OPERATIONS MANAGEMENT SKILLS Essay Example | Topics and Well Written Essays - 500 words

OPERATIONS MANAGEMENT SKILLS - Essay Example Raw material cost. The cost for buying raw materials to be used in boot division maybe high. The boot division may be making losses in their sale, or their stock may not be moving and therefore could’not be able to meet the cost of buying raw material. The raw materials may also make boots not to be durable, and this may trigger complaints from customers. This may force the company to use its money to purchase the raw materials for the boot division. In such situation the company should stop producing boots in the mean time until the all stock of boots move or until the cost of raw materials used in boot division lowers. Labour cost (wages). This is another cost of the company affected by the boot division. This can happen when the boot division has has a large number of employees than the required capacity. This may lead to shirking effects, where some workers may free ride and the company may end up spending more in paying wages. The company should therefore determine the required capacity of workers needed in boot division, and reduce this number based on productivity and performance. Advertisement cost. These are costs incurred in the prrocess of informing customers about the product. The boot division may be incurring more cost in advertising their products. This may lead to the company spending more on advertisement of the products. The company may prevent this by determining the desired level of advertisement required for boots to avoid spending more on advertisement. Promotion cost. This is the cost incured in promoting the products of the company. The boot division may increase the promotion cost of the company if it gives the customer promotion every time. Such promotion can be price discounts. The company should determine if the cost boot division is using more in promotion, and regulate if necessary. Packing costs. The packing of boots may be costly, leading to increase in