Operations Content List
Successful implementation of MRP depends on the following factors which makes an MRP effective and efficient. Management commitment Top level management should commit the proper budget and allocate adequate number of resources to successfully implementation of MRP system in the organization. User involvement All the MRP users across the organization will be responsible for the […]Continue Reading... No Comments.
The different MRP Terminologies which are mainly used are Dependent demand: The demand for an item depends on another item. The demand dependency is the degree to which the demand for an item is associated with demand for another item. MRP helps to identify all the dependency and controls the order for each item in […]Continue Reading... No Comments.
Material Requirement Planning (MRP) refers to basic calculations method or tool/software for the materials required to develop the end product along with their time of procurement. It is a technique for determining the quantity of the raw materials required to develop the end product and the timing of the acquisition for the same and making […]Continue Reading... No Comments.
There are three techniques for inventory management: ABC Approach Economic Order Quantity Model Managing Derived-Demand Inventories The ABC (Always Better Control) Approach It is a simple approach in which the main idea is divide the inventory into three (or more) groups based on the quality, quantity or significance of their usage. In some cases, companies […]Continue Reading... No Comments.
There are two basic types of costs associated with current assets. Carrying costs Shortage costs Carrying costs Carrying costs represent all of the direct and opportunity costs of keeping inventory on hand. These include: Storage and tracking costs Insurance and taxes Loss due to obsolescence, deterioration, or theft The opportunity cost of capital on the […]Continue Reading... No Comments.
Inventory refers to all the materials the company posses during different stages of the production. Inventory Types It is normally classified into three categories. Raw materials Work-in-progress Finished goods Raw materials refer to the initial basic products that are used to develop the end product. For a Steel company, the raw material is iron ore. […]Continue Reading... No Comments.
Working capital management refers to the decisions and managing the working capital (cash or cash equivalents, inventory, finished goods) efficiently during the normal course of business operation. This involves proper management of company’s total current assets and current liabilities. The main aim of Working capital management is to ensure that the company utilizes the working […]Continue Reading... No Comments.
To keep an eye on Working Capital Management we have to check following factors: Inventory Turnover Debtors and Creditors Turnover Working Capital Leverage Operating Cycle Cash Conversion Cycle Let’s discuss each and every factor in detail: Inventory Turnover Inventory can be in one of the following states: Raw Material Work in progress Finished Goods The […]Continue Reading... No Comments.
The Cash Conversion Cycle (CCC) measures time frame during which the company converts the cash from payables to receivables which means the time frame when the cash is inside the market place. During its daily business operations the company Buy the raw materials and inventories from the suppliers and pay them cash for the same. […]Continue Reading... No Comments.
Earlier the traditional supply chain model was based on a push based strategy where the manufacturers produced the goods and pushed them through the supply chain without receiving any proper feedback and information regarding any requirements or specifications. In that process, there was often some gaps between the supply and demand which led to either […]Continue Reading... No Comments.