, etc. 2. Quality Quality is defined by the customer. The operations manager looks into two important aspects namely high performance design and consisitent quality. High performance design includes

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PGDBA Semester II Q2.a. List the benefits of forecasting b. Explain the significance of plant location decision

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Answer: Forecasting basically helps to overcome the uncertainty about the demand and thus provides a workable solution. Without the forecast, no production function can be taken up. Hence, it can be stated that forecasting helps to: Improve employee relations Improve materials management Get better use of capital and facilities Improve customer service

b. The significance of plant location decision

: A plant location cannot be changed

frequently since a large capital needs to be invested to build the plant and machinery in the selected area. Therefore, before selecting a plant location, a long range forecasting is to be made to foresee the future needs of the company. Location identification for an organisation is an important strategic level decision taken by the top management. It involves planning and management of the plant location. Location decisions are strategic decisions that bind the organisation to a certain place. Hence utmost care has to be taken while selecting the location.

Location decisions are made on the basis of parameters which make it suitable for various considerations of suppliers and markets. While locating a plant, the following long range forecasting needs are to be considered: The companys expansion plan and policy Diversification plan for the products Changing market conditions The changing sources of raw materials Many other factors that influence the choice of the location decision

The main concern of the operations manager will be the extent of flexibility he/she has. This can be determined by raising such questions like: What is the volume of production of different products? What operations have to be outsourced? How to deal with surge or decline in demand? Page 2

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PGDBA Semester II What will be the growth potential in that place?

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Materials need to be stocked and moved to various locations for operations and today it is common to see plants being operated at multiple locations. Since decisions have long term implications, thorough analysis and involvement of senior managers from all departments is essential. Multilocations for manufacturing and distribution to exploit situations of supplier availability or market requirements are now a common practice among Indian companies. This trend in the recent times has lead to Indian companies being called by a new name, Indian MNCs.

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