Management Science And Systems For CHEMS Process

Summary of the Main Issues

Discuss about the Management Science and Systems for CHEMS Process.

CHEMS is operating their business in chemical industry where they are producing specialized industrial chemicals for large scale industries. The company is involved in the business to produce chemicals by orders from their customers that differs according to the need of the customers. Three managers in three segments that are associated with the production, administration and accounts manage the operation of the company. Senior manager is involved in the process of administration, production manager is involved with the manufacturing, purchasing and storage and accounts managers associated with the accounts department. Among three managers accounts manager is the decision making authority that make decisions considering the recommendations from senior manager whereas production manager is the most subordinate manager among three. Every recommendations made by the senior manager are based on specific data that provide supports to the accounts manager to pursue his decision.  At present, the company finalized an order from customers takes 4 months. However, personnel, operations and problems embedded in the company’s structure. There are two main aspects of the company’s problems that are identified from the current scenario, one is the order and the production process and second is the decision-making structures and processes. The objective of this report is to discuss and identify the problems in the operational process and decision making structure and find out suitable recommendations to improve them.

Summary of the main issues, including the ordering and production process and decision making structure and process currently employed in CHEMS Ltd.

Considering the ordering and production of the company, seven problems have been identified that are developing mess among the system those are discussed below in detailed. The first issue is associated with the production manager who is responsible for the production performance however; he has no control over the input materials. Production manager is not able to decide about that input materials that also involves the quality. When raw material suppliers submit their quotation then it goes to the account manager instead of production manager. The system is wrong because accounts manager is not directly involved with the production process and knowledge of the function is also less. In such case, company should change the centralized approach for their goods purchasing and production because it will be better understood by the production as compared to the accounts manager.

The second issue of the organization is that the only allow the standard price list from the supplier however; in the time of adjustment, it becomes difficult to compare the price list with the others. The third issue of the organization is functional responsibility of the managers. The current system overload the accounts manager with lot of responsibility and almost every process needs his approval. Therefore over reliance has become the habit of the employees. If some day accounts manager is absent then the whole process of the organization becomes slow or stagnant. The fourth issue of the company is the unstable goods supply from the raw material supplier due to the complication purchase process. CHEMS supply their products to their customer once the order is received. The unstable goods supply is the one of the biggest problem of the company.

Key Challenges Faced by Senior Managers of CHEMS Ltd

The fifth issue of the company is the operational expense particularly on staffing. CHEMS The annual cost of 10 staff was as much high as 25000 dollar that easily can be reduced by negotiating properly with them. The high operating cost was affecting the operating capital of the organization. Quality control period is the sixth issue of the organization. The quality control period of the manufacturing process lasts for three weeks, which is too long whereas production time is one week. Therefore long quality control time is one of the hindrances of the process. The seventh issue of the organization is the arrangement of the container for the produced goods to supply. The organization starts the process of arranging the container after production complete whereas they should arrange it before that by scheduling the production in such a way so that they remain in a simultaneous process.

Considering the decision making structure of the organization there are five problems that are identified.

The first issue of the decision making structure is type of job done in the system. The computer system of the company generates weekly systems that are associated with the overall activity of the whole week. On the other hand, the senior manager of the company also produces a weekly report that is almost similar to the computer system, which is wastage of time and burden to the employees.

The second issue is almost similar to the first problem because senior manager of the organization has to submit one hardcopy and one softcopy to the accounts manager therefore it also a wastage of resource.

The third issue is inserted among the staff of the organization. In spite of the fact that there is data framework in the organization, the Senior Managers are declined to utilize the database much of the time. Likewise, they more often than not have an unfriendly outlook towards the framework, which causes the issue of data incoherency by condensing information physically.

The fourth issue is likewise implanted in the brought together approach and the misallocation of workload. In CHEMS, Chief Accountant needs to favor various reports, which could impact the nature of creation and the absence of bias of the choice.

The fifth issue is the quality of the report produced by the senior manager to the accounts manager. Since the job role and the decision making process is not in a structured frame therefore the quality of the report is low. The unorganized report from the senior manager is also a waste of time that involves more time from the accounts manager.

Analysis of the Production Reports Provided by CHEMS Ltd

An analysis of the two key challenges facing the Senior Managers of CHEM Ltd

CHEMS LTD
Production report
Week to 30 April 20X3	Report date: 19 May 20X3
	Production cost per batch	Profit for week	Manufacturing cost	Cost to date	Sales value
Project
A	453.98	2,563.98	10,002.43	777,734.90	1,000,000
B	664.23	655.83	8,444.93	76,339.00	500,000
C	76.34	27,736.90	57,223.94	299,433.93	750,000
D	266.87	17,117.28	38,339.00	89,222.90	350,000
Project A – input mix	Cost	Stock at 30 April
Material X	453 tons	4.53	34
Material Y	65 tons	877.30	233
Material Z	477 tons	500.00	78

                                            Table 1: Computer generated weekly report available to the senior manager

                                                               (Source: Provided in the scenario)

The production reports gave by CHEMS is not viable in helping Senior Managers with their basic leadership. For settling on decision making, Senior Management ought to procure adequate data in steady way from the report gave by CHEMS. In any case, there are 5 components demonstrating that the report is not successful in giving adequate and compact data that could add to the nature of the basic leadership.

The primary issue of the long production procedure could be confirmed by the long time break between the report date and the system generated information. In any case, the report must be accessible on the 19 May 20X3, which demonstrates that the report takes over two weeks for submission. The long time could defer the basic leadership and spoil the adequacy of assessing execution, cost assignment, and influence.

The second issue is the inconsistent utilization of measures between the production cost and benefits created disarray in contrasting the business execution. Since the second section demonstrates the expense per group while the third segment shows the expense every week, it could not give adequate data recommending the measure of product sold or the aggregate expense of clusters every week.

The third issue of the company is the non-existence of the sales unit. The data only represents the total sales value of the company whereas it should have a unit wise data that could help to calculate the return.

The fourth issue is about the nonattendance of information on the allotment of material X,Y, and Z on item per batch. This information gave just let us know the aggregate utilization of Material X,Y, and Z for project A, while the data of the allocation per group is not given, which could obstruct the choice on cost allotment and the viability of cost control.

The fifth issue of the production is the in consistent unit cost for the selected project. From the cost section, we could not get any data showing whether the reflection of the expense of information blend per unit or per tones. In this way, the data is mistaking for the Senior Manager to settle on correlation and choice.

The reporting arrangement of CHEMS does not replicate an abnormal state of competency in its procurement of data to its Senior Managers and its IS administration. The inadequacy of the reporting frameworks can be confirmed by the two main considerations. The main reason is the absence of broadened solid data assets that filled reference need for administrator’s basic leadership. In CHEMS, just a week by week creation report is given to Senior Manager for basic leadership while different assets, for example, verbal report from Production Managers are not sufficiently formal for reference. Subsequently, Senior Manager can just get data from one source and have no entrance to different assets for crosschecking the precision of every data source. Besides, the week-by-week report is not viable for basic leadership as talked about above. In addition, the data arrangement of CHEMS is not an entirely controlled framework that gathers, sorts out and breaks down the information as indicated by the request, clients and suppliers. Then again, there are few inputs for the data framework administration.

Describe two critical success factors that can be used to judge the success of the change.

Recommendations to Improve the Decision-Making Structure and Operational Process

Any adjustment in an organization can whether carry change or raise cost with no development to an organization. Viability and productivity are the two main considerations that used to assess whether a change that happens in an organization is fruitful or not. In administration’s definition, viability signifies, “making the best decision”. To put at the end of the day, it gauges the extent to which the objectives are come to and the degree to which an issue can be explained. Since adequacy concentrates on the outcome, the technique and the expense is less accentuated. The second component that decides the achievement of a change is proficiency. Effectiveness is a critical foundation in deciding the efficiency of an organization. While viability signifies “making the best choice”, productivity signifies “doing thing right”. It quantifies whether an organization can streamline its generation by using the same measure of assets including cash, time and human resource.

Explain how time could be saved within the order and production process. Provide a detailed estimate of the new production time from the receipt of order from the customer to the delivery of the finished goods.

The existing process of manufacturing within CHEMS involves long 4 months starting from order processing to goods supply that consist 4-stage operation “quotation, material ordering, production, and packaging and shipping”. A portion of the strategies can be occurred in the meantime to decrease the manufacturing time. In the accompanying, another request and creation procedure will be acquainted with recovery the season of generation. By reducing the manufacturing time, the outcome can be come to while the information can be minimized. In spite of the fact that the cash expense of a more drawn out production process and a shorter manufacturing procedure is the same, the exercise ineffectiveness for other production and the additional compensation spent are the open door expenses of a period devouring production process. Despite the fact that the present production procedure of CHEMS can create the right item to the clients, it is not productive by receiving the sequencing rationale. As talked about already, viability is about making the best choice while productivity is about doing thing right. In this way, a change that could convey productivity to the organization should be done.

Keeping in mind the objective to upgrade the efficiency, the 4 months in length production procedure can be compacted under 2 weeks. The main phase of the order and manufacturing procedure is estimate. Really, the assignments of drafting estimate and information prerequisite is not important to take more than one month. In addition, these two activities are not trouble with each other, which implies that they can be occurred in the meantime. Moreover, an underlying info prerequisite can be accessible in no less than 2 days. However, the estimate draft and the information necessity rundown can be completed in the meantime in 2 days.

The second phase of the order and estimate procedure is material requesting. As of now, the organization first conveys value enquiries to three suppliers then sit tight for the suppliers to react with the firm quote. Arrangement must be completed after the accounts supporting the estimate. To accelerate the basic leadership, the arrangement can be completed following two days of conveying the value enquiries. Once the most reduced quote is affirmed after the transaction, the Accountant can straightforwardly support the suppliers that offer the least quote. The one-month material requesting procedure can really be wrap up in 16 days.

The third phase of the procedure is the manufacturing, which incorporates item production and quality control. Since quality control must be done after the manufacturing, the methods of this stage need to taken in consecutive request. Be that as it may, one of the methodology, requesting particular holders can happen along with the quality control process subsequent to these two stages are not conflict with others. Request specific compartments and quality control ought to wrap up at the same date. Thus, the CHEMS can arrange specific messenger soon after finishing the past methodology. The new procedure that permits two non-clashing systems happen in the meantime permits the 4 months procedure to be compressed within 2 months

Describe how different information system (IS) and decision support system (DSS) may be developed for use within CHEMS including how management science models and software tools might be used as a component for decision making and how different database, information and models interface to form an IS or DSS.

The high level of information system expected that a company is operated at a higher level, which is confidential IS (information system) in various level which is used by the users in various seniorities. The result of a lower level will be obtained as the input of the top level for data processing and making decisions or decision-making. Moreover coming back to the case of CHEMS, the superior manager did not manage upper level of quality report for the executive level. This issue may be traced back to the sources of gathering data or information to manage the report. Presently, the superior obtain data or information from the three key sources, which are the oral reports from the Operation or Production managers who develop the chemicals, technical papers that superior managers bought by self and the data received from every week production gathering or meeting. Due to insufficient observation in the data or information input, the result is not valid for assisting the right decision-making. To enhance the result manage by the Superior managers for assisting the senior accountant’s decision-making; a device or system that can be observed the output and input of the data should be obtained. There are four levels of information system is been defined in the below figure.

Figure 1: Four levels of Information system

(Source: Anderson et al. 2015)

DSS means Decision Supporting Systems which involves or have three key compoenents which are mentioned below.

1. MBMS (Model-Base Management System)

2. DBMS (Database Management System)

3. DGMS (Dialog Generation & Management System) or User-Interface

Figure 2: Major Components of DSS

(Source: Power, Sharda and Burstein 2015)

There three key components combined altogether to provide a simplified, ease to understand, a systematic data or information for the superior managers to make the right decision. The database management system is basically the DB (database) that holds a huge quality of information or data in the decision supporting system. To make the huge meaningful data or information, the model-base management system functions to change the unstructured and unorganized data into an easy or understand information while the users can have effective information and recommendation from a user effective and friendly interface. Other than the inner operation system, the decision supporting system also access data or information from other computer-based networks (extranets, intranet, internet) and system to improve its modeling capacity and database as shown in the below figure. The huge quantity of information or data stored in the data management is changed to organized information or data which will be transferred to the knowledge based inner system. Simplified information or data that gives enough information to the users will be showcased on the user interface.

Figure 3: Conceptual Block diagram of Decision supporting system

(Source: Power, Sharda and Burstein 2015)

The DSS refers to a computer-based system which allows the customers or users to make decision and perception in an effective manner. It can be implemented in the sections or areas that needed difficult decision-making such as military and medical fields. The chemical business or company CHEMS that included generally difficult decision making and the main issues of IS (information system) takes the position of the superior manager’s level. Therefore, DSS (Decision Supporting Systems) will be a correct and suitable structure or model among the information systems system which should be implemented by the chemical company CHEMS. User-friendly systems mix the functionality of different management science models and databases and provide the permission to the users to ask queries and get the required answer from the system. When we compare the old or traditional IS (information system) access, Decision supporting systems can reach its faults in obtaining and recover data or information.

Formulate and critically evaluate the possible decisions/outcome using suitable management science models and software tools, and advise the company accordingly on a suitable course of action

Expected monetary value (EMV)

EMV (alternative i) = (Payoff of first outcome) X (Probability of first outcome) + (Payoff of second outcome) X (Probability of second outcome) +…… + (Payoff of last outcome) X (Probability of last outcome)

Expected Value of Perfect Information (EVPI)

EVPI indicates the amount that people are willing to pay for extra information/ perfect information

EVPI = EVwPI – Maximum EMV

EVwPI indicates the average return if decision is made under the situation of acquiring perfect information in long run

EVwPI = (Best payoff of first outcome) X (Probability of first outcome) + (Best Payoff of second outcome) X (Probability of second outcome) + …… + (Best payoff of last outcome) X (Probability of last outcome)

Based on the data and information, we can get the following results:

Let System I is successful:

EMV = [(1m x 10 – 2.5m) x 55%] + (-2.5m x 45%) = $ 3 million

Let System I fails but System II succeeds:

EMV = [(1m x 10 – (2.5m + 1m) x 75%) + [-2.5m + (-1m) x 25%] = $4 million

Let either one system succeeds:

EMV = -2.5m + (-1m) = $-3.5 million

Conclusion

At present, CHEMS has various issues in its stream of data and the operation. The present method for working the business costs additional costs to the organization. What’s more, the exercise in futility could likewise be viewed as an open door. Besides, the lack in the data chain results in the low quality reports delivered by the Senior Managers. The low quality report could not fill the reference need for basic leadership. The issues of CHEMS are implanted in its operation, assets designation, and direction towards the faculty. The organization ought to lessen the repetition of workload. CHEMS ought to introduce a progressed and easy to use DSS for the producing brilliant reports. Likewise, it does not important to create an additional report physically by the Senior Managers. Senior Mangers ought to be prepared to utilize the framework and screen the information info and yield as opposed to delivering an excess report. The employment designation ought to be reassigned. Senior Accountant ought to just concentrate on the assignment identified with the budgetary execution of the organization. Different assignments, for example, the information blending of the generation, should be in control by the Production Managers. The organization ought to enhance the trade among divisions and streamline the elements of every gathering by better data trade and occupation portion. Besides, the Production Managers ought to be outfitted with fundamental money related learning and be enabled the privilege to control the info blend.

The manufacturing to supply period has to to be abbreviated from 4 months to under 2 months. The organization should not embrace the successive preparing as at present connected. Some farm duties that are not struggle with each other could be done in the same time to improve the organization efficiency. This issue is particularly clear in the time of requesting unique couriers with specialized container. CHEMS can really decrease the requesting time frame. Likewise, Quality Control and the logistics plan can really be done in the same time. The organization must shrink the expense on employing the arrangement staff. Rather than enlisting 10 individuals, 8 individuals can be sufficient for taking care of the whole process. Moreover, lessening the HR in this part can likewise decrease the extra expense of the organization. Since Information System and information exchange assume imperative part in basic leadership, an organization, for example, CHEMS that includes complex basic leadership must play uncommon consideration. Simple operational and structural strategy of the organization will enhance the organizational performance by arranging efficiency with effectiveness.

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