Limiting Factors and Business-decision Making Techniques: Shang Mask Manufacturing Case Study
Executive Summary (Assignment Brief)
A limiting factor is a function adjustment that changes significantly in performance or evaluates a system. The limited element means those goods or products that will reduce a business’ activity or service through its scarcity. Factors that restrict the output or operation of a company are or limiting factors. In this paper, I will address the limiting factors, business-decision-making techniques that help the organization make decisions, and some recommendations to the management department of the Shang Mask Manufacturing company so that the issue is solved, which does not have sufficient resources to satisfy the need by its clients.
Keywords: limiting factors, Shang Mask Manufacturing company, business-decision making techniques, and recommendations.
a) Introduction:
The paper includes an investigative study on a manufacturing firm called Shang Mask, established in Seremban, which cannot manufacture enough goods to satisfy customer demand from the local market for Malaysian media and on the European market due to shortages in raw non-woven fabrics. This paper addresses the limits of market conditions. Limiting factors indicate that the output opportunities are restricted in availability. Limiting factors are staff, machinery, or equipment shortages which prevent a company from optimizing its sales. Several limiting factors include financial scarcity, lack of raw materials, equipment shortages, and skilled employees. The research report focuses on some recommendations that will help the organization make decisions on its activity, calculate the cost of each commodity, analyze restricting variables, classify the goods, and allocate the highest to the lowest income source. Examples of raw, non-woven cloth materials are provided to the Shang Mask manufacturing firm.
b) Limiting Factor
First, I will explain the idea of a constraint of resources and the limiting factors that prevent a business from operating and being viable to satisfy its potential customer. A factor limiting natural capital or the ecosystem usually inhibits the proliferation, development, or excess of activities and processes. Economically speaking, restricting factors that are an obstacle or deterrent to a person or organization’s growth and operation to maximize production potential can meet its customer’s needs. That is, a restricting factor is a factor that an organization can or cannot easily access. From a capital perspective, it is also understandable that a company’s finances or production are inadequate. The organization’s top managers and owners must obey their organizational priorities and plan the scarcity of resources and deal with the circumstance they face to resolve the matter with plans and money alternatives (Finkel, 2019).
There are some limiting factors that are likely that a corporation or sector meets during their whole service, including raw material scarcity, highly skilled labor shortages, financial assets, working hours, machine hours, and production shortages of goods within the industry. Accordingly, to realize the limiting factors and quickly substitute them with an optimal solution, an organization board member can recognize the market and form of enterprise they conduct. On the other side, we will build and improve our market sustainability against our competitors by providing solutions for restricting resources when businesses worldwide have lately become closer and more innovative. A company has a strategic advantage by providing high-quality products/services and on schedule through continuous output. For example, the business with many raw materials and cheaper to produce its products, or if a globally operating business-like Shang Mask Manufacturing Company needs to grow its subsidiaries abroad, it must enable us to hire less costly labor. Perhaps, the competitiveness of a business can increase, and many more products and services are produced such that consumers can afford, and the company benefits in terms of more sales.
Furthermore, due to inadequate resources, this organization is liable for reducing surplus raw material. Therefore, the representatives of the organization must be willing to control and preserve the morality of their employees by providing them with a safe and stable work environment and an adequate salary to discourage attention from exiting the organization. Finally, it is essential and efficient for an organization to achieve its goals, manage, and use its restricting Factor desirably and successfully (Ryglova, 2007).
As I have already mentioned, there are some restricting factors, but I will briefly describe others in this section:
- Shortage of Raw Materials: The essential and fundamental limiting factors that a firm or company faces in its manufacturing activities are raw materials or resource scarcity, and the absence of raw materials asserted by specialists worldwide is a significant challenge or problem, not just for the manufacturer, sonder for all aspects of human well-being and its lives. The organization must also first recognize the lack of its raw materials. Then, substitute them with a qualified supplier to prevent manufacturing loss in the face of a change of customer requirements. In essence, the shortage of raw material is due to a manufacturer’s s inability to supply the raw material required for the manufacturing process(Sridhar, 2020).
- Lack of workers: Refer to a shortage of skilled workers. For example, the need for jobs occurred in several ways often; however, the issue was their demand from an enterprise when it was highly trained and intelligent. They will not work for a low-paid business and therefore lose them. It will be challenging, however, often to find highly qualified and experienced workers for our company(Fournier, 2020).
Space shortage of working capacity:
- Deduction of Business Demands
- Investment Deficiency
- Limited Capital
Example of limiting factors:
The outbreak of the Worldwide pandemic (covid-19)
Covid-19 is now the world’s most enormous illustration and challenges to corporate and other activities. But like I mentioned, the pandemic has been an overwhelming restricting factor for companies both at home and worldwide. Shang Mask Manufacturing Company manufactures Mask in Seremban for local and European markets. The company is unable to produce enough to meet the demand of the local and European market. This is due to a shortage of raw non-woven fabric, which is source locally. The supplies of other natural materials are not affected. The company needs to produce enough to meet the local and European market demand due to the covid 19 pandemic. If the company loses the customer to other competitors, it will be challenging to recapture the local and European markets.
I will give an example to clarify and illustrate limited factors. If an enterprise manufactures three M, N, and O components, RM24, RM240, and RM12, each contributes per part of their output. It takes machines 6 hours, 2 hours, and 1 hour for each production piece. The three goods have 3,000 units, 3,000 units, and 3,000 units in estimated production. It needs 18,000, 6,000, and 3,000 respectively hours of machinery, respectively. The machine times are restricted to 18,000 hours whenever a machine is broken down.
The example states that the organization’s production requirement for its goods M, N, and O is estimated to be based on a total of 27,000 machinery hours. The corporation has 18,000 computer hours anyway because of breakdown. Unfortunately, this is a minor consideration for the corporation since it lacks sufficient machine hours to manufacture all goods. If the business continues to manufacture product M, since product M contributes the most significant benefit from the above facts, it would be incorrect to assume that it does not. Since M requires 6 hours of machine production, N needed 2 hours of machinery, and O just 1 hour. The business can start operating alternatively with 3,000 N and O products, and the company has machine-to-product hours in hand. Shortly there are no computer hours to manufacture N and O if the corporation pays attention to products M, we may tell. To optimize the company’s earnings, the company can use limited factors.
Finally, we can conclude, to maximize profit, the organization would carry out a limiting factor study to determine the most significant contribution for each commodity to make a profit by the most effective manufacturing process.
b) Business Decision-Making Techniques:
In this segment, I address several methods that the organization has established to determine if they have single restrictive resources or various resource limits. Some techniques and approaches have enhanced an organization’s decision-making as it is confronted with single limits or several limited resources such as the study of variables, Calculation of benefit input of each commodity, allocation of the resource, Product ranking, etc.
In confronting a single limiting factor, the company must use a restrictive factor study to find rare assets and use the strongest solution to available resources to maximize the benefit. Firstly, when analyzing the limiting Factor, we can classify the bottleneck tools. And then, the benefit per part of every commodity can be calculated. Third, the output by bottleneck reserve should be calculated for any item. After we obtain the results by bottleneck source, the products can be mentioned. Lastly, by getting most of the lowest contributions, we will share the references. If a single limiting factor limits money, the rating of the highest gift will allow us to make the most benefit.
Still, every day a company utilizes multiple kinds of policies to reduce the shock. Companies should look for natural resource options and use them wisely to continue their operations. In case of a decreased equipment shortage, the machinery can be increased for the production business. They will spend the office because of the lack of working space. If an enterprise needs investment, it will purchase new shareholders and apply for a loan to increase its investment (Hedreen, 2019).
When there are more than one of the scare tools that have restricted the business’s activity, we will resolve it using linear programming. First, we must describe the conflict while we use linear programming. Then we can identify and prepare the goal. Thirdly, the dilemma may be constrained. Next, we should draw a chart to describe the practical field to achieve the best results in a favorable production schedule. Finally, the issue has been resolved, and the donation received is complete.
d) Views and recommendations to the management
Firstly, the article on the condition of the Shang Mask Manufacturing business today is relatively straightforward. It’s pretty obvious. Due to the shortage of raw materials, the company cannot deliver enough products to meet the need of the local and European markets. This study includes advice and measures to support the organization tackle supply shortages or other lack of resources in the current economic situation.
But the firm faces some deficit in its raw materials and services in the current scenario. Shang Mask Manufacturing business manager has advice for helping the company manage its available materials and resources. Which are:
- Knowledge to analyze the limiting factors to find the bottlenecks’ resources and calculate the per commodity unit contribution.
- Allot the resource for each benefit from the highest contribution to the lowest contribution per rating, as resources are used.
- In the lack of a natural resources professional, options may be sought to protect them, and processes may be modified such that the enterprise does not have to rely on them.
- For the lack of production capacity managers, the computers should be increased to be covered, and another approach is to outsource or obtain resources for the other firms with mutual transactions.
- Managers may purchase new owners and receive bank credits to accumulate the resources of scarcity.
- Optimization of supplier-managed inventory to ensure the correct item is produced as needed according to the schedule and prediction.
- The manager must be mindful of various risks, including economic risks and geopolitical risks that may influence the supply chain(Blanchard, 2012).
- Develop a modern process management method to handle manufacturing to remove waste from limited, finite capital.
e) Conclusion
It can now be inferred that the aspect restricting the activity or the operation of an organization and industry can be limited. Or limiting factors are factors restricted to or not in excess sums to the organization. For example, several determining factors include labor scarcity, computer hours shortage, financial shortage, raw materials, personnel, etc. Any approaches and methods have been improved to assist in making business decisions, as there are several limited resources, including Examination of factor limits, Calculation of the per-unit contribution per commodity. The commodity is ranked from top to bottom in series based on the contribution per unit of strait capital. The resource is allocated from maximum contribution to minimum contribution per unit as services are used. Finally, some guidelines concerning the resolution of a manufacturing firm called the Shang Mask to recognize various risks that could impact the supply chain, identify the factor analyses limits, optimize controlled stock, and allocate the resources using a resource ranking from the highest contribution per benefit.
