BUS4098 Week 4

Production Decisions

In this simulation, you have the option of adding a couple of automation choices to your manufacturing plants that

will impact production. However, the manner in which these choices will impact production varies. Choosing the

right automation option is critical and, at this stage of the simulation, you have either reaped some of these gains

or ruled your decision as a waste of money.

Making automation decisions is important because of the in�exibility involved, but misunderstanding this is not

the more common error managers make. The �rst error managers make is to see automation as a substitute for,

rather than as a complement to, something currently in the �rm's production function. Close behind this error is

the failure to align the automation choice with the �rm's competitive strategy.

Let's �rst look at the substitution fallacy. One of the great corporate mistakes in the latter part of the twentieth

century was the belief that automation would be a perfect substitute for labor.

There is no question that machines have taken over a large percentage of the value-adding activities in both

manufacturing and services. However, they have not eliminated labor but only changed what is required from

labor. It is a "different" labor, in that workers need to have different skills and motivations. Simply replacing

workers with machines, as General Motors (GM) found out to its grief, can be a very expensive failure that sends

unit costs skyrocketing.

You may click on link to learn more about the GM case study.

why smart executives fail (http://whysmartexecutivesfail.com/)

Additional Materials

Production Decisions 

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