Your small services company has outgrown the current facility after the first tw

Question

Your small services company has outgrown the current facility after the first two years of a three-year lease. As the operations manager, you are being held accountable for cancelling orders, and you are beginning to lose market share due to late deliveries. The goal is to determine what action to take in the future to improve the situation and restore sales.

i. What criteria should have been used in the decision-making process that could have avoided the current situation?

ii. Describe the eight elements for effective decision making used in a rational decision-making approach, and describe how it could have been applied seeing this potential crisis in advance.

Explanation / Answer

Ans i.

The decision maker must consider possible situations along with their outcomes. Therefore if the operation manager had consider growth potetial of the company or talk to sales department regarding future sales outlook and planned for bigger facility with some extra capacity for growth, the current situtation could have been avoided.

Ans ii.

Ans i.

The decision maker must consider possible situations along with their outcomes. Therefore if the operation manager had consider growth potential of the company or talk to sales department regarding future sales outlook and planned for bigger facility with some extra capacity for growth, the current situation could have been avoided.

Ans ii.

Following are the eight elements for effective decision making in a rational decision making approach:

1: Identification of the Problem

In our case problem is to identify capacity of the production capacity of the facility.

2: Identification of decision criteria

Decision criteria could have been as follow:

3: Allocation of weights to criteria

We can now assign weights to criteria:

4: Development of Alternatives

The manager could have develop alternatives like outsourcing or expansion of current facility in case of shortage of capacity.

5: Analysis of Alternatives

Alternatives could be evaluated based on dynamics of the product for example if its generic product like FMCG the manager could outsource the production but if the product is complex (covered by intellectual property rights) the company should search for expansion of facility.

6: Selection of Alternatives

7: Implementation of the Alternatives

8: Evaluation of the Decision Effectiveness

The operation manager should not have waited till he runs out of capacity, he should have done periodic review of capacity every quarter or so and plan for adjustments accordingly.

Following are the

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