Operations Plan Notes Learning Outcomes Understand the concept of operations function in business Prepare an operations plan for their proposed project Introduction Operation is an important function in a business organization. Managing operations ensures production or service delivery meets customer specifications, quality, and time requirements. Operations management: process of marshalling business inputs to transform them into outputs (products or services). Components in Operations Business Input Transformation Process Output Feedback External Environment Operation Plan The operations plan is included in the business plan. Demonstrates the operational aspect of transforming business input into output. Ensures the business can produce the planned products or services from the marketing plan. Operations Plan Comprises Of Process Planning Operations Layout Production Planning Material Planning Machine and Equipment Planning Manpower Planning Overheads Requirement Location Plan Business and Operations Hours License, Permits and Regulations Required Operations Budget Implementation Schedule Process Planning Identification of step-by-step processes from beginning to end. Manufacturing: explains activities, duration, and equipment used. Service: explains steps from start to finish to provide the service. Can be illustrated using flow charts or process charts with universally recognized symbols. Symbols Used in Process Chart Operation: Activity that modify, transform or give added value to the input Transportation: Movement of materials or goods from one place to another Inspection: Activity that measure the standard or quality Delay: Process is delayed because in process materials are waiting for next activity Storage: Finished product or goods are stored in the storage area or warehouse Operations Layout Arrangement of machines, equipment, workers, and facilities. Designed for smooth and efficient production of goods and services. Three types of layouts:Based on process Based on product Based on marketing Layout Based on Product Suitable for businesses with a product focus or continuous flow production. Design follows the sequence of activities to produce the product. Example: food processing factory. Layout Based on Process Suitable for businesses producing several products using similar processes. Design based on the similarity of processes where similar machines and equipment are grouped together. Example: steel workshop or tailor store. Layout Based on Marketing Designed to maximize the area available to display goods. Examples: retail businesses like bookstores or departmental stores. Production Planning Ensures the business produces enough output or services to meet market demand. Determines how much output to produce for a certain period (day, week, month). Relies on information from the marketing plan (e.g., sales forecasts). Example Calculation Average sales forecast per month = R M 25 , 200.00 RM 25,200.00 RM 25 , 200.00 Price per unit = R M 15.00 RM 15.00 RM 15.00 Number of output per month = 25 , 200 / 15 = 1 , 680 25,200 / 15 = 1,680 25 , 200/15 = 1 , 680 If 24 working days per month, output per day = 1 , 680 / 24 = 70 1,680 / 24 = 70 1 , 680/24 = 70 Material Planning Determines the type and amount of raw materials needed for production. Involves four steps:Identify and list raw materials Prepare the Bills of Materials Calculate the quantity of raw material required Bills of Materials Contains a complete list of materials, parts, or components and amounts needed to produce one unit. Requires understanding the product's design. Important information for purchasing activities. Machine & Equipment Planning Steps:List all required machines and equipment based on process flow. Determine the amount of each needed based on venture capacity. Identify reliable suppliers based on price and after-sale services. Factors to Consider in Purchasing Price Quality and reliability Availability of spare parts Breakdown maintenance facility Technology & user friendly Supplier reputation After sale services N o . : o f : M a c h i n e = P l a n n e d : R a t e : o f : P r o d u c t i o n : p e r : d a y : X : S t a n d a r d : P r o d u c t i o n : T i m e : / : U n i t M a c h i n e : P r o d u c t i v e : T i m e : p e r : d a y No. : of : Machine = \frac{ Planned : Rate : of : Production : per : day : X : Standard : Production : Time : / : Unit}{Machine : Productive : Time : per : day} N o . : o f : M a c hin e = M a c hin e : P ro d u c t i v e : T im e : p er : d a y Pl ann e d : R a t e : o f : P ro d u c t i o n : p er : d a y : X : St an d a r d : P ro d u c t i o n : T im e : / : U ni t Manpower Planning Steps to determine direct labor:Determine the planned production rate per day. Determine the standard time for a worker to produce one unit. Determine workers' productive hours. Calculate the amount of direct labor required. N o . : o f : W o r k e r = P l a n n e d : R a t e : o f : P r o d u c t i o n : p e r : d a y : X : W o r k e r : S t a n d a r d : P r o d u c t i o n : T i m e : / : U n i t W o r k e r : P r o d u c t i v e : T i m e : p e r : d a y No. : of : Worker= \frac{Planned : Rate : of : Production : per : day : X : Worker : Standard : Production : Time : / : Unit }{Worker : Productive : Time : per : day} N o . : o f : W or k er = W or k er : P ro d u c t i v e : T im e : p er : d a y Pl ann e d : R a t e : o f : P ro d u c t i o n : p er : d a y : X : W or k er : St an d a r d : P ro d u c t i o n : T im e : / : U ni t Overheads Requirement Determine overheads required in operations (other than direct materials and labor). Examples: indirect labor, indirect material, insurance, maintenance, utilities. Location Plan Decision on the best premise for the business. Influences sales revenue, business operation cost, and long-term investment. Factors Influence the Location MANUFACTURING ACTIVITY: Priority should be given to the cost factors In manufacturing cost saving would contribute to profit SERVICE ACTIVITY: In service priority should be given to distance from market or customers. Distance from customers will influence sales revenue. Increase in revenue will contribute to increase in profit Factors for Choice of Location Distance from raw materials/suppliers Labor supply Transportation Land price or rentals Infrastructure Climate Local Government Policy Security Facility for expansion Business & Operation Hours Business hours: time the business is open to customers. Operation hours: hours the workers have to work. Manufacturing: typically 8-hour shifts; depends on production planning. Service: state business hours in terms of days and hours. License, Permits & Regulations List all required licenses/permits/regulations to operate. Identify the responsible agency for approval. Operation Budget Estimate the budget for operations activities. Categories:Fixed asset expenditure Monthly expenses Other expenses Implementation Schedule Sequencing and allotting time to all project activities. Decide how long each activity takes and compute resource requirements. Use Gantt Charts to schedule resources and allocate time. Knowt Play Call Kai