Operations Strategy - Area Production and Production Patterns

Posted by The New Economics Education

Before understanding about the process of operation, preceded by a broad understanding of the optimal production. Area of ​​the optimal production volume should be produced in one period for a profit. If the volume of production, then prices could be reduced, this could result in an increased value of the investment. But the consequences on cost savings, and increased maintenance costs. Whereas if the production volume is small, it will have an impact on the high cost of the product so there may not be able to meet market demand.

Factors that affect the optimal production area is the availability of raw materials, medias and labor capacity, the demand constraints, environmental, and government. Now we know the optimal production area, in a factory, then it must be identified patterns of production. Production pattern is the annual distribution to smaller production period, for example monthly or weekly. Basically the kind of production patterns are grouped into three types, namely:
1. the pattern of production is constant, if the amount of production each year at the same
2. the corrugated pattern of production, when production quantities in each year not same
3. moderate production pattern, apabiia production quantities in each year bumpy, but tends to a constant.

Management companies should be able to choose the most appropriate pattern of production with factory conditions and other requirements related to the problem of production, inventory, and product sales. The selection pattern of production is closely related to the operating system the company uses.

Factors that affect the optimal production pattern is:
1. The pattern of sales, if the resulting product sold at any time, the pattern of production is constant, if the resulting product sold in a particular season, then produced a wavy pattern.
2. Maximum capacity of the plant
3. Financing patterns, grouped as follows:
a. Labour Turn Over Cost, including training costs, and severance costs employment per period. In the wavy patterns of production, these costs are higher when compared with the pattern of constant production.
b. Carrying Cost, a cost savings of products that have not been sold.
c. Cost Over Time, in the form of overtime pay, there are patterns of surging production.
d. Sub Contract Cost, a cost to place an order with another company, if the sale is greater than the volume of production and persediaaa. finished goods.

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