This article throws light upon the four main types of control techniques. The techniques are: 1. Operations Design 2. Operations Coordination 3. Quality Control 4. Inventory Control.
Type # 1. Operations Design:
Operations design is conceived with how work-related facilities (such as machines and jobs) are constructed, arranged and co-ordinated. Due to lack of space, a detailed discussion of the topic is not possible in this text.
Type # 2. Operations Coordination:
This is the second element of operations control. It is the process of determining what materials and services are necessary to do the work of the organisation in an effective way. In recent years, attention has focussed on a relatively new approach to this activity called material requirements planning (MRP).
Type # 3. Quality Control:
The third important element of operations control is quality control. Quality control is the maintenance of appropriate levels of quality for an organisation’s products or services.
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Two important techniques and approaches are often used for operational quality control:
1. Acceptance sampling, which involves sampling finished goods to ensure that quality standards have been met. The key to effective acceptance sampling is determining what percentage of the products should be tested (e.g., 2,5,10,25%). This decision is especially important when the test renders the product useless (e.g., wine, tea, steering wheels).
2. In-process sampling involves assessing the products during production so that needed changes can be made. This technique allows problems to be detected before they accumulate.
Type # 4. Inventory Control:
The last major element of operations control is inventory control. Essentially, inventory control is the management of inventory levels so that shortages, carrying and ordering costs are kept to minimum.
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The traditional approach to inventory control revolved around the concept of the economic order quantity, or EOQ. The EOQ refers to the quantity that should be ordered to optimise the three factors: shortages, carrying cost and ordering costs.
The EOQ formula is:
EOQ = √2 RS/C
where, R = yearly requirement of what is being ordered, S = ordering or set-up cost, and C= carrying costs per unit. If we use 4,500 units per year, if set-up costs are Rs. 20, and if carrying costs are 50 paise per unit, then
This means that each order should be for 600 units.
Another recent innovation in inventory control used mainly by Japanese companies is called ‘just-in-time’. This approach, relevant for carrying large raw materials and parts inventories, involves having parts and materials arrive just as they are needed. Obviously, this requires that production schedules be established far in advance. This is why this approach has considerable appeal.