During the last ten years, much attention has been given in the academic and management literature concerning the topic of Operations Management (Adam & Ebert, 1990; Daniels & Burns, 1997). Much of this interest is attributed to the astounding success of the Japanese "just-in-time" manufacturing process wherein effective scheduling and "top-to-bottom" organizational motivation play a major role (Goulden & Rawlings, 1997). This paper will analyse the major trends in Operations Management today, paying particular attention to the step-by-step process needed to implement successful Operations Management. Rather than deal with abstract theory, it will be more meaningful to establish a company model, so that the definitions have a practical application.
ABC Products packages and sells gift boxes of wine by mail. ABC cannot carry any inventory of finished products because of slow inventory turnover and insufficient capitalization. On the plus side, the packaging operation is simple, inventory delivery is rapid and new employees can be trained quickly. ABC is located near a large metropolitan area and new employees are readily available. On the average, each employee can produce 1,000 gift boxes of wine per month. Payroll costs including wages and fringe benefits average BP 1,730 per employee per month. It usually costs about BP 200 to hire a new employee and BP 300 to lay one off. Currently, there are 12 employees on the payroll. The company plans to meet demand by adjusting the work force size.
ABC is still new to the operations management concept, but the top management is willing to try anything. After much research, the company officials have learned the importance of approaching the planning in a logical and flexible manner. And they want to experiment with "aggregate planning," but are not sure of (a) exactly what it is, and (b) the validity of using it.
A company such as ABC which decides to do Aggregate Plann...