Production Plan for Riordan Manufacturing
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Production Plan for Riordan Manufacturing
Operations Management/OPS571
June 28, 2010
Robin Hundley-Solomon
Production Plan for Riordan Manufacturing
Learning Team A’s recommendation for a new process design and supply chain emphasizes strategic capacity planning, enabling Riordan Manufacturing to sustain systematic balance with increases in capacity, both internally and externally. For instance, Riordan Manufacturing can schedule overtime, lease equipment, and subcontract additional capacity during larger production periods. In addition, Riordan can strategically plan for capacity by using forecasting methods to predict demand. As a result, Riordan can determine equipment and labor needs in accordance with their accessibilities. Furthermore, Learning Team A recommends Riordan strive for the best operating level, which is the processes capacity level at which the average unit cost is minimized at that particular volume output level. Likewise, Riordan must focus on the capacity utilization rate, which shows how close the organization is to its best operating level. Ultimately, Riordan should aim to operate at a point of economies of scales. The organization and production volume will continue to grow, decreasing the average cost per unit of output. This phenomenon is clearly expressed in organization with high fixed costs, as no matter the level of output; the fixed costs remain the same, therefore, the greater the output, the smaller the fixed cost per unit (Chase, Jacobs, & Aquilano, 2006).
As Riordan Manufacturing produces more units, the organization will gain more experience with the optimal production techniques, reducing the production cost in a predictable manner. This experience curve will provide Riordan with a competitive advantage. By constructing larger facilities and producing more units, Riordan Manufacturing will gain greater experience, which increases sales volume with a lower cost to price, providing another competitive...
Operations Management/OPS571
June 28, 2010
Robin Hundley-Solomon
Production Plan for Riordan Manufacturing
Learning Team A’s recommendation for a new process design and supply chain emphasizes strategic capacity planning, enabling Riordan Manufacturing to sustain systematic balance with increases in capacity, both internally and externally. For instance, Riordan Manufacturing can schedule overtime, lease equipment, and subcontract additional capacity during larger production periods. In addition, Riordan can strategically plan for capacity by using forecasting methods to predict demand. As a result, Riordan can determine equipment and labor needs in accordance with their accessibilities. Furthermore, Learning Team A recommends Riordan strive for the best operating level, which is the processes capacity level at which the average unit cost is minimized at that particular volume output level. Likewise, Riordan must focus on the capacity utilization rate, which shows how close the organization is to its best operating level. Ultimately, Riordan should aim to operate at a point of economies of scales. The organization and production volume will continue to grow, decreasing the average cost per unit of output. This phenomenon is clearly expressed in organization with high fixed costs, as no matter the level of output; the fixed costs remain the same, therefore, the greater the output, the smaller the fixed cost per unit (Chase, Jacobs, & Aquilano, 2006).
As Riordan Manufacturing produces more units, the organization will gain more experience with the optimal production techniques, reducing the production cost in a predictable manner. This experience curve will provide Riordan with a competitive advantage. By constructing larger facilities and producing more units, Riordan Manufacturing will gain greater experience, which increases sales volume with a lower cost to price, providing another competitive...