Sub optimisation - operations function, Operation Management

Assignment Help:

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).


Related Discussions:- Sub optimisation - operations function

Explain what type of human resource strategy did lenovo, Overview: This cas...

Overview: This case explores the mission to become a major player in the global personal computer industry. Lenovo acquired IBM%u2019s personal computer division in 2004 to become

Explain better plan capacity, The number of students enrolled at Spring Val...

The number of students enrolled at Spring Valley Elementary has been steadily increasing over the past five years. The school board would like to forecast enrolment for years 6 and

Why is cutting cost an merit of reducing project scope, Why is cutting cost...

Why is cutting cost an advantage of reducing project scope? Need at least a paragraph

Explain the current maximum output of the process, I-mart is a discount opt...

I-mart is a discount optical shop that can fill most prescription orders in around 1 hour. The management is analyzing the processes at the store. There currently is one person ass

Product , Product Product is anything that can be offered to a market ...

Product Product is anything that can be offered to a market that might satisfy a want or need. There are two concepts of product narrow concept and wide concept. In its narrow

Explain functional structure with simple structure, Explain how the followi...

Explain how the following somewhat match each other: • functional structure with simple structure • divisional structure with departmentalization by product • machine bureaucracy w

Explain socially responsible company, In light of these actions, can GM sti...

In light of these actions, can GM still be a socially responsible company? If so, how?

Explain discussion maker acted unfairly in this situation, Why do think the...

Why do think the discussion maker acted unfairly in this situation?

Explain considerations in designing organisation structure, Explain main co...

Explain main considerations while designing the organisation structure. While designing the organisation structure, there are two major considerations:  - Differentiation an

Explain improve long-term sales potential, Corporate social responsibility ...

Corporate social responsibility programs that increase brand awareness to improve brand equity, in order to improve long-term sales potential, are directly affecting the ______ out

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd