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Sub optimisation - Operations Function
Another important issue raised by the systems approach is that of sub-optimisation. This is of considerable significance for managers, as it refers to situations where a sub-system is configured such that its performance appears to be optimal, yet the performance of the larger system is prejudiced. A hypothetical example might be a firm comprising several divisions (sub-systems), one of which is responsible for the assembly of final products.
The management of this division decides to reduce operating costs by cutting the stock levels of component parts, and placing replenishment orders for smaller quantities, and more frequently than previously. If this division is supplied by other manufacturing divisions of the firm, they may be obliged to produce in uneconomically small batches: the resulting increases in set-up costs of the supplying divisions may turn out to be greater than the stock-holding savings made by the assembly division. What appears to be optimal for a sub-system (the assembly division in this case) may not be not be optimal for the higher level system (the firm).
Dinoco produces three types of oil products: domestic oil, petrol for car and aviation fuel. Each product must meet the minimum average octane regulation. The average octane levels
Describe BP'S first problem, which involved the firms IT function. Discuss BP'S solution to this problem.
Fireside Tire Company, a manufacturer of radial tires for sport utility vehicles, sells its products in the automotive aftermarket and distribution them throughout the United State
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A project manager desires a work breakdown structure that goes through 6 levels of detail. Level 3 through level 6 would most likely be prepared by: Answer Project sponsor
A dry cleaner uses exponential smoothing to forecast equipment usage at its main plant. August usage was forecasted to be 88 percent of capacity; actual usage was 89.6 percent of c
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