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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).
The prices for company A for the first quarter of 2007 are given below. The price of the stock on January 1, 2007 was $120. Find the holding period return for an investor who purch
Hatten (2009) stated, because inventory is such a significant expense, most businesses look carefully for ways to determine the appropriate levels of control for their inventory. H
Relation with types of manufacturing plant location and layout.?
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Which are your top 10 requirements to offer someone a top manager position?
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