Operations Management Archives - BBA|mantra

Inventory, Inventory Control – Theory Notes

bbamantra — Fri, 12 Jan 2018 19:07:39 +0000

Inventory simply means ‘a stock of goods’. It can simply be divided into three categories i.e. raw materials, finished goods, and work in process. It is any tangible property that is:

held for sale in the ordinary course of a business (Finished Goods)
held in the production process (Work in process)
consumed in the production process (Raw Materials)

It includes –

Raw Material
Consumables
Finished goods
Supplies and spares
Equipment and Components

According to Bolten S.E., “It refers to a stock-pile of a product, a firm is offering for sale and components that make up the product.”

Motives for Holding Inventory

Transaction Motive i.e. finished goods for the purpose of sale, raw materials for production.
Precautionary Motive i.e. raw materials and finished goods to meet unforeseen circumstances or emergencies
Speculative Motive i.e. to capitalize on market opportunities (shortage in market) and make profit

Types of Inventory

(1) Movement Inventory – It refers to stock of goods that take substantial amount of time to be transported from one place to another. They are also known as transit inventories.

(2) Buffer Inventory – Goods held in stock to meet the uncertainties related to demand and supply of goods are called buffer inventories. These are goods that require a substantial lead time (time taken between placing an order and having the good ready for use) and hence are held in excess of the expected demand to meet emergency situations and fluctuations in demand or supply.

(3) Anticipation Inventories – It refers to stock of goods that are held in bulk due to an anticipated shortage or expected demand rise in the future. For e.g. Rain coats and Umbrellas kept in stock just before a rainy season, or stock of Air conditioners before summers.

(4) Decoupling Inventories – Stock of goods held between different stages in a production process to decouple or disengage one stage from the other are known as decoupling inventories. The main purpose of holding such goods is to ensure smooth running of the production process, therefore, even if one machine required for a particular stage breaks down, work on other stages in production won’t be hampered.

(5) Cycle Inventories – Cycle inventories are maintained for goods that are sold in bulk or big quantities, therefore, rather than making frequent purchases in small amounts which increases the cost of obtaining the products, goods are bought in very large lots to reduce to cost of obtaining goods.

Inventory Costs

Purchase Costs – Cost of purchasing raw materials from various sources.
Ordering Cost / Procurement Cost – Cost associated with replenishment of raw material i.e. processing of order, transportation, quality inspection etc.
Carrying Cost / Holding Cost – Cost related to storage of goods like rent of warehouse, electricity, heating and lighting, staff salaries etc.
Stock Out Cost – Cost associated with lack of goods or not serving the customers due to shortage of goods

Inventory Control

It refers to the process employed to maximize a company’s inventory. It is a systematic control and regulation of purchases, storage and usage of materials to maintain a smooth flow in production and to avoid excessive investment in inventory.

Inventory System / Policy – A set of policies and controls that monitor stock levels and determine

What inventory level should be maintained?
When stock should be replenished?
Quantity of stock that should be purchases?

Methods of Inventory Control

FIFO (first in first out) – This method assumes that goods that are added to the inventory first must also be removed from the inventory first i.e. goods that are bought first must be sold first. This method is generally used by firms dealing with perishable goods or goods that are subjected to quick obsolescence.
LIFO (last in first out) – This method assumes that goods that are added to the inventory last must be sold first or removed from the inventory first. This method is usually used by firms dealing with goods that are not perishable or do not become obsolete quickly.

Techniques of Inventory Control

EOQ Model – Economic Order Quantity
ABC Analysis – Always Better Control
HML Analysis – High, Medium, Low
VED analysis – Vital, Essential, Desirable
MRP – Material Requirement Planning
Max Mini System
Two Bin system
Buffer Stock
JIT – Just in Time etc.

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Manufacturing Process of Ferrari

bbamantra — Wed, 03 Feb 2016 21:29:04 +0000

Project/Slides/Presentation Transcript

Subject: Operations management

Topic: Manufacturing Process of Ferrari

Maranello Factory – Italy

Introduction
A town in northern Italy, near Bologna, Maranello has been home to Ferrari since the 1940’s. At more than 250,000 sq mts, the factory’s 45 buildings house more than 3000 workers. It is here that passion, innovation and technology combine to create the company’s GT and formula 1 cars. On December 3, 1942, planning permission was granted for a small plant making tools in Maranello.

Our aim is to study the manufacturing process of Ferrari by understanding the working of all facilities in the Maranello factory of Ferrari.
The concept
In 1977, Ferrari introduced its Formula Uomo initiative at its Maranello HQ, with the aim of providing its staff with the best possible working conditions.
Ferrari’s aim was to develop an innovative factory by creating a well organized, ecological environment that would continually stimulate and motivate those who work there.
The Ferrari plant is a model work environment. The Ferrari complex combines carefully designed lighting systems, green areas, a new restaurant, climate control, noise damping and special measures aimed at reducing environmental impact, with advanced technologies. Ferrari employees also benefit from an extensive range of education, fitness and well being programmes. As a result, Ferrari believes that visitors to the Maranello factory will discover not only innovative cars, but a world of ecological and technological research, carried out by people making the best possible use of their talents and passion.
Manufacturing Process of Ferrari
GT Car Production – All the facilities

Light Alloy
New Mechanical Machining Area
Engine Assembly Area
Paint Technologies Area
Experience Department
Wind Tunnel
New Assembly Lines
Carrozzeria Scaglietti

Light Alloy – Foundry → The Light Alloys Technology area is where the components of Ferrari 8 and 12 cylinder engines take shape. Manufacturing process of Ferrari is organised in two teams – one for special castings and the other for industrial castings for GT cars. The ATLL’s role is to produce castings using two different techniques in shells with the molten metal is poured at a temperature of 720˚ C and in sand molds, where the temperature of the metal reaches 740˚ C. The characteristics of the modern systems used in this area make it possible to achieve precision castings geometries and thickness of just 2-3 millimeter.
New Mechanical Machining Area – Ecology between the Lines → The mechanical workshop covers a surface area of 15,000 sq mts and comprises of 15 work areas. Each of these devoted to a specific activity contains work stations with machine tools and CNCCAD centres, offices, metrological rooms and two green areas. A balcony specially designed for visitors which allows them to observes the various stages of the work process.
Engine Assembly Area – 8 and 12 cylinder → This area is where all the components of Ferrari’s V8 and V12 engines are assembled prior to being bench tested. After assembling each complete engine is carried by special, high speed conveyor units to one of the seven test beds, where they undergo dynamic hot running tests to verify that they conform to specifications. The tests performed include the all important emission tests which take account of standards imposed in different markets.
Paint Technology Area – Health and comfort are priorities in the paint shop → This area is the most advanced in Europe and one of the most sophisticated in the world. Its vertical form allows every car body to undergo a series of unique processes, including a real `dunk tank’ -360˚ coverage with Protective Fluid.
The Paint shop has a surface area of 20,000 sq m and an overall height of 22 m at the point where the lift serving to stockpile on eight levels over eighty car bodies is located. The painting process, directed from a single control centre on which the various functional units depend, allows the bodies to be treated with a power primer and water based points.
Experience Department – Prototypes and new cars → This department constructs prototypes of new cars and tests the function of groups and components of the chassis, engine, transmission and body Data from the new engine is also analysed, in particular relating to exhaust gases, assuring that emission levels conform to regulations. Once checked the car undergoes a rigorous road and track test where the smoothness of the gear changes, road holdings and brakes are all verified.
Wind Tunnel – Challenge in the air → Build in 1977, the Galleria del Vento (Wind tunnel) is the first step in the `Formula Uomo’ programme.
The wind tunnel looks like a large cylinder placed horizontally and closed at both ends by a C shaped tubular duct. In this tunnel, the airflow is created by a turbine fan with a power of 2200 kw, while sophisticated equipment keeps the temperature range down to 0.5˚ C. The electronic system of recording and processing of analogical and digital data regarding the acting forces and the speed, direction and turbulence of the wind is in constant implementation.
New Assembly Lines – colours and Microgan-dens → The new assembly lines occupies over 21,000 sq m, divided into assembly lines of 8 and 12 cylinder cars, test area, prototype development facility, offices, meeting rooms and relaxation areas.
In the centre of the building, the plates bear the Ferrari Prancing horse symbol. A red fence marks the interior area. The building’s external shell is faced with reflective fretted stainless steel sheet that is intended to mirror the ever changing interplay of colour outside the building.
Carrozzeria Scaglietti – Body shell production → Paneling is one of the most important stage in the manufacturing process. This is one of the most advanced plants for the machining and assembly of aluminum where the sophisticated technology of the manufacturing and control systems combines with workers traditional manual skills, to produce the lines and shapes that have made Ferrari immediately identifiable for over half a century.

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