Operations Decision Making

Part 1

Many practitioners prefer to update their material requirements planning on a weekly or biweekly basis. This is based on the performance of an operation in the organization that naturally varies from the day to day activities. It is usually done on the weekly basis in order to create some time period for observation in which performance is measured (Ptak, Smith & Orlicky, 2011). This smoothens the daily variations o the business operations in which they are averaged. For instance, below average performance in a day may be considered as an offset of the more than the average performance of the following day. Having daily updates of the material requirements planning will help in monitoring the performance more closely (Ptak, Smith & Orlicky, 2011). This can also achieve and also create an exception on the report that may result in a calling of the normal variation given the abnormal deviation from the expected output.

Part 2

There are some requirements that a supplier must meet in an agreement with a customer in order to make sure that all the specifications before the shipments are met. This is because there would be some effects to cost in relation to the quality to the consumers. First and foremost, before an agreement is made most of the times a customer is likely to inspect all parts. The agreement ideally excludes the need for inspection such as appraisal cost that will be reduced due to the agreement that all the supplies are within the tolerance (Weele, 2010). The agreement allows the customer to mainly focus on quality improvement that increases prevention cost. There would also be an effect to the supplier in relation to the cost of quality. Internal failure costs will be eliminated because the quality is focused on and defects before shipment are corrected (Weele, 2010). There is also minimization of external failure costs that are found by the customer after receiving the supplies due to the fact that the supplies are of the right quality hence fewer defects.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reference

Ptak, C. A., Smith, C., & Orlicky, J. (2011). Orlicky's material requirements planning. New York: McGraw-Hill.

Weele, A. J. (2010). Purchasing & supply chain management: Analysis, strategy, planning and practice. Andover: Cengage Learning.