Operation management is an area of management that is concerned with design, controlling and production as
well as redesigning of the business operations of organization for manufacturing of goods and services. The term
operation management is being majorly used for increasing the efficiency and effectiveness of planning the
activities that have significant impact on the business process of organization. IKEA focuses on the importance
of operation management as a leading furniture company and IKEA believes in high quality goods in wide range.
You are required to research IKEA on their website as a global provider of furniture on www.ikea.com .
Your Project requires that you explain the concept of liner programming and analyze the critical path as well as
the networking planning models in use at IKEA. IKEA is world largest furniture manufacturing and retailer
organization that is operating business in different parts of world according to needs and demand of the
customers. As of March 2016, IKEA owns 384 stores in 48 nations and offering more than 12000 products. You
are also required to produce the local area networking plan and identify the approaches that can be used for
project management and quality control in sales, stock and purchase process.
Background Info on IKEA:
The operations functions of IKEA Furniture
The operation functions are series of process that are interdependent to each other and linked procedures. It
consumes one or more resource as input at each stage. Operation functions depend on decisions and result.
Strategic plans are designed according to future condition and demand. The operation functions of IKEA
furniture are explained below:
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• Design process and identify requirement: This function describes a planning stage. Operational manager
identify process and mechanism of their execution. This would identify number of human resource and
technical tools required. The operation manger also has knowledge to handle such process effectively.
In case of IKEA Furniture, this operation function estimate about list of raw materials, technical tools
and human resource. All such needs are consider as input for next stage (Hill and Hill, 2012). These are
collected in sufficient number so that next stage would not suffer from lack of any resource.
• Process activities: Process stage is considered most important function. Here the expectation is high as
the organisation aims to produce goods of quality. For Example- IKEA is including production processes
which can be operate safely, give results on time, best quality in output with low cost. All these
objectives should be fulfilled at the process stage. It includes all the activities that must be executed
one by one. The activities include sufficient number of input also (Slack.et.al.2010).
• Monitor and Reviewing: Operational manger need to perform monitoring function at time of processing
of activity. Monitoring involve cost and quality of product. In case of IKEA- product quality is monitored
and if it does not meet the quality standard then current process rejects the product and is sent back
to manufacturing for correction. The organisation wants to minimise cost of process. Therefore,
operational managers are required to keep the cost under control. The output from process function is
evaluated and finally quality department reviews the manufactured products to assess the product
quality (Li.et.al.2011). This review defines quality and cost of developed of product. The reviewing is
beneficial to set cost for sale goods so that company get profits.
Evaluation of operation management in IKEA
Operation management can be defined as the process to design and manage the production of new products
and restructure the business operations to meet requirements. Operation management includes four basic
steps: inputs, transformation process, output and feedback. Operations carried out by IKEA to produce products
are given to illustrate operation management of company.
• Inputs: Input may be raw material and resources to design a new product or service. According to use,
inputs can be categorized in two types.
- Transformed resources: This type of inputs is used as the raw material to develop a product from
them. IKEA uses glue, plywood, frames and iron nails as input to transform. - Transforming resources: This type of resources is not used as raw material and only helps to
achieve desired products. Transforming inputs used by IKEA company are: machines, human
efforts and capital (Slack, 2015).
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• Transformation process: This is the actual processing where raw material of IKEA takes the form of
output. Input may be either in form of information, human power or physical requirements to build
output. For instance, to create new Sofa, company’s described transformed input will be processed with
the help of transforming resources. Plywood, glues and iron nails will be used in a proper manner to
create the output. Thus, the manner of treating inputs for an output is transformation process.
• Output: Result of transformation process is the output. Transformation process may produce some
undesirable outputs. IKEA company checks the outputs whether they are meeting the quality standard
of organisation or not. A damaged or poor quality product cannot be sold and is a loss for the
organisation. Producing higher number of poor quality products leads to operational failure and poor
financial performance (Krajewski.et.al.2013).
• Feedback: Feedback is the suggestions to improve the output. If the production processes can be
modified or improved to solve the issues, than a better quality product can be expected from output.
IKEA uses feedback to eliminate production mistakes.
Tension between cost minimization and quality maximization
This is the biggest challenge for IKEA Furniture to minimize cost and maximize quality also. IKEA wants to include
such procedures and resources that minimize the cost of operation but does not decrease quality of
goods. However, the achievement of double goals simultaneously is difficult task. Quality is the vital parameter
for IKEA in order to sustain at the present position. But it has been analyzed that quality sustainability increase
cost and time also. The quality of output expected by customers may result in increased expenses. On the other
hand, some time cost minimization suffers from quality degradation. Lower quality of goods affects the brand
image. It can decrease selling of goods also (Hirschey, 2016). Therefore it is very critical to handle both the
parameters together- cost minimization and quality maximization. Although cost minimization is necessary to
gain more profit on sales. It is also required to compete with other brands.
In order to provide more benefits to customers on sales and to sustain in market, company may balance the
product cost and quality management in business where it can. IKEA needs to finds new ways to reduce the
manufacturing cost of products. For that, company can buy a lot raw material with discounts to reduce the cost
per product. To sustain the desired quality, supplementary inputs like human efforts can be replaced somewhat
with electronic machines to reduce overall cost (Ajodhia, 2010). Management in company can find new places
to develop and outsource the business so that cost in transportation and supply can be reduced. The effect of
all activities will be reflected on products as minimization in cost with same quality. This would reduce tension
at some extent.
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Project Task
Question 1: (25 marks)
Study Linear programming at IKEA and explain how it adds value to production process
Example: I have provided a sample of an introduction that brings in the theory see below (you are required to
come up with your own version and cannot use my example)
Linear programming is the process that involve process and planning of managing the operations and make decision for establishing
the tools and equipment according to needs and activities of organization. This process involves the mathematical concept for
developing the plan. The management of IKEA could use this method for achieving the best outcome to maximize the profit by
increasing the efficiency. This method adds value to the operational activities of IKEA by helping in determining the network flow;
defining the engineering process and calculating the price and cost of each unit to make the decision for implementing the changes
in the existing process (Mohammadi.et.al. 2014). In addition to this, to make the decision like purchasing of raw material the
organization would use the linear programming which will help to forecast the production cost as well help to identify the areas of
monitoring that minimize the cost and encourage the production of furniture.
Apart from that, linear programming will help the IKEA management to analyze the variation in the production process which will
support to maintain the effectiveness in operational activities.
Question 2 – (25 marks)
Explain Critical path analysis and network planning
Critical path analysis is majorly used tool for operation and project management that helps to analysis of network
and handle the complex and time-sensitive operations of organization. Using the chart below explain how IKEA
management could user the critical path analysis for following processes:
o Define the tasks and put down them in an order for manufacturing of furniture.
o Develop the flowchart to evaluate the relation in operations of production of furniture.
o Identification of critical and non-critical paths.
o Determination of expected time of competing tasks.
o Use of alternative options for most critical paths
Sample Solution