Powerful Insight

I was browsing www.lds.org tonight.  I was trying to figure out why Elder Robert D. Hales, member of the Quorum of the Twelve Apostles of the Church of Jesus Christ of Latter-day Saints, did not speak in General Conference a couple of weeks ago.  I hope he is well.  I didn’t find my answer, but I found this quote that I think is very insightful.  I think it applies to all fields of study, even Operations Management…

“The law of the harvest is simply that you don’t get something for nothing in life,” says Elder Hales. He tells a story about his comment to a translator about the translator’s good fortune in having the gift of tongues. The translator responds, “My gift of tongues was received after thousands of hours of study and after overcoming many moments of failure and discouragement.” Elder Hales points out that the development of gifts is not an easy undertaking—in order to take full advantage of the gifts we are given, we must put in the corresponding effort.

Part of the translator’s response really caught my attention.  “[A]fter [working real hard AND] overcoming many moments of failure and discouragement,” the translator was able to fully recognize his gift.  I’ve been experiencing feelings of failure and discouragement in my educational pursuits.  I’ve wondered if I’m cut out to do anything.  I worry because I don’t always remember everything I learn in school.  I’m unable to consume all the new information placed before me fast enough.  Do I have what it takes to become a successful certified public accountant?  The translator’s response gives me a better perspective.  I’m not alone in my feelings.  Most of my fellow travelers in life, if not all, must feel this way at some time.  The trick must be to keep broadening your perspective, looking for all the good around you, and for ways to help others on their way-then pick up your feet and put one foot in front of the other again.  Eventually you will reach the destination you seek.

 

Week 16

Our final exam is this week.  I've really enjoyed this class.  I think that keeping a journal about the insights I've gained in this class has proved to be a good memory aid.  I have a feeling that some of the material I've learned this semester will stick around in my retrievable memory longer than most information I acquire in school.

I'm going to miss the interaction and insights I've gained in class.  I know that pieces of this class, as with my other classes, will remain in my memory though for me to look back at with joy.  Good times!  I highly recommend the Jon M. Huntsman School of Business at Utah State University :)

Week 15

This was the last week we met for class.  Next week is the final exam.  Our final topic of study is Resource Planning, which lies at the heart of any organization and crosses all functional areas.  A big focus of this chapter is Enterprise Resource Planning (ERP) systems.  I think it is very interesting that I'm learning about ERP systems in my Accounting Information Systems BUS 4500 class right now too.

According to our textbook in this class, "ERP systems allow an organization to view its operations as a whole rather than having to try to put together the different information pieces produced by its various functions and divisions." 

ERP systems can be very expensive, so care should be made to design the system right to begin with.  It is important to involve all departments in the planning and design processes.  A good point to start is determining the outputs wanted and needed first, then determine the required inputs, etc.  Logical and Physical security measures and controls should be established to protect the system.

The topic of EOQ surfaced again in this chapter, in conjunction with Fixed Order Quantity (FOQ).  A FOQ rule maintains the same quantity or lot size each time an order is issued.  Periodic Order Quantity (POQ) was also discussed.  A POQ rule allows a different ordering quantity for each order issued but tends to issue the order at predetermined time intervals, such as every two weeks.  The order quantity equals the amount of the item needed during the predetermined time between orders and must be large enough to prevent shortages.

My favorite activity in this chapter was using a bill of materials and other information to develop a Master Production Schedule (MPS).  The process is a lot like solving a puzzle using math skills.  I think I'm inclined to enjoy these types of activities.  It seems that many fellow classmates of mine dislike math based problems.  I on the other hand prefer them, unless they are extremely time consuming problems that provide only busy work.  It's always good to practice, but sometimes I've felt overloaded with homework in some of my previous classes.

If I ever begin a manufacturing operation, I will definitely refer back to this chapter.

Week 14

This week we studied Inventory Management.  Our textbook describes it as, "the planning and controlling of inventories in order to meet the competitive priorities of the organization."  "Effective inventory management is essential for realizing the full potential of any value chain."  

Whenever an organization has more receipts of materials, parts, or finished goods than what is disbursed, inventory is created.  Inventory is depleted when disbursements exceed receipts.  There are advantages and disadvantages to maintaining low and high inventories.

The pressures for low inventories include elements that comprise what is termed Inventory Holding Cost:

• Cost of Capital
• Storage and Handling Costs
• Taxes
• Insurance
• Shrinkage

The pressures for high inventories include:

• Customer Service
• Ordering Costs
• Setup Costs
• Labor and Equipment Utilization
• Transportation Costs
• Quantity Discounts

One of the inventory management tools that made an impression on my mind is the mathematical formula called Economic Order Quantity (EOQ).  The EOQ helps identify the lot size that minimizes total annual cycle-inventory holding and ordering costs.  The EOQ is based on the following assumptions:

• The demand rate for the item is constant and known with certainty.
• No constraints are placed on the size of each lot.
• The only two relevant costs are the inventory holding cost and the fixed cost per lot for ordering or setup.
• Decisions for one item can be made independently of decisions for other items.
• The lead time is constant and known with certainty.

In reality such simple situations are rare, but the EOQ is often a reasonable approximation of the reasonable lot size, even when several of the assumptions do not quite apply.  The formula for EOQ is derived using calculus.  It is the square root of the quotient 2DS/H; where D=annual demand, in units per year, and S=cost of ordering or setting up one lot, in dollars per lot, and H=cost of holding one unit in inventory for a year, often expressed as a percentage of the item's value.

My reason for such interest in the EOQ is due to a casual conversation I had with a former bishop of mine the other day.  We were both doing some service at a Bishop's Store House in Magna, a few days after I learned about EOQ in class, when my former bishop asked me what I was studying in school.  I told him about my classes.  His response regarding this operations management class surprised me.  He knew what I was talking about.  He was very interested in the subject.  I found out that he's been using the principles and techniques I've learned in class in his own career.  EOQ was the most recent thing in my mind so I mentioned it to him.  He knew all about it.  The experience impressed EOQ into my mind even more.  If I'm ever responsible for inventory, I will refer back to EOQ and other tools that I've learned in class.

Week 13 - Happy Thanksgiving!

We didn't have class this week due to the Thanksgiving break.  Happy Thanksgiving!


My Dad showed me this picture. I think it's fun!



Week 12

We didn't actually meet in class tonight because Mr. Allen had business to take care of out of town.  We still studied chapter 11 from our textbook on our own though.  Chapter 11 discusses Location.  In week 10, we covered chapter 8 on Process Layout.  This chapter is similar in that there are some mathematic equations to use for solving optimal location.  The major difference being that we are looking at building/plant/facility/warehouse location in the world versus process layout/location within a building.

Location plays a critical part in managing value chains.  Some of the dominant factors in determining where to locate manufacturing facilities include:

• Favorable Labor Climate
• Proximity to Markets
• Quality of Life
• Proximity to Suppliers and Resources
• Proximity to Parent Company's Facilities
• Utilities, Taxes, and Real Estate Costs

The factors for determining location for a service organization are the same as those for manufacturing with one important addition: the impact of location on sales and customer satisfaction.  "Customers usually care about how close a service facility is, particularly if the process requires considerable customer contact."

I've considered the possibilty of starting a small tax return preparation business.  The thought has come to mind to bring the service to the customer.  I'm sure it's not a new idea or concept.  It could save time to be in the customer's home where they keep their repository of records because sometimes people aren't sure what records to bring to the office.  Time is wasted contacting the customer for new needed information and then waiting for the new information to arrive.  Often times, multiple reminders are needed.  The customer's home would be a prime location to sit down and complete the tax return.  I only have one major reservation about the idea though--liability risk.  If my computer were to blow-up and start a fire, I would feel better about it happening to my office space versus my customer's home, etc.

Week 11

This week we learned about Lean Systems.  Our textbook defines lean systems as "operations systems that maximize the value added by each of a company's activities by paring unnecessary resources and delays from them."

Lean systems typically have the following characteristics:

• Pull Method of Work Flow
• Consistent Quality at the Source
• Small Lot Sizes
• Uniform Workstation Loads
• Standardized Components and Work Methods
• Close Supplier Ties
• Flexible Workforce
• Line Flows
• Automation,
• Five S (5S) Practices
• Preventive Maintenance

One of the things I found interesting about this chapter were the new Japanese terms I learned that the Japanese use to describe their application of lean systems principles.  One of the words I liked was "poka-yoke."  Poke-yoke are defined as mistake-proofing methods aimed at designing fail-safe systems that minimize human error.  A company could use the poke-yoke method by making different parts of the modular product in such a way that allows them to be assembled in only one way--the correct way.  I think that is such a good idea.  If I'm ever in charge of designing a modular product, I'll remember and try to apply this poke-yoke method.

The Kanban system was introduced in this chapter too.  Kanban is a Japanese word meaning "card" or "visable record."  I've heard the term  mentioned in my cost accounting class before, now I understand what it is better and that it's a word with Japanese origins.  I'm pretty sure we use a type of Kanban in our office processes of preparing tax returns.