Project Management in Manufacturing, Essay Example

Why does the learning curve apply mainly to direct rather than indirect labor?

The learning curve is a depiction of how an organization spends lesser time and costs as they produce more units of the given commodity, good or service. In essence, the learning curve is based on the assumption that as employees (direct labor) of an organization repeat a task over and over again, then the more the grasp the concepts and technicalities of the production process and hence they spend lesser time in producing additional units of a commodity and thus reducing the costs associated with production (Swink, 2011). This only applies to direct labor as direct labor is constantly involved with the production process while indirect labor is mostly seasonal. Indirect labor is only employed when the organization experiences shortages in labor due to the need to increase production. As such, the learning curve cannot be applied for indirect labor.

Question 2: If each time production volume doubled and cumulative average direct-labor requirements decreased by 5 percent, what would be the appropriate learning rate?

As the production volume doubles and the cumulative average direct labor requirement decrease at a constant rate, in this case 5%, then the constant percentage that the average labor requirements (costs) of the doubled quantities reduce is referred to as the learning rate. This is because the 5% depicts the rate at which labor units better their skills in the production process and thus average direct labor requirements reduce at this same rate. (Badiru, 1996)

Question 3: Discuss why it is important for buyers to have knowledge of a supplier’s learning rate when preparing to negotiate a purchase contract.

Before a buyer enters into a purchase contract with a supplier, the learning rate can be an essential tool for the buyer to determine whether the supplier would be the most ideal candidate to handle his purchase needs and requirements. This is because of the following reasons:

Improve Costs: a supplier with a higher learning rate will tend to produce more commodity over shorter periods of time at lower costs. This decrease in costs will almost always be reflected on the price that the buyer has to incur to purchase commodity. Therefore the price of a supplier’s commodity with a high learning rate will reduce over time. (Berk, J., & Wiley InterScience (Online service), 2010)

Improved Capacity: a supplier with a higher learning rate tends to improve capacity over time as they are able to produce and/or supply more commodities over shorter periods of time. Therefore in the case where the buyer requires more commodity in a short period of time, in the case of emergencies, then the supply can be relied upon to produce the required amount of commodity. (Berk, J., & Wiley InterScience (Online service), 2010)

Change in Process or Product Design: a supplier with a higher learning rate can always easily change the process or product design to improve the quality of their good or commodity without drastically affecting the production rate. As such a supplier would be considered reliable.

What are the major differences in working on projects, as opposed to general work in most purchasing environments?

(Badiru, 1996)

Describe the concept of value as it relates to value analysis? Provide examples of how an organization can increase value to itself or its customers?

Value analysis is the examination of each production item, the total costs of acquiring the raw materials, costs of production, costs of operations, transportation and any other costs related to the production and supply of the given commodity (Swink, 2011). The value is the final monetary compensation that is expected to be gained on the sale of the given commodity. In essence, it is the monetary equivalent of the improvement of the given commodity

An organization can increase value to itself through:

• Hiring skilled labor
• Purchasing efficient production machinery
• Reducing costs through innovative improvements to the production process

An organization can increase value to its customers through:

• Production of high quality commodities
• Offering after-sale services
• Offering good customer service

References

Badiru, A. B. (1996). Project management in manufacturing and high technology operations. New York: Wiley.

Berk, J., & Wiley InterScience (Online service). (2010). Cost reduction and optimization for manufacturing and industrial companies. Hoboken: John Wiley.

Swink, M. (2011). Managing operations across the supply chain. New York: McGraw-Hill Irwin.