Page 12 - DCAP208_Management Support Systems

Unit 1: Support Systems

5. Inventory management strategy: It is essential to develop a strategy for coordinating Notes
production needs with raw material and component inventories. However, the inventory
strategy is determined by whether the demand is dependent or independent of the demand
for other components. If the demand for one product, such as air conditioners, is independent
of another product, such as kitchen chairs, then an independent inventory management
strategy is required. However, if the overall component demand is dependent on the
demand for the product, then a Material Requirements Planning (MRP) strategy is needed.

Notes MRP is a component manufacturing planning method in which items required for
a manufacturing process are indexed to overall product demand. With MRP it is not
essential that all inventory items are available at all times, but only when they are required
in the production process. Thus, under MRP, inventory needs are coordinated with
production needs.
6. Human resource planning and management strategy: As a rule of thumb more than 75% of
a firm‘s operating expense is for human resources. Therefore, adequate hiring, training,
and utilization of human resources is a critical operational strategy for achieving success.

Example: The management of an organization makes a strategic decision to develop a
five-year marketing plan to achieve a competitive advantage through the introduction of a new
service.
An automobile manufacturer makes a process strategy decision to offer a standard group of
options on its automobiles in order to reduce the variation in its production needs and lower
unit costs.
A computer chip manufacturer makes a strategy decision to increase R&D expenditures on an
advanced CPU chip design enabling compatibility with multiple computer operating systems.
A firm makes a location strategy decision to conduct a nationwide survey of state industrial
development agencies to evaluate where the company could receive the greatest financial and
environmental location benefits.
A lawn mower and snow blower manufacturer makes an inventory management decision to
use an MRP system to coordinate their need for lawn mower and snow blower components with
seasonal manufacturing schedules.
A manufacturer makes a human resource strategy decision to give more responsibility to its
employees by creating work teams to assemble entire products rather than components in the
belief that it will obtain greater productivity because of job enrichment.
Administrative Decisions

The types of administrative decision are as follows:
1. Programmed decisions: Decisions typically made regarding highly routine situations where
little discretion is required.

2. Non-programmed decisions: Decisions made in unstructured situations where problem
conceptualization and original thinking is required.

Example: Management makes a programmed administrative decision to establish a
vehicle maintenance schedule.

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