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 a mechanistic and organic organization, Contrast a mechanistic and ...

Contrast a mechanistic and organic organization giving an example of each. What would a bureaucracy be more like, mechanistic or organic? Why?

Explain job evaluation methodologies, How does FES differ from other point ...

How does FES differ from other point factor job evaluation methodologies? Give examples of bobtailing in FES

Explain criminal prosecutions hurt innocent shareholders, Respondeat superi...

Respondeat superior is the theoretical basis for holding companies criminally liable for actions of their employees. Companies oftentimes have little defense against prosecution. C

Factors determining production control, Factors Determining Production Cont...

Factors Determining Production Control 1. Nature of Production: In job oriented manufacturing products and operations designed for some particular order which may or may not b

Explain production and distribution of pharmaceutical, Carrington inc is an...

Carrington inc is an international company engaged in the production and distribution of pharmaceutical. Is the Peterson operation successful? To the degree that it can be judged a

Explain widespread problem in industry, In light of today's high standard o...

In light of today's high standard of living, why do you think that employee theft is such a widespread problem in industry?

Describe what is xyzs stock price today, Assume XYZ stocks last dividend wa...

Assume XYZ stocks last dividend was $3. The dividend growth rate is expected to be constant at 5% for 3 years, after which dividends are expected to grow at a rate of 6% forever. X

Describe the similarities and differences of medicare, Explain the similari...

Explain the similarities and differences of Medicare and Medicaid managed care plans by comparing and contrasting the following three issues: Strengths, weaknesses and incentives b

Explain the purpose of realistic and contrived tests, Explain the purpose o...

Explain the purpose of realistic and contrived tests as part of the installation of a new system. Both of these tests contribute to a critical activity prior to the changeover

Supply chain management, explain the extend to which SCM is applicable to a...

explain the extend to which SCM is applicable to a service operation like Cruise int.

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