reply to my classmates Operation Management

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Reply to my first classmate: TAREQ 

Capacity of Saudi Gap Organization

Apparel products are sold by the organization. The association's concern is that, as a result of changing style patterns and an increase in the number of apparel stores, it has been unable to sell the number of things it intended to sell, resulting in large stock costs and a loss in commitment edge as the items are offered with high limits. “Capacity planning is a key strategic component in designing the system. It encompasses many basic decisions with long-term consequences for the organization” (William, 2018, p. 189). The organization's capability may be described as

Total working hours available across industrial facilities / Average number of hours expected to manufacture an item = capacity.

Strategy for a Lead (Lead Strategy)

  • The most powerful technique is the lead procedure.
  • Organizations strive to be the market leader by planning ahead of time to ensure that they don't miss out on any client demands.
  • With an increase in anticipated interest, organizations increase the limit.
  • Fear of greater stock, excessively expensive fixed costs, and reduced margins.

Strategy for the Match (Match Strategy)

Match strategy is a kind of primary goal of Lead Strategy and Lag Strategy Associations make little changes in the limit on a regular basis, taking into account request conjectures and actual demands. Instead of making major changes, make little modifications to the limit.

Strategy for Lag (Lag strategy)

The most conventional tactic is the lag strategy.

Only by responding to genuine demands do organisations change their interests. (Sturman and McCabe, 2007)

Approach that is both cost-effective and efficient

Chances of not completing all client demands and, as a result, the risk of losing potential clients.

Recommendation

The organization now uses the Lead system since it has been the market leader for the target market for a long time, but given current trends, I believe the organisation should switch to a coordinated process rather than a lead methodology to avoid greater stock costs and lower margins. The organization has the authority to raise the limit if there is high demand or a significant increase in demand following gauging throughout the period leading up to the season. “Capacity decisions have a real impact on the ability of the organization to meet future demands for products and services; capacity essentially limits the rate of output possible” (William, 2018, p. 191).

Reference

Sturman, M.C. and McCabe, D., 2007. Choosing whether to lead, lag, or match the market: developing a competitive pay strategy for a new restaurant. Journal of Human Resources in Hospitality & Tourism, 7(1), pp.85-97.

William J. Stevenson (2018). Operations Management (13th ed).

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Reply to my Second classmate: AHMED

Demand and capacity are very important and has to be managed well in any organization producing goods or services, leaders in the organization has to manage and balance that to achieved the customer satisfaction and utilized organization resources effectively.

In this thread, I have selected Almarai Company, the biggest company in dairy sector in Middle East, Almarai established in 1977 located in Saudi Arabia, Riyadh regain, Almarai serving over 18 million daily consumers inside Saudi Arabia and foreign countries. Currently Almarai producing many products such as airy Liquids, Juices &Foods. I will focus in this thread in dairy sector one of the lovely food in Saudi Arabia, Dairy products was valued by USD 4,807.70 million in 2020 in Saudi Arabia (Mordor Intelligence,2021) In 2016 Saudi Arabia has held the largest share of 68.8% in GCC region, It was exceptional demand comparing with other counters in GCC. With that Almaray utilize his full recourse and capacity to produce dairy products that result to satisfied the customers and importing large volumes of dairy products. According to study contacted by UN Comtrade 2018 that result to Saudi Arabia was the 2nd largest importer of dairy products worldwide with value over USD 253 million for one year.

The equation capacity gives the organization an overview how much they have to produce to utilized resources effectively and satisfied customers. The formula to calculate the equation capacity is = number of product produced/market demand.

Lead Strategy is including capacity in expectation of an increment in market demand. Lead strategy is forceful technique with the objective of baiting clients absent from the company's competitors by making strides the benefit level and decreasing lead time. the Lag Strategy is more preservationist than the Lead Strategy because it holds up until the current capacity is extended to its limits some time recently including more capacity. In lag strategy, producers react to real increment in request and boost capacity after the current operation runs in full. Match strategy to extend capacity when demand starts to extend or can say to stay a step ahead of the trend. I believe the recommended strategy for Almarai and dairy sector is to utilize the Lag strategy because the dairy products having an short expiry date so this is the best strategy can be used with less risk.

 

References:

- Brian Hoey.(2018). What is demand capacity planning? Link: https://blog.flexis.com/what-is-demand-capacity-planning

- Mordor intelligence.(2021).SAUDI ARABIA DAIRY PRODUCTS MARKET - GROWTH, TRENDS, COVID-19 IMPACT, AND FORECASTS (2021 - 2026) link: https://www.mordorintelligence.com/industry-reports/saudi-arabia-dairy-products-market

- Stevenson, W. (2018). Operations management (13th ed.). New York, NY: McGraw-Hill Irwin.

- Almarai company website: https://www.almarai.com/en/

Revision (2021-10-07)

can you add one question for Ahmed Reply

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