MANTISSA COLLEGE

DAMANSARA KUALA LUMPUR

NAME: I.D NUM: COURSE: COURSE CODE: LECTURER:

KAMAL MUHTAR ALHASSAN

OPERATIONS MANAGEMENT

MR. AWANG ZAHARI

QUESTION 1
Nowadays, investors are more concerned with where there business can be done without any setback and how they minimise their production cost and at the same time improve their product quality. Malaysia is seen as the best country in South East Asia for investment and moving to the top rank in the world. From a country relying on agriculture and primary commodities and today it has become a hub for investors. Malaysia has work tirelessly to build, formulate, strategies and implement policies, developed some in built mechanism that will make the country investment friendly and attract many investors from around the world and that has been achieved on so many grounds. According to Masaru Maruo, Panasonic Corporate and Regional Director for South East Asia mentioned some factors that attracted them to Malaysia. Here are some of the factors and what some other investors want in an economy before investing: Good Locational Strategy Malaysia, strategically located in the heart of South East Asia, offers a cost competitive location for investors intending to start operations in the country. Majority of investors sees this as an opportunity to easily network other countries in the region either by road or air for sales and promotion in other increase their profits and to be close to their customers. (World Atlas Map. N.D)

Malaysia is right in the middle, which makes it easier for investors to expand their sales into surrounding countries

Advancing with Technology Technological improvement has become an essential part of Malaysia's been attracted to investors from all over the globe as the present and future industrialised nation. With the nations advancement in technology, Malaysia is steadfast in providing for the modern day requirements of investor companies based in the country and those in pipeline. Malaysia is one of the most technologically developed countries amongst industrialising nations in the South East Asia region. The nations persistent determination to develop modern technologies proves to be a great advantage to present and in coming manufacturers. For example in the going Green awareness campaign, the country is attracting so many investors especially those in areas of electronics such as Panasonic manufacturing LED television screen which saves energy.(MIDA 2012)

Source: The panel was produced at the 24 international invention, innovation and technology exhibition on May 2013

th

Political Stability Political stability has a significant impact on investors and business. Malaysia is a politically stable country with a well developed legal and transparent system. Political stability of a country is very important for all investors to enter into the country because the analysis of the business is often times mainly based on its political stability. Malaysia scored above seventy percent (70%) ahead of other Southeast Asian countries and it said countries with greater political stability and a better bureaucracy are stronger and will attract not only many but major investors around the world. Source

(The Edge April 29, 2013). According to Malaysia Prime Minister Datuk Seri Najib Tun Razak said the nation achieved rapid development after 54 years of independence because of the country's political strength and stability. (The Star newspaper. January 9, 2013). High Skilled Labour with Diverse Language Capability One of the country greatest assets is her human resources. The workforce is young, educated and industrious, proving to be one of the best in the South East Asia region. The Government relentless effort on human resource development ensures the continuous supply of manpower to meet the needs of the expanding manufacturing and services sectors. Therefore, investors are rest assured that their business will not suffer skilled workers in production and staffs with floorless human relationship, ability to speak different languages so as to communicate with other South East Asia countries. (Taylor and Jean G. 2003)

Continuous Economy Growth As a result of constant foresight, strategic planning and abundant resources, Malaysia offers investors a wide spectrum of investment opportunities. The nations commitment to continuous growth is also a major factor that attracts investors to the country. (Department of Statistics Malaysia 2012)

Malaysias statistical growth representation over the years

Attractive Tax Incentives Tax Incentives is the deduction or exemption from a tax obligation, offered as a means of persuasion to investors in a stated activity or industry for a certain period. Reduction of tax by the government attracts a lot of company to come and invest in the countrys economy because most thriving country in the world always wants to do away with tax payment. Malaysia's company tax rate is attractive at 27% and is applicable to both resident and nonresident companies. Malaysia also offers a wide range of tax incentives for manufacturing projects under the Promotion of Investments Act 1986 and the Income Tax Act 1967. (MIDA 2012)

Competitive Economic Policies Formulation and proper implementation of business friendly and flexible economic policies will definitely lure more investors in to the country. The new policy on the bumiputra 30% equity objective will now be a macro target as the Government seeks to turn Malaysia into a more competitive economy, said Datuk Seri Najib Tun Razak because the economic environment regionally and globally has changed drastically and these changes must be made so that the new policy will make the economy more vibrant, dynamic and Malaysia will be high up in the radar screen of investors. Source: (The Star news July 1 2009).

Conclusion The turning point of Malaysia becoming the hub for investors is because of the suppleness of all the policies implemented and where the country was natural situated has made it a very conducive atmosphere for manufacturers. Therefore, in a country where all government inhibits investor friendly strategies, manufacturers will definitely be attracted.

Question 2
In every business, keeping of accurate stock is very vital. For a business to function and thrive, constant records of all the materials used in production, finished goods or anything that has to do with the daily operational activities of the business must be well documented and catered for. Inventory is the process of efficiently overseeing the continuous flow of units into and out of an existing record or the total amount of goods or materials contained in a store or factory at any given time. There are four types of inventory needed in a factory: Raw material inventory: These are materials that are usually purchased and have not yet entered the transformation process that is raw components that has not undergone any production process. Work-in-process inventory: Materials and components that have undergone some changes but have not yet mature to the stage of completed product. Finished goods inventory: These are goods that have completed the manufacturing process but have not yet been sold or distributed to the end users. Maintenance or Repair inventory: This concerns itself with keeping the machinery, processes, facilities, and office operations running.

2B) Discuss two (2) inventory management models that may be adopted in such a factory. Before choosing management inventory models to be adopted in such company like Panasonic Corporation, there are many factors that are considered before deciding on the effective model. Some of these are costs to store the inventory, costs of ordering items for inventory or produce them, what the business will lose if revenue is short of inventory and safety of the stock in its inventory model is crucial. There are various ways of determining the appropriate inventory model for a business. Some the models often used are: Economic Order Quantity (EOQ): This is the method of ordering quantity that minimizes total inventory holding costs and ordering costs. This method determines the

best formula to be used for inventory level, so as to ensure that the business has the lowest cost to house the inventory and the lowest cost to order new inventory. Based on the fact that managers encounter problems on how to avoid excess inventory, a good starting point for balancing these conflicting pressures and determining the best inventory level of a product is finding the economic order quantity. There are five approaches in determining EOQ. The demand rate for the item is constant, there are no limitations, the two important costs are the inventory holding cost and the fixed cost per lot for ordering setup, decisions can be made independently on one item, there is no uncertainty in lead time or supply. The EOQ will be ideal when the assumptions are considered. (Volman, T. E, Berry, W.L., and Whybark, D.C. 1998)

Just in Time (JIT): Just in time model is a production strategy that strives to increase a business return on investment by reducing in process inventory and cost associated to carrying it. This model objective relies on signals between different points in the process, which tell production when to make the next part. If applied correctly, Just in Time focuses on continuous improvement and can improve a manufacturing organisation return on investment, reduce waste, quality, and efficiency across the whole industry. To achieve continuous improvement key areas of focus could be flow, employee involvement and quality. (Womack, J. P. and Jones D.T. 2003)

Advantages Of Just In Time Model

Lower Warehouse Costs

Better Supply Chain Management

Reduction of Waste

Better Customer Satisfaction

CONCLUSION
As to production is crucial to manufacturer, so is inventory. Proper inventory method will increase the company efficiency and reduce leadership cost. Adoption of suitable inventory management models will control production from excess leading to auction or waste and it will it will increase customer satisfaction. In a nut shell, Inventory management requires establishment procedures that will serve as tools in utilizing your system on a daily basis in the most efficient manner to produce the most profits for your company.

10

QUESTION 3
Material requirements planning is a production planning and inventory control system used to manage manufacturing processes. This system is software based, and it is possible to conduct them by hand as well. Manufacturing Resource Planning II is a computer based system that can generate detail production schedules using real time data to coordinate the arrival of component materials with machine and labour readiness. Manufacturing Resource Planning consist of additional procedures to address the shortcomings of MRP. It is also an integrated manufacturing system by bringing together other functional areas such as marketing and nance. The additional functions of MRP II include forecasting, demand management, scheduling dispatching rules, and input or output control. MRP II works within a ladder that divides planning into long range planning, medium range planning, and short term control. Enterprise Resource Planning is business management software which allows industries to use a system of integrated applications to manage their activities. These three systems perform various functions but still have some things in common. Enterprise resource planning (ERP) systems are extensions of MRP systems that run on a single database in a client server environment. ERP systems support marketing and nance departments in addition to the production department. Signicant coordination advantages arise when all functions draw and add to the same data. (Monk, E. and Wagner, B. 2006) Here are some of the differences between the three manufacturing systems are: Material requirements planning is concerned primarily with manufacturing materials while Manufacturing Resource Planning II is concerned with the coordination of the entire manufacturing production, including materials, finance, and human relations but Enterprise Resource Planning encompasses materials planning, efficient production, profitability, customer satisfaction and basically, every aspect of business.

11

MRPII systems begin with MRP, material requirements planning. MRP allows for the input of sales forecasts from sales and marketing. These forecasts determine the raw materials demand.

MRP allows for the coordination of raw materials purchasing, MRPII systems draw on a Master Production Schedule, the breakdown of specific plans for each product on a line while ERP system bases its operating parameters on the principles of bandwidth management, dynamically adjusting parameters such as lead times and ideal inventory according to the historic data when needed, and measuring performance to a set of statistically derived control bands, rather than fi xed
parameters

Material Requirement Planning allows coordination of raw materials purchasing, Manufacturing Resource Planning II enables the development of a complete production schedule that accounts for machine and labour capacity, scheduling the production runs according to the arrival of materials while the Enterprise Resource Planning disseminate information about production across the industry.

Material requirement planning is the concerned with early stage of production, Manufacturing resource planning II output is a final labour and machine schedule data about the cost of production, including machine time, labor time and materials while Enterprise Resource planning check from the beginning, final production numbers to the end users.

Manufacturing resource planning II introduced the closed loop model, which uses a centrally held data file to record, monitor and report on various company activities, by comparing predictions with actual outcome, companies can analyse performance and improve processes to achieve better efficiency while Enterprise Resource Planning integrates the principles of supply chain management, in which the value of every activity in the supply chain is examined, along with the growing development.

Enterprise resource planning systems integrate internal and external management of information across the entire organization. For example managing business

12

functions inside the organisation, and manages connections to outside stakeholders while MRP and MRPII are mostly internal alone. Similarities between these three systems are: They all are software based system and require human knowledge to function to their full capacities. They are all working towards achieving the same goal for the industry Material requirements planning, manufacturing resource planning and Enterprise resource planning are all increasing information integration business process strategies that are implemented using hardware and modular software applications linked to a central database that stores and delivers business data and information. MRP and MRPII systems draw on a master production schedule, the breakdown of specific plans for each product on a line.

CONCLUSION
The three manufacturing systems plays a major role in the production process, but all were developed one after the other because there is need for more space to be filled in the production aspect. They are useful for accurate and timely production and they bring production processes into one dome.

13

References and Bibliography

Volman, T, E, Berry, W.L., and Whybark, D.C. (1998). Manufacturing Planning and Control Systems, 3rd Edn United States of America Laudon, K.C. and Laudon, J. P. (2012). Management Information System, 12th Edn England: Pearson Education Limited. Womack, J.P. and Jones, D.T. (2003). Lean Thinking: Banish Waste and Create Wealth in Your Corporation, Dublin. Harper Business Press. Taylor, J. G. (2003), Malaysia Peoples and Histories.1st Edn United States of America Yale University Press. Monk, E. and Wagner, B. (2006) Concepts in Enterprise Resource Planning, 2nd Edn, Canada: Thomson Course Technology. Waldner, J.B. (1992): Principles of Computer Integrated Manufacturing. John Wiley & Sons Ltd. Laudon, K. C and Laudon, J. P (2010). Management information systems: Managing the digital firm, 11th Edn Upper Saddle River, New Jersey: Pearson Prentice Hall. Wortmann, J.C, Berg, C. D. and Wilson, B. (1983) Efficiency of Manufacturing Systems, New York, Plenum Press Hopp, W and Spearman, M. (2011) Factory Physics, 3rd Edn United States of America Waveland Press. MIDA) Malaysian Industrial Development Authority (2012) Attractive Tax Incentives for Foreign Direct Investments Datuk Seri Najib Tun Razak (2009), New policy to make Malaysian economy more competitive in The Star, 2009, A daily newspaper in Malaysia, p.10. IMF (2013), IMF Gives Malaysia High Marks in Political Stability and Bureaucracy. The Edge, A Malaysia weekly business newspaper, p. 16. Raaf, A.R. (2009). Panasonic Pindah Operasi Pasang TV LCD ke Malaysia, in Berita Harian, 11 December 2009, Malaysia.

14