Notesale: Turn your study into money

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UNIT – I
OVERVIEW OF BUSINESS FUNCTIONS

Business function in an organization,
Material management,
Scheduling,
Shop floor control
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An organization is an entity where two or more
persons work together to achieve a goal or a common purpose
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Daily we visit and see many organizations like hospitals, colleges, factories, farms and
government offices
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People go there and say
prayers and activities of praying are to achieve a certain goal
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If there is an organization, then there must be some people who work as a whole for a common
purpose, so there must be a defined purpose
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To achieve the purposes by using people, the processes are needed
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If we see in our daily life,
we have some goals
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So that process is also
obvious and important for an organization
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Planning
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Leading
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Figure 1
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BUSINESS FUNCTION IN AN ORGANIZATION
All organizations are divided into many departments or sections, with each department having an
assigned functional responsibility
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The different
departments function in isolation and have their own data collection and analysis systems
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So unless all the departments know what the others are doing
and for what purpose, the inter-departmental conflicts will arise thus disrupting the normal
inter departmental
functioning of the organization
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2 Organization where there is no or little Communication between Departments
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Consider, for example, an educational institute such as large University
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The administrative office will be
divided into many sections, each with an assigned function
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All departments will have to coordinate their
activities to meet the overall objectives of the organization
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Table 1
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2 Functions of Various Departments of a Manufacturing Organization

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Its main objective is cost reduction and
efficient handling of materials at all stages and in all sections of the undertaking
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Materials Management is defined as the function responsible for the coordination of planning,
sourcing, purchasing, moving, storing and controlling materials in an optimum manner so as to
provide a pre-decided service to the customer at a minimum cost
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Materials planning and Control: Based on the sales forecast and production plans, the
materials planning and control is done
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A store is also responsible
for the physical verification of stocks and reconciling them with book figures
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It is also called
the idle resource of an enterprise
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The interval between the receiving the purchased
parts and transforming them in to final products varies from industries to industries
depending upon the cycle time of manufacturer, it is therefore necessary to hold
inventories of various kinds to act as a buffer between supply and demand for efficient
operation of the system
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Figure 1
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2 Material planning and budgeting
Material planning is a scientific technique of determining in advance the requirements of raw
materials, ancillary parts and components, spares etc
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It is
a sub-system in the over all planning activity
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These factors can be classified as macro and micro systems
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Macro factors: Some of the micro factors which affect material planning, are price trends,
business cycles Govt
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Material planning
through bill of material explosion is shown in figure 1
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Figure 1
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SCHEDULING
Scheduling is committing resources to the realization of an event at a defined time
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This module assists in simplifying the administration and
evaluation of time data
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This component can
simplify efforts irrespective of whether the organization uses centralized or decentralized data to
determine employee working hours
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With time management, can set flexible
working hours and process work notices as times are recorded
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The time evaluation component allows daily processing of employee time data
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The time evaluation component stores
organization’s business rues and automatically validates hours worked and wage types
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Most packages provide a review of feature which will
provide all necessary information and tools to review and maintain employee time data
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1 Purpose of scheduling
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Minimize the production cost
Minimize the production time
Maximize the efficiency of the operation

Companies use backward and forward scheduling to allocate
• Plant and machinery resources
• Plan human resources
• Plan production processes
• Purchase materials
Forward scheduling is planning the tasks from the date resources become available to
determine the shipping date or the due date
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Scheduling algorithm
• Heuristic algorithm
• Stochastic algorithm

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The SFC or PAC module monitors all shop floor activities and communicates
status information on manufacturing orders and work centers back to respective managers
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It also maintains the paperwork and details
concerning an order, and gives feedback (either manual or automated) on the status of an order
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SFC reacts to changes and reschedules the work in response to priority
changes
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With this process, overloaded or under loaded
work centers can be identified to provide more effective work centre utilization
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Process reengineering efforts and the elimination of waste have necessitated
greater reliance upon powerful, user-friendly, flexible shop floor planning and control systems
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Cost information must be flexible as well
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This realignment places an added burden upon the
supporting systems
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Shop floor control systems must be flexible and
adaptable to changing needs
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This reprinting gives a shop foreman flexibility to print a duplicate copy when an order is split
between operators
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Every shop order
can be maintained through out its life
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Orders can be rescheduled either backward or forward
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It is a method for translating past
experience into estimates of the future
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The computer enabled the forecasters to make the calculations much more quick and easy
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All forecast are projections of the past: The best basis for predicting what will happen
in the future is to look at the past
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This is
the reason why accounting data is so important in forecasting; it provides the historical
base
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All forecasts consist of semi-structured decisions: Forecasting decisions are a good
example of the semi-structured type of decisions that are supported by the DSS
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Since managers are aware of these facts, they apply much judgment in using the forecasts as a
basis for future planning
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1 Forecasting Methods

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1 Non- quantitative (Qualitative methods):
Non- quantitative Methods: A non- quantitative forecasting method does not involve
computations of data but is based on subjective estimates
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So I think
we will sell twenty-five hundred next year
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Many
managers are very good at the non- quantitative approach
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Three
such formal systems are:
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The experts can meet on a regularly scheduled basis, follow a
prescribed agenda, and have the discussion recorded in a written form
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Each round of questionnaires incorporates inputs from previous
rounds, thus gradually refining the content
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Electronic meeting system: An electronic meeting system (EMS) is a type of
computer software that facilitates group decision-making within an organization
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The term was coined by Jay Nunamaker et al
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term is synonymous with Group Support Systems (GSS) and essentially
synonymous with Group Decision Support Systems (GDSS)
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With an electronic meeting system, each user typically has own
computer, and each user can contribute to the same shared object at the same time
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When a group or a group leader
deems it appropriate, people can contribute anonymously to most electronic
meeting systems tool, so the group can focus on the content and meaning of ideas,
rather than on their sources
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It is less useful when a team is establishing
the agreed meaning of ideas, or building consensus
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Trend analysis is based on the idea that what has happened in the past gives traders an idea
of what will happen in the future
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Weighted Moving average
One, very simple, method for time series forecasting is to take a moving average (also known as
weighted moving average)
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, t-1, t so that
mt = [Yt-L+1 + Yt-L+2 + Yt-L+3 +
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Consider the following example: the demand for a product for 6 months is shown below calculate the three month moving average for each month and forecast the demand for month 7
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The moving average
for month 3 is given by:
m3 = (42 + 41 + 43)/3 = 42
and the moving average for the other months is given by:
m4 = (41 + 43 + 38)/3 = 40
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7
m6 = (38 + 35 + 37)/3 = 36
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Hence the demand forecast for month 7 is 3670 units
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Single exponential smoothing

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One disadvantage of using moving averages for forecasting is that in calculating the average all
the observations are given equal weight (namely 1/L), whereas we would expect the more recent
observations to be a better indicator of the future (and accordingly ought to be given greater
weight)
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One technique known as exponential smoothing (or, more accurately, single exponential
smoothing) gives greater weight to more recent observations and takes into account all previous
observations
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Hence the exponentially smoothed moving average for period t is a linear combination of the
current value (Yt) and the previous exponentially smoothed moving average (Mt-1)
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For example if µ = 0
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Note here that Mt = µYt + (1- µ)Mt-1 can also be written Mt = Mt-1 - µ(Mt-1 - Yt) or current
forecast = previous forecast - µ(error in previous forecast) so exponential smoothing can be
viewed as a forecast continually updated by the forecast error just made
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2 and 0
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We have the following for µ = 0
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M1 = Y1 = 42 (we always start with M1 = Y1)
M2 = 0
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8M1 = 0
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8(42) = 41
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2Y3 + 0
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2(43) + 0
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80) = 42
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2Y4 + 0
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2(38) + 0
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04) = 41
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2Y5 + 0
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2(35) + 0
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23) = 39
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2Y6 + 0
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2(37) + 0
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98) = 39
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We use M6 as the forecast for month 7, i
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the forecast for month 7 is
3938 units
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9Y2 + 0
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9(41) + 0
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M3 = 0
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1M2 = 0
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1(41
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M4 = 0
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1M3 = 0
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1(42
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M5 = 0
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1M4 = 0
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1(38
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35
M6 = 0
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1M5 = 0
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1(35
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As before M6 is the forecast for month 7, i
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3684 units
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Correlation
It is a statistical measurement of the relationship between two variables
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A zero correlation indicates that there is no relationship between the
variables
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A correlation of +1 indicates a perfect positive
correlation, meaning that both variables move in the same direction together
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ACCOUNTING AND FINANCE
Accounting and finance personnel record the company’s transactions in the books of account
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Those data are then
summarized in meaningful ways to determiner the profitability of the lemonade stand and to
support decision making
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Additionally, they record accounts payable when raw materials are
purchased and cash outflows when they pay for materials
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People in other functional areas provide data to accounting and finance marketing and sales
provides sales data, production and materials management provides production and inventory
data, and human resources provides payroll and benefit expense data
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Marketing and sales personnel require data from accounting and finance to evaluate customer
credit
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If accounting is slow to record sales or customer’s payments, then
accounts receivable balances are inaccurate
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In a similar
way, it would also be possible to deny credit to customers who actually owe less than their credit
limit, potentially damaging the relationship with the customer
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HUMAN RESOURCES
Human resources management is an essential factor of any successful business
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In brief,
HR managers should continually review and optimize their business processes
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It must cover all the functions
required in business practices
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Today, many
businesses cross boundaries
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Apart from languages, currencies and legal
requirements, accounting systems often vary from one country to another as well, making this a
vital feature
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When you log on in a particular language, screens, messages and documents
appear in the language you specify
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The HRM Function is responsible for the processes, which allow the organization to stay
competitive on the external market and internally efficient
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The investments needed to keep the current
staff and the competition on the market usually define the playground for the HRM Function
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But also, in the organization its role and responsibility can be
reduced on the pure Personal Administration, just taking care of satisfying the needs of the top
and line management
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2 HR Role in the Organization
HR Role in the organization is quickly changing, HRM has been developing for several decades
and the function is not that mature as many people would expect
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HR Role in the organization is changing from the industry to the industry and it also depends a
lot on the country, in which the organization operates
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HRM gets more and more
responsibilities and participates on strategic initiatives in the organization
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Many times, the HRM Function does not work with sophisticated processes, but the employees
inside are so mature, the HR Role and HR Position are very visible to the rest of the
organization
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There is no modern organization, where the HRM
Organizational Structure stayed the same for more than 18 months
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PRODUCTIVITY MANAGEMENT
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Labor productivity, for example, is typically measured as a ratio of output per labor-hour,
an input
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As such quantitative measures of input, and sometimes output, are
emphasized
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Productivity is about how well an organization converts resource inputs into goods or services
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Basically it's
about exploring all the ways that can make a working environment more efficient
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Unfortunately, many of these systems would not be able to
communicate with one another or need to store or rewrite data to make it possible for cross
computer system communication
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Once an ERP system is in place, usually all aspects of an organization can work in harmony
instead of every single system needing to be compatible with each other
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Monetary policy (inflationary pressures)
Fiscal policy (financing of health, education, welfare)
Slow productivity growth = conflicting demands for distribution of income more likely
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Productivity is an efficiency of the production system which is expressed by the ratio between
output and input
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Thus, there is an increase in productivity, in the utilization of material
(cloth)
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Productivity of a production system is analogous to the efficiency of a machine
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European productivity council defines “productivity is an attitude of mind
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It is the certainty of being able to do
better than yesterday and continuously
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It is the continual effort to apply new techniques and methods
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When we consider an industry as a whole, the productivity can be expressed in terms of the ratio
between the value of the goods and services produced to the value of the resources utilized for
this production
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The resources utilized for
production are:
Land and Building: Land is a convenient location on which the buildings and other facilities
necessary for the operation of manufacture are needed
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Materials: Materials that can be converted into products to be sold
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Manpower: Man and woman to perform the manufacturing operations; to plan and control, to do
clerical work; to design and to research; to buy and sell
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Since, higher productivity means more output from the same resources, it also means lower
money costs and higher net money returns per unit of output
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The productivity can be improved broadly
by the following two ways:
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Efficient utilization of resources
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Secondly, after increasing the resources above certain limit, it is possible that
the production may rise but in small proportion as compared to increase in input and hence the
production may decrease
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Productivity of the enterprise will be increased when:
a
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b
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c
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Attempts for improving the productivity of an industrial enterprise will have to be directed
towards these three areas

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