Case Studies on Ethical Issues and Operations †Free Sample

Question: How do ethical issues impact organizations and operations? Include an example seen in the workplace, in the news, etc. that relates to real-life situations. Answer: Part 1 1 Ethical Issues and Operations Ethics refers to the set of moral values as well as principles which are engaged in governing the decision and the activities. The code of ethics in an organization helps in guiding the people of the organization in designing the policies, program and the decision of the company. The ethical behavior of the organization has significant influence on the managing bottom line, reputation and productivity of the organization. The ethical behavior of the leaders of an organization has impact on the employee morale as well as employee loyalty. The leaders generally follow code of ethics which is the determining factor for the discipline procedures as well as the acceptable behavior for the entire workforce (Hill Hill, 2012). It has been observed that when the organizational leader has high ethical standard, it motivates the employees and it improves the employee morale. A healthy and positive organizational culture is developed with the aid of ethical behavior which ultimately contributes in enhancing productivity. Additionally, employee retention rate is improved. Ethical behavior is the major factor for increasing the efficiency followed by the productivity of the organization (Johnston, Clark Shulver, 2012). Thus, the organization achieves financial benefits through ethical behavior. 2 Business Processes There are various business processes that are important for the operations of an organization. These processes include the strategic development, product development, systems to produce the goods and services and order fulfillment. The strategic development is one of the most important processes as it helps in achieving the goals and objectives of an organization (Jones Robinson, 2012). The strategic development is a necessary process for establishing the core competencies of an organization and achieving the competitive advantage. Product development is the process of bringing a new product in the market by processing and creating the new product. It is basically the process of designing, creating and marketing of a new product or service for the consumers (Lewis Brown, 2012). It is thus very important to develop systematic method for providing the guidelines of all the processes related with new product development in the market. New product development can help an organization in acquiring more market share. Systems to produce goods and services are also a very significant part of the operational process. In order to produce a product there are various processes that are used. At first the inputs are acquired and then the processes are implemented for converting the inputs into outputs. Thus these processes are necessary for the operations of the company ('Manufacturing Service Operations ManagementSpecial Issue on Behavioral Issues in Operations Management', 2005). Order fulfilment is basically the complete process from the point of sales inquiry to the delivery of the product to the customers. It is also a one of the logistics functions and a process of responding to the orders of the customers. There are various options of order fulfilment like Built-to-order, engineer-to-order, make-to-stock etc. Here it can be said that the each and every process is very important for the operations process but the most important process is the systems to produce the goods and services. The strategic development and the product development need to be supported by appropriate production of goods and services. On the other hand the orders cannot be fulfilled if appropriate process is not used for the production of goods and services. Thus it is the most important process of production. Case study: Midas A service centre at a dealership like Genoa Ford can offer the same service as a typical Mi8das shop but there are debate regarding whether they are competitors or not. These organisations basically adopt different strategies for their operational efficiency. The main strategy of Midas is to provide narrow range of services at lower cost (Prajogo McDermott, 2008). On the other hand Genoa Ford Service Center is to provide a whole line of automotive repairs. They satisfy wide group of consumers. Midas is deciding on adding an engine tune in the existing product line. Thus it is very important to analyse the impact of the strategy on the operations. a. Anticipated Impact on the operating Efficiency Midas is in the automotive repair business and they provide narrow services to a wide geographical area. They have decided add engine tune-ups in the existing product line. This will affect the efficiency of the operations. At present the customers do not wait longer than 30 minutes for the muffler service but after the tune-up the customers will wait for a shorter time. Scheduling the tune-up service can make it easier for the company to keep the pledge and it will also help in serving more consumers in the market (Stevenson, 2012). Thus the company will acquire more customers and the market share. But one of the difficulties that can be faced by the company will be in terms of training. They need to train the employees to use the new facility appropriately or there may be various problems that can be faced by the company. If there is any form of breakdown then that can cause more waiting time if appropriate maintenance service is not implemented. On the other hand as a result of th e increase in the demand, the company can face difficulties in terms of the restricted capacity (Van Dierdonck, 2006). Here it can be recommended that the company should implement effective training and maintenance service for the facility. The company should also increase the capacity of the facility to support the service and the company should add more shops to the existing shops for taking the load. b. Change in the Operating Practices It is very important to accommodate for the operating practices in the organisation. It is known that effective operating practices are essential for the growth and benefits of the organisation. If an extra facility in terms of engine tune-ups is added then it is very important that effective changes are made in the operating practices as the new facility should be aligned with the operating process and thus there should be compatibility of the system for effective operations. Thus it is evident that the operating practice should be changed for accommodating the tune-ups in the process for increasing the efficiency of the organisation accordingly. It can help in avoiding any form of difficulties or issues (Jones Robinson, 2012). c. Gathering inputs from Shop Owner It is very important to gather the inputs from the shop owners. An organisation uses various processes to convert the inputs into outputs. Thus inputs are one of the essential materials that are used for the production process. Tune-up will help in increasing the efficiency and the productivity of the organisation and thus it is very important to acquire it from the appropriate vendor. The inputs need to be acquired from the shop owners, as they can provide the required assistance at the later stage. The shop owners can also help in supplying the required products at the right time at the right place and that can help in executing the operations of the company. Thus the inputs should be gathered from the shop owners. d.Type of Inputs Gathered There are various types of inputs that are required for the production process. The inputs are also referred as the factors of production. These inputs are processed by using various techniques and then outputs are produced. In the service industry, human resource is one of the major inputs for performing the service. Here various other instruments can also be used to support the service. It is known that there are three basic factors of production that are land, labour and capital. These factors of production can be used to provide the goods or service to the consumers. Human resource is the major factor of production in the service industry and they perform the services. Thus in this case efficient and skilled employees need to be acquired for performing the task (Hill Hill, 2012). The required machinery and the additional instruments for maintaining the facility need to be acquired as well. This can help in increasing the operational efficiency and effectiveness. e. Process to Launch the New Programme It is very important to take appropriate steps for implementing new programme in the organisation. In order to implement the programme of engine tune-up, it is very important to assess and analyse the initial performance of the company. After that the need for the tune-up is analysed. In the next stage various alternative solutions need to be identified and the best alternative should be chosen. After that the basic inputs and other required resources need to be acquired by the organisation (Jones Robinson, 2012). After that the system should be integrated with the new process and new facilities can be added with the existing facilities for supporting the service. Finally various measures must be taken to maintain the facility by continuously managing the programme and taking appropriate steps immediately if any problem is faced by the facility. It should also be taken into consideration that similar problem is not faced in the future (Johnston, Clark Shulver, 2012). Thus these are the basic steps that are necessary for launching the new programme to increase their profitability and to lead growth and development. Part 2 1 Productivity It is seen that many times the trade-offs are necessary to increase the productivity. Here it can be said that the production process is one of the major activities for any organisation. Thus it is constant attempt of the managers and the organisational heads to increase the productivity of an organisation. The productivity can be referred as the quantity of outputs produced per unit of output. Thus the productivity of an organisation is higher when per unit of input can produce more outputs. Thus the organisations implement strategies to increase the productivity of the production process and trade-off is one of the strategies that are implemented for the increase in efficiency and productivity (Flin, 2006). It is evident that there is a trade-off between the less productive inputs with the more productive inputs for increasing the productivity in every business unit. Here it can be said that in recent economic scenario, the level of competition is significantly high in each and every industry and thus the business units have to increase their core competencies and gain the competitive advantage. Thus their main aim is to increase the productivity of the operations and they can perform several trade-offs to achieve their aims and objectives. For example, there can be trade-off between the less productive labours with more productive capital (Hill Hill, 2012). On the other hand there can also be trade-off between skilled labour and unskilled labour. Though the company may need to bear more cost for their choices but they can gain in terms of higher productivity and thus the profitability. 2 Product Design and Quality In present economic scenario, the production units emphasises more on the product design and the quality of the product. Here it can be said that the quality and the product design is one of the most critical success factors for an organisation (Heizer, 2013). It is known that the consumer satisfaction is very important to gain customer loyalty and it can also help in gaining the competitive advantage and can increase the market share in an industry. Product design and quality can affect the customer satisfaction and thus the company can also achieve its desired goals and objectives (Childs, 2004). There are various forces and the important organisational activities that enable a firm to build the quality into its products. It is known that the global industry is in the way of fundamental transformation. The product needs to be conceived, designed and sourced in appropriate manner that is suitable for achieving the objectives. Some of the key drivers are, Smart Product and connectivity: there has been extensive increase in the connectivity and the networks. Here a new level of service for the customers is established, termed servitisation. Servitisaton: it is expected that service will be used as a diffrentiator in two-thirds of the manufacturing sector by 2015 and they will also help in establishing the profit centres. It is identified that the service quality will be one of the important factors for competitiveness in the future. Digitisation: it will help in meeting the fragmented customer demand and it will also help in increasing the global collaboration. Digitisation also helps is the strategies for globalised design-build service and manufacturers can validate the configuration of products before they are built. Personalisation: Personalisation is crucial for customer satisfaction and for meeting customer demand. But it can reduce the quality and increase the cost. Thus quality check is very important. Globalisation: after globalisation the competition in every market has increased significantly and thus it is very important to increase the quality to gain competitive edge in the market. Case study: Memorial Hospital The Memorial hospital is a privately owned health care unit with various facilities like intensive care units, an emergency room, psychiatric ward, cardiac care unit etc. The organisation has avoided specialised diagnostic equipment due to high cost of the facility. The hospital concentrates on mainly offering quality healthcare at an affordable price. Now various aspects related to the quality of the service can be discussed here. Measuring Quality of the Service: It is very important to measure the quality of the Memorial Hospital. It is known that the hospital has not introduced any special form of service in order to lower the cost and to offer the existing facility at a high quality. Thus one of the main objectives of the unit is to offer high quality product at an affordable price and there are various ways in which the quality can be measured. In a healthcare unit the quality can be measured by dividing the facility into four broad categories. There are structure, process, outcome and patient experience. Assessment of the structure can also help in identifying the quality of the service. The policies related with the care delivery, the personnel, facilities and care setting can be analysed for evaluating the quality ('Measuring Quality in Modern Managed Care', 2003). The process of the service that is given to the patients need to be analysed if they are consistent with the benchmark service or the routine clinical care. Outcome or the results of the health care for the patients can also help in assessing the quality of the facility (Kanji Moura e S, 2003). Patient Experience can also be one of the measures of quality and the patients can be interviewed or their feedback can be taken in terms of their experience in the facility or to know if they had faced any problems in the unit (Kara, Tarim Zaim, 2003). These measures can provide good knowledge of the quality of the service unit. On the other hand healthcare quality assessors can also be hired from outside to assess the quality. Potential Cost of Quality: there are various potential costs of quality for the Memorial Hospital. One of the major costs that can be borne by the hospital if there is any lack of quality of the service is the potential health risk that is faced by the patients. It is known that the health of the patients is the most important factors in a healthcare facility and the service is usually performed on the patients. Thus a lack is quality can put the life of the patient at risk (Flin, 2006). It is known that the life of a person cannot be quantified and thus its value cannot be determined. But the hospital will have to bear the cost of their goodwill and thus the loss of service users in the hospital. One of the direct costs of quality is the loss of service users in the facility and that can directly affect the profitability. Here the value of human life needs to be included as well for assessing the cost of quality (Lindgren Andersson, 2011). TQM service in the Memorial Hospital: Total Quality Management is one of the effective tools or measures that can help in managing g and improving the quality of the service that is provided to the service users (Flin, 2006). There are a wide variety of service quality aspects that can be considered in the healthcare facility. TQM is one of the integral parts of a high strategy level and it is very important that each and every staff provides their full support and attention in order to increase the quality of the service at every level. The top, bottom, forward and backward supply chain needs to be managed for providing high quality service to the customers. The organisation should focus on zero defects and it can be done by supplier quality control by providing proper inspection. The organisation should work on continuous system improvement and should also implement the training and educational programme for increasing the efficiency of the staff. The records should be properly mai ntained and any form of barriers should be removed that can provide hindrances for quality service (Hill Hill, 2012). So these ideas or techniques can be implemented for quality healthcare in memorial. Measures Used to Assess the Quality of Healthcare: In order to measure the quality of the healthcare facility that it is providing, it is very important to implement various measures that can help in assessing the quality of the facility. Memorial can take the feedback of the patients who are receiving the service facility. Their feedback can enlighten on the quality of the service (Hou Su, 2006). Consumer satisfaction is very important and the results of the facility can also provide an idea of the quality of the service (Kllstrm, 2010). If the health of the patients is improved then it can help in measuring the quality. Thus it can be concluded that in healthcare unit, the quality of the service is very important as the lives of the patients can be at a risk if high quality service is not provided to them. The value of the lives of the patients cannot be quantified and thus the cost of quality cannot be intensive in a healthcare facility. Thus quality cannot be compromised and efforts must be taken to continuously improve the quality (Kanji Moura e S, 2003). Part 3 1 Suppliers The suppliers are very important part of the production process. It is evident that the production supply chain starts from acquiring various raw materials and other inputs from the suppliers. Thus the suppliers perform one of the main functions and initiate the supply chain. An organisation can chose to keep the number of suppliers to a minimum or they can also use more suppliers for supplying the raw material and other inputs (Jones Robinson, 2012). It is evident that there are various advantages and disadvantages of both the approach of having fewer or more suppliers. These can be discussed here. The advantages of having more suppliers are that the risk can be diversified. In a situation where one supplier is unable to provide the goods, then the producer can get the supply of the inputs from other suppliers. The producer also has the advantage of choosing from various alternatives. One of the disadvantages of having many suppliers is that, the interconnectedness between the buyers and supplier is weak (Jones Robinson, 2012). There are many suppliers, thus there is no loyalty or special relationship with a supplier that can give them advantages in future. On the other hand in case of having a few suppliers, the advantages that can be achieved is a better relationship with those suppliers. They can provide various benefits later and it can also help in building an efficient supply chain. The disadvantage of having only a few suppliers is the narrow choice of suppliers and it can also increase the risk for the producers as they may fail to produce the goods in time if the supplier fails to provide the inputs at the correct time. The producer may also suffer in terms of the quality (Krajewski, Ritzman Malhotra, 2013). 2 Forecasting Method In the following table the forecasting can be shown. Year Mergers 5 Year Moving Average (Forecast) Absolute Deviation Squared Deviation 2000 46 2001 46 2002 62 2003 45 2004 64 2005 61 52.6 8.4 2766.76 2006 83 55.6 27.4 3091.36 2007 123 63 60 3969 2008 97 75.2 21.8 5655.04 2009 186 85.6 100.4 7327.36 2010 225 110 115 12100 2011 240 142.8 97.2 20391.84 MAD 61.45714286 MSE 88.88303711 In the above table the 5 year moving average is shown and it is forecasted that the number of mergers in 2012 will be 142.8. The moving average technique has been used to determine the forecast for 2005 to 2011. In the 5 year moving average table (forecast), the forecast of 2000 to 2011 mergers are shown. The error has been calculated as well and the MSE is 88.8830 and the MAD is 61.4571. Here a weighted moving average method can also be used to forecast the mergers for the year 2012. The weights are 0.10, 0.15, 0.20, 0.25, and 0.30. Weighted Moving Average (5) = 0.10 (123) + 0.15 (97) + 0.20 (186) + 0.25 (225) + 0.30 (240) = 12.3 + 14.55 + 37.2 + 56.25 + 72 = 192.3. Thus according to the five year moving average method, the forecast for the year 2012 is 192.3. In the following table the regression is shown. SUMMARY OUTPUT Regression Statistics Multiple R 0.895691715 R Square 0.802263649 Adjusted R Square 0.782490014 Standard Error 33.2939966 Observations 12 ANOVA df SS MS F Significance F Regression 1 44974.1 44974.1 40.57239 8.14E-05 Residual 10 11084.9 1108.49 Total 11 56059 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% Intercept -35459.56993 5583.689 -6.35056 8.35E-05 -47900.8 -23018.3 -47900.8 -23018.3 X Variable 1 17.73 2.784184 6.369646 8.14E-05 11.53072 23.93781 11.53072 23.93781 The equation for forecast is Y= 17.73*(X+ (-35459.6)) Y2012 = 35459 + 2012* 17.73 Y2012 = 221.7727 The moving average method is one of the most effective measures that can be used for forecasting the demand for future. Compared to other methods of forecasting, it is easier and weighted moving average method can also be implemented to forecast effectively. Another forecasting technique that can be as effective is exponential smoothing, autoregressive moving average, extrapolation, trend estimation, and linear prediction. Case study: Outsourcing Outsourcing is one of the effective methods that are used by various business units at present. It is evident that the main aim of various organisations is to minimise the cost and maximising the profits of the company (Chakravarty, Grewal, Sarker Sambamurthy, 2014). Thus outsourcing is one of the strategies that are applied by various organisations to move gain the competitive advantage by lowering the cost of the company. Outsourcing is used by various organisations in recent economic scenario for achieving the competitive advantage. It is known that there are various aspects of the economic conditions for the developed and developing countries. For example labour is abundant and comparatively cheap in developing countries whereas the capital is abundant in developed nations. Thus it is very important to produce according to the abundance of the factors and gain competitive advantage in the industry. Thus outsourcing can be an effective measure for gaining cost advantage and thus competitive advantage in the industry. a. Trade-off between Inputs and Productivity Here it can be said that there is a trade-off between the inputs and the productivity. Inputs are the basic requirements of the operations and thus it is very important that effective inputs are acquired at a lower cost. Thus it can be said that there is trade-off between the inputs for the productivity improvement (Haugen, Musser Lovelace, 2009). In various situations, it can be difficult for the producer or the business unit to raise the inputs at home productively. Thus if the business unit cannot raise productive inputs at home then, it is more feasible to acquire the inputs from outside. There are various factors that need to be considered in case of outsourcing. The necessity of increase in efficiency and the productivity can affect the outsourcing. Thus in order to increase the productivity, a trade-off between the inputs is conducted. b.Advantages and disadvantages of global sourcing There are various advantages and disadvantages of global sourcing against producing in the United States. Here it can be said that global sourcing can provide several advantages as well as disadvantages. The main advantage of outsourcing is lower cost and increased productivity. Here it can be said that, after globalisation the business units have the advantage of outsourcing inputs from other locations at a lower price. There is increase in the transfer of both physical and financial resources (Vitasek Manrodt, 2012). At present high skilled labour can also be acquired at a lower cost from outside. It is evident that developed countries outsource high skilled labour from countries like India and China. Some of the disadvantages of outsourcing are the quality concern. In certain situations, the production units compromise on the quality to gain the product at a cheaper cost. There can also be issues in terms of transferring the product or service from outside. Thus these are the main disadvantages of the situation. c. Product or Service of a low-cost Country Here an example of the product or service of a low-cost country can be given as well. It is evident that there is a pool of human resource in countries like India and China. There is abundance and huge supply of good-English speaking human resource in India. The labour can be outsources effectively at a much lower cost than in any developed country. d. Recommendations Here various recommendations can also be made for business units in terms of outsourcing. Here it is seen that there are various advantages as well as disadvantages of outsourcing for a company (Haugen, Musser Lovelace, 2009). It is evident that due to globalisation, there is increased interaction between nations and the transfer of goods and services has also increased. After the technological innovations, the information technology and the communication efficiency has also progressed and that can help in outsourcing by making. Thus transfer and communication cost is lower due to technological progress and cheap labour or other inputs can be acquired and it can be beneficial and profitable for the business. Part 4 1 Process Selection Product Design and Capacity selection is one of the important decisions that are taken by the productive unit (Reid Sanders, 2013). The producer must decide upon the design and other specification of the product that is produced and the capacity of the production is also required to be assessed. The product design can involve the dimensions, measurement, materials, and blueprints. These should be taken into consideration (Albiana Vila, 2012). It is known that the product design and the process selection can significantly affect the customer satisfaction, product cost and the quality of the product. Here it can be said that the process of production is determined after analyzing, what will be the design of a product. On the basis of the demand of the consumers the, product designs are specified and after that the process of production is implemented. The process that is used for production also depends on the capacity of production (Ambruch, 2013). On the other hand the capacity can also be increased for accommodating for the production process that is adopted by the producer. Thus it can be said that the process selection is related with the product design and capacity determination. 2 Monique Food Processing Company and Capacity Steps Description Capacity(Units/Hour) Unused Capacity 1 Preparefood 200 25 2 Measureandplaceinplasticpouch 175 0 3 Preparecardboardbox 200 25 4 Insertpouchintobox 300 125 5 Shrink-wrapbox 200 25 System Capacity and the Bottleneck Department: here it can be seen that the capacity of preparing food is 200 units per hour. The capacity for measuring g and placing plastic pouch is 175 units per hour. Thus even though 200 units will be produced but only 175 units can be put in the plastic pouch and the cardboard box are prepared 200 units and the capacity of pouch that can be inserted in the box is 300 units per hour but only 175 units of plastic pouches will be available to the operations for putting them in the cardboard box. Similarly only 175 units will be available for shrink-wrap of the box even though its capacity is 200 units per hour. So the system capacity is 175 units and the bottleneck is step 2 that is measure and place in plastic bag s(South China Morning Post, 2014). The unused capacity or the slack has been shown in the table. If 25 units more capacity is added in the bottleneck department that is the second department (measuring and placing in plastic bags) then the system capacity will be 200 units. It is the feasible option as the capacity of other three departments is only 200 units. The key factors that decide whether to add capacity is the difference between the bottleneck and the capacity of other departments. If the difference is high then the unit must add capacity in the bottleneck to increase the production as it can lead to a greater loss of profits and the capacity of other departments. An organization may want to reduce the capacity of other departments when they are constrained by the bottleneck department as the excess capacity is a waste and loss of profit due to the bottle neck (Stevenson, 2012). Case study: Beck Manufacturing and Plant Capacity Calculation of capacity ofeachmachinecenterandthecapacityofthesystem: Available capacity for Milling = [No. of machine * no. of shifts * shift duration * utilization * efficiency] / run time per piece = [5 * 2 * 8 * 100 % * 97%] / 0.03 = 2587 [approximately] Available capacity for Grinding = [No. of machine * no. of shifts * shift duration * utilization * efficiency] / run time per piece = [7 * 2 * 8 * 100 % * 95%] / 0.05 = 2128 [approximately] Available capacity for Boring = [No. of machine * no. of shifts * shift duration * utilization * efficiency] / run time per piece = [3 * 2 * 8 * 100 % * 98%] / 0.02 = 2352 [approximately] Available capacity for Drilling = [No. of machine * no. of shifts * shift duration * utilization * efficiency] / run time per piece = [6 * 2 * 8 * 100 % * 93%] / 0.042 = 2126 [approximately] Therefore, the capacity of the system is = [2587 + 2128 + 2352 + 2126] units = 9193 units It is the fact that the Drilling department looks like to be the bottleneck; therefore, capacity should be enhanced by an additional piece per minute. At present, there is a slack in every department. Therefore, increment of an additional piece per minute in Drilling department would cut back the slack in each department. As per given information, Mr. Beck would like to expand capacity without purchasing new equipment. So, from this point of view, it can be said that he would needed to incorporate an additional shift as third shift specifically for the Drilling department to make sure this particular centre produce additional pieces (Stevenson, 2012). Here, inclusion of such third shift will enhance the organizations total productivity and as a consequence, there will not require purchasing an extra machine. Further, in doing this, the level of material cost also be under control, which positively influence the final product cost. Part 5 1Material Requirements Planning (MRP) Inventory and Customer Service The material requirement planning is basically the inventory control, scheduling and production planning system that is used for managing the manufacturing process. MRP system can be used by hand as well but it is mostly software-based. The main objectives of MRP is maintaining the lowest possible products and materials in the stock, ensuring that there is availability of materials for the production and the products are timely delivered to the consumers. It also helps in purchasing activities, delivery scheduling and manufacturing activities. The MRP system can help in inventory control and also can process the materials. Thus one of the major functions of MRP is inventory control and maintaining low level of inventory. The delivery, purchasing and manufacturing activities can also be planned by MRP. It is known that the customers require the products at a shorter possible time than it takes to create them. Thus it is very important to plan for the process. The company may lose money or the customers if appropriate planning is not done. For example, dynamic lot sizing method can b used to maintain the inventory but also provide the goods to the consumers on time. Thus MRP is one of the effective tools to increase the customer service level but it also helps in lowering the inventory of the company. 2 Perpetual versus periodic Inventory Systems The perpetual inventory system refers to the system where the cost of goods and the merchandise inventory that are sold, are continuously updated and after every transaction of sale or a purchase. Here the point of sale system can be introduced and the records are updated continuously. In the inventory account some other transactions can be updated as well like purchase discounts, sale/purchase returns etc. In the inventory account, the purchases should be directly debited in the account. In the perpetual inventory system, the purchase account is not used (Accountingexplained.com, 2014). The periodic inventory system can be referred as the system of inventory management where various activities related with the inventory is not updated continuously. The sale transaction is recorded via a single journal entry and purchases are recorded in the purchase account. During the accounting period, the cost of goods sold account does not exist. Thus there is a difference between the two inventory systems and in certain situations one is better than the other. Here it can be said that among the two inventory systems, at present, most of the retailers use the perpetual inventory system but the periodic inventory system can be better in certain situations. For example, in case of periodic inventory system, it is known by the companies at the beginning of the period that how much inventory they have. They also know the level of inventory at the end of the period. On the other hand, the perpetual inventory system, a company known the money that is invested in the inventory system. Case study: Alliance Supermarket and Point of Sale (POS) System The Alliance supermarket has been using the point-of-sale (POS) system to track the inventory of the system. The system also uses a laser scanner for the Universal Product Code in every item at the checkout counter by identifying the unique number in each and every product. At present it is used for updating and maintaining the inventory records and the system has also improved the ability of the company for replenishment in the inventory but there are certain problems that are faced by the company at present (Stevenson, 2012). The differences in the tastes and preferences are not included in the system which creates major issue for the company. Innovative Use of Point-of-Sale Point of sale (POS) is the place where the transaction of retail sector is completed. The customers make the payments at the POS and to the merchants for the exchange of goods and services. The customer service at the point of sale should be very effective and efficient as the organization has to deal with the customers directly (Reid Sanders, 2013). Here it can be said that the POS can also be used in an innovative manner to help the organization achieve their strategic goals. Here various data can be collected from the POS in terms of the details of the buyers and what do they purchase at what time. The information can significantly help in creating a trend after estimating the purchase pattern of the consumers. It can help in maintaining the records of the trend and thus forecasting of the demand of the consumers at certain time period can be estimated as well and the company can prepare beforehand. This can help in minimizing the risk. The customer relationship can also be devel oped at the point of sale by effective measures. There are various ways in which Alliance can reduce the cost and also provide better service to the customers. In this regards it can be said that at the POS, the employees should be trained to interact with the consumers so that they can provide better service to the consumers (Krajewski, Ritzman Malhotra, 2013). The information of the customers and their purchasing pattern records can be very helpful in avoiding risks and various other costs and it will also improve the service to the consumers. Alliance can also implement online support service and they can use online marketing techniques. In the official website of the supermarket, various sections can be added for receiving the feedback of the consumers. They can also implement a special card system for the consumers (Krajewski, Ritzman Malhotra, 2013). A special credit can be maintained in the card. The regular purchasers can be asked to use the card during every purchase and in return they can be provided with special credit in the card. For example, free purchase of goods worth $15, after total purchase of $300 goods from the market. That way the record of the purchasers can be maintained as well. It is very important to take into account the ethical and privacy considerations for the consumers. It is known that, accessing the information of others without any consent can lead to ethical violation and there should be certain privacy policy for the organization as well (Krajewski, Ritzman Malhotra, 2013). In this case the information is gathered from the consumers regarding what they are purchasing at what time. Thus there may be ethical and privacy consideration with the POS system information gathering. Part 6 1 Just-in-Time (JIT) Inventories Just-in-time is a production strategy that basically helps in improving the returns on investment by associating the carrying cost and the reducing in-process inventory. It is one of the effective approaches of operations management that reduces the waste and increases the productivity and efficiency of the entire operation. It is evident that JIT system is more effective for the manufacturing sector where the repetitive work is conducted and JIT can help in increasing the efficiency by continuous improvement. It can also be implemented in service sector where more repetitive work is conducted like in restaurants, in case of checking and paying bills. But in the service sector where more personalized services are conducted like hair cuts or seeing patients by the doctors. Here it can be said that in the medical service industry, JIT cannot be implemented as various patients need specialized care. The kinds of treatment that are given to the patients are different for each and everyone and that depends on their requirement and need for the treatment. Thus in such situation JIT cannot be implemented as patients should be given intensive care and treatment and thus similar process cannot be used for every patient as it can lead to harmful consequences (Krajewski, Ritzman Malhotra, 2013). For example, if a doctor detects some symptoms on a patient and provides him with the required medication after the checkup, he cannot use the same medicine on another patient with the same symptoms without checking their allergies or conducting other medical check-ups. This can escalate the issue and thus JIT cannot be used here. 2 Scheduling Process The scheduling process is one of the important processes in the operations management that is undertaken by the production units. It is known that there are various processes and sub-processes that are undertaken by production units in order to convert the inputs into outputs. In order to conduct a smooth production, it is very important to implement scheduling for each and every activity or process (Cs.rutgers.edu, 2014). If scheduling is not conducted then it can lead to system breakdown and can create a chaos and thus the productivity or the efficiency of producing the output can be affected. Here it can be said that the scheduling process in various service industries can be different. The scheduling process in the restaurants, hospitals and airlines can be different. In the restaurants scheduling is necessary for manage the staff and their shifts in the restaurant. In the restaurant the scheduling process is used to make roasters for the employees so that various shifts are covered by equal service providers in the restaurant. Here forecasting techniques are used to predict the most rush hours and thus more staff can be scheduled to work during that shift. In hospitals as well the similar scheduling process is used for staffing in different shifts. In airlines also similar scheduling process is used but the scheduling in case of airlines is more complex as the flights, their time should be integrated in the schedule with the flight attendants and other employees. Case study: Space Age Furniture Company Space Age Furniture Company basically manufactures cabinets and tables that are used to hold the portable television and microwave ovens. The company uses the same production and operations method even though they are made in different features and sizes. Part number 3079 is used in making Saturn and Gemini as one of the subassembly part and it is produced by renowned specialist Ed, Szewczak. The main aim of the company is to reduce the inventory cost by reducing the storage and they have adopted the strategy of zero finished goods inventory. At present the specialist of part 3079 is feeling uncomfortable due to the extra overtime and thus measures should be taken to improve the situation. Here various aspects of the problem is identified and discussed. Addressing the Problems Coral is facing various problems at present especially of losing their experienced machinist because of the service that is given by him in overtime for the production of part 3079. The sub-assembly part 3079 for Gemini and Saturn has been used extensively in the operations and thus it is very important to address the issue as the part is very important for the production and raising a similar skilled machinist is also not an easy task. Here a sound production planning is necessary and a comprehensive planning can help in addressing the demand in the market with adequate supply at the correct time. The technique of economic order quantity can help in efficient allocation of resources and the problem of overtime can also be eliminated in the company and the specialist can work within a time limit. Appropriate forecasting can help in managing and preparing an effective schedule for the organization. The downtime and the breakdowns can be reduced with the help of total product maintenan ce. It is very important to plan the preventive maintenance for the equipments and the machines and it can ensure smooth flow operations. This can minimize the risks of production. Various tools and techniques can be implemented in order minimize the overtime costs of the production process and tools and techniques can also be implemented for making the employees work efficiently and faster (Jones Robinson, 2012). The overtime cost can be reduced if the employees are more productive during the work hours. The organization can also hire additional employees during the peak season so that workload can be distributed. This will enable the organization to be more competitive and increase the efficiency of the operations. Reduction of Minimum Quantities of Sub-assemblies Here the stock control method can be used for reducing the minimum quantities of subassemblies in the production unit. It is very important keep a minimum quantities of sub-assembly in order to ensure that the parts are provided at the required time and there is no shortage of the parts. The company produces a new batch of stock after reaching the reorder level (Jones Robinson, 2012). If the minimum quantities of the sub-assembly can be reduced then the parts will also be reduced and thus there can be faced difficulties in meeting the demand for the parts. Here the master schedule for the process should be carefully planned for the minimum quantities of subassemblies and the plan can also help in forecasting the demand for the products. There will be no buffer stock for using in the production and due to the reduction in quantities of sub-assembly the overall cost can also be reduced (Hill Hill, 2012). Costs of Carrying Excess Items in Inventory The cost of holding the inventor will significantly increase if at each stage the company produces excess items. The holding cost in this case is investment cost, labor cost, material handling cost etc. In the production of both the TV stands a storage space will be required for keeping the excess inventory (Hill Hill, 2012). The storage conditions should be maintained so that the products are not affected. This can increase the cost of the operations and the production. It is known that the each part of 3079 costs $0.75 per unit and the inventory costs for holding the sub-assemblies is $0.25 per week. Thus the storage cost of Saturn is $1.50 and the storage cost of Gemini is $1.25 per week when there is no immediate shipment of the products. The cost of inventories can be obtained by multiplying the units produced and the cost of storage for each unit. It is evident that the holding cost for every sub-assembly part and part 3079 is lower than the cost of storing the finished goods per unit in the inventory (Childs, 2004). Trade-off between Overtime Cost and Inventory Cost Here it can be said that the organization is facing difficulties in terms of maintaining the inventory cost and the overtime cost. In this case scenario it can be said that the overtime cost is very expensive for the company as the productivity and the production diminishes with the increase in overtime. 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