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 :)
Tuesday, December 14, 2010
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.
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:
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:
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.
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
- 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.
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