PRODUCTION AND QUALITY

MANAGEMENT

1.1 INTRO
It is important to ensure that a business is able to

produce the right quantity of products or services

according to the specifications at the right time in
order to achieve its business goals
Production activities involve three main features
which are input, system and output.

1.2 PRODUCTION SYSTEM

1.3 MATERIALS REQUIREMENT AND

INVENTORY CONTROL
Stock Inventories
For example, the estimated average monthly sale for readymade clothing is RM49,
500. If the price per unit is RM110, so the total demand for readymade clothing
is 450 units (RM49, 500/RM110).
Estimated end stock = 2% from demand
Total clothing produced = (450 unit + (2/100 x 450)
= 459 unit
Estimated cost of material for a unit of readymade clothing = RM 55.00
Cost of material for 459 units = RM55 x 459
= RM 25, 245
Estimated end stock = 5% from materials needed
Total materials to purchase = RM 25,245 + (5/100 x RM 25,245)
= RM 26,507.25

1.4 PRODUCTION CAPACITY PLANNING

To determine the number of labors needed, an entrepreneur needs to get the
following information:
Planned operational rate
Standard time for 1 unit product
Workers productive hours
The formula as shown below:
Number of workers = Standard time for produced x Planned Operational
1 unit product
Rate
Workers productive hours

Example:
Mrs Siti decides to produce 200 pieces of clothing daily. The standard
time taken to produce a piece of clothing is 32 minutes. Workers
productive hour is 6 hours per day. How many workers are needed to
produce 200 pieces of clothing daily?
Number of workers = 32 minutes/per clothing x 200 unit/day
6 hours/day x 60 minutes
= 6 400/360
= 17.7
In the above example, Mrs Siti needs 18 workers provided that the
business is running in only one shift.

The purchase of machines and equipment needs to be

made carefully because it is a long term investment for a

business. Other factors that need to be taken into
consideration are:

Price
Quality
Spare part resources
Frequent Maintenance
Technology Efficiency and operation resources
Supplier reputation
After sales service

To calculate the number of machines needed for an

operation, the following information is required:

Planned operational rate
Standard time for 1 unit product
Machines productive hours

 A laundry business has an average estimated sales of RM26,500. The

manager decides to purchase a few machines. The specification given by the

supplier is that the machine is able to wash 6kg of clothes per wash and
takes about 30 minutes to complete. If the price of 1kg of wash is RM3.50
and the business operates from 9.00 a.m. to 9.00 p.m., how many machines
are needed by the manager?

Calculate operation rate:

Monthly operational rate = Average monthly sales
1 unit production price
= RM26,000/month
RM3.50/unit
= 7,572 kg/month

If the average working hour per month is 25 days, so the production rate per day is:
Daily operational rate = 7572kg/month
25 days/month
= 303 kg/day
If the machine to operate for 10 hours without interruption from 9.00 am to 9.00 pm, the hour production rate is:
Daily production rate (hour) = 303kg/12hours
Determine the production time per unit of goods
Production time per cycle = 30 min/kg
Determine productive time machine.
Productive time machine =

Real time machine

Daily operating time

= 12 hours
12 hours
= 1 hour

Number of machines needed =

Production time per cycle X Planned production rate
Productive time machine
= 30 min/6kg x 303 kg/10 hours x 1/60minutes
1
= 2.5 ~ 3 machines

1.5 QUALITY MANAGEMENT

1.6 LOGISTIC AND WAREHOUSING

Logistics is defined as the management of the flow of

goods, energy, information and labor of a business

There are four sub-functions of logistics which are
sales, manufacturing, materials and purchasing
management.

Warehousing intends to store finished products

while distribution is moving finished products
from factories to consumers.

1.7 PRODUCT LABELING AND

PACKAGING
Labeling strategy is one of the strategies done by companies in

order to distinguish their products from other products in the

market
Features of labeling:

Easily expressed by consumers (Eg: Gardenia, Nestle, Anakku

and Dutch Lady)

Easily remembered by consumers (Eg: M symbol for
McDonalds)
Trademark, which is part of the label that patented to protect
the producers right
Copyright, which is the legal right to be the only person or
company that can produce a book, or perform a play, song etc.

Packaging is a way to store products to ensure that

they are long- lasting, unspoiled and easily

recognized by consumers. Products can be packed in
cans, bottles, boxes, plastic bags, paper, etc.