DOM 401 - MANUFACTURING OPERATIONS MANAGEMENT EastCo Oils...

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MANUFACTURING OPERATIONS MANAGEMENT EastCo Oils Limited EastCo Oils Limited is a company that is in the manufacturing industry in East Africa. Their main concern is to satisfy customers through providing quality, varieties of products when need by the consumer at the right time and place at reasonable prices. To gain competitive advantage the organization need to have a clear strategy on how to meet and sustain their performance metrics. In so doing, the company is able to meet customers' expectations, therefore gaining their intimacy. Their processes also need to be well maintained and coordinated for quality and timely delivery across the region. Their facility capacity and capabilities are of great importance. Make-buy analysis Make-Buy analysis involves variable considerations such as analysis of the future as well as the current environment (at the strategic level) and government regulation, competition, and market trend while making a buy-make decision. The firm should make items/products that reinforce or are in line with their core competencies i.e. these are areas in which the firm is strongest and which give the firm a competitive advantage. The core competence of EastCo Oils is manufacturing of edible oil products. Their facility provides for capabilities and capacity to manufacture several brands to meet customers' expectations and needs. The two most important factors to consider in a make-or-buy decision are cost and the availability of production capacity. To meet the performance metrics and satisfy customers and other stakeholders, EastCo Oils should utilize the concept of lean manufacturing. These call for maximum capacity utilization and minimization of wastes within the organization and will prompt an increase in outsourcing by EastCo Oils of such parts as packaging materials. Since the organization is operating in a dynamic environment characterized by rapid changes in technology and market needs, EastCo should consider buying (outsourcing) the packaging materials from reliable supplier(s).
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Make-Buy Analysis involves both quantitative and qualitative costs. Cost considerations should include all relevant costs and be long-term in nature. Cost elements of the "make" analysis include; Incremental inventory-carrying costs, factory overhead costs, Delivered purchased material costs, managerial costs, purchasing costs capital costs, and stemming and follow-on costs Cost considerations for the "buy" analysis include: Purchase price of the part, transportation costs, receiving and inspection costs, incremental purchasing costs, and any follow-on costs related to quality or service. While cost is seldom the only criterion used in a make-or-buy decision, simple break-even analysis can be an effective way to quickly surmise the cost implications within a decision.
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