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Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Module 9THE OPERATIONS PLAN
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
LEARNING OUTCOMES
At the end of the module, students should be able to:
understand the concept of operations function in business
understand the topics that are included in an operations plan
prepare an operations plan for their proposed project
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
INTRODUCTION
Operation is one of an important function in a business organization
Managing operations is crucial to make sure that the business is able to produce product or deliver services according to the specification, quality and time specified by the customer
Operations management can be defined as the process of marshalling business input to transform them into output in the form of product or services
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Components in an operations system
The components of an operations system that is involved in the transformation of business input into output comprises of the following:
Business Input Transformation Process Output Feedback External Environment
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Schematic Diagram of an Operations System
The components of an operations system can be portrayed in the schematic diagram as shown below:
Input OutputTransformation
Process
TransformationProcess
Feedback
External Environment Factors
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
OPERATIONS PLAN
The operations plan is the one of the section that is included in the business plan
This section will demonstrate the operational aspect of the business that is crucial in transforming the business input into output
The operations plan will ensure the business is able to produce the product or to provide the services that the business had planned in the marketing plan
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
The operations plan comprises of the following topics: 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
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
PROCESS PLANNING Process planning involve the identification of the
step-by-step processes from beginning to end in making the product or in providing the services
For manufacturing business, the processes involved will be explained clearly such as the activity involved, its duration and the equipment used
For service business, the process planning will explain all the steps that should be taken from start to finish to provide the service to the customer
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
PROCESS PLANNING (cont.)
The step by step processes can be illustrated using diagram such as a flow chart or a process chart
The process chart will use symbols that are universally recognized in the operations management field
These symbols are also used in the job activity chart to show a worker’s activity
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Symbols Used in the 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
Symbol Activity Description
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
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Flow Chart for the Production of Mixed Fruits JellyFlow Chart for the Production of Mixed Fruits Jelly
Transfer the fruits from the store to the Transfer the fruits from the store to the production areaproduction area
Check the quality of the fruits and segregate the Check the quality of the fruits and segregate the bad fruitsbad fruits
Clean the fruits under running waterClean the fruits under running water
Put the fruits into the fruit chopper for Put the fruits into the fruit chopper for chopping processchopping process
Use electric ladle to stir the fruit until the Use electric ladle to stir the fruit until the fruits change into pulpfruits change into pulp
Add ten parts of water into the mixtureAdd ten parts of water into the mixture
Boil the mixture for 90 minutesBoil the mixture for 90 minutes
Put the chopped fruits into the boiler for Put the chopped fruits into the boiler for steaming processsteaming process
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Activity Chart for Web Designing ServicesActivity Chart for Web Designing ServicesGreet the client
Invite the client into the discussion room
Get the relevant information from the client
Brief the client about terms and conditions
Get the agreement from the client regarding terms and condition
Work on the design of the web
Get the feedback from the client
Make the amendment accordingly
Make a presentation to the client
Send the client to the door
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
OPERATIONS LAYOUT
Illustrate the layout of the operations Layout refers to the arrangement of machine,
equipment, workers and other facilities used in the operations
The layout must be design in such a way that the production of goods and services can be done smoothly and efficiently
There are three types of layout:o Layout based on processo Layout based on producto Layout based on marketing
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Layout based on product This type of layout is suitable for a business that
has product focus or continuous flow production The design of this layout is made according to the
sequence of activities to product the product Example of a business that have this kind of layout
is a food processing factory
Types of Layout
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Layout based on process This layout is suitable for a business that produce
several products using similar processes This type of layout is design based on the similarity
of processes where by machine and equipment that perform similar function will be grouped together
Example of business with this type of layout is a steel workshop and a tailor store
Types of Layout (cont.)
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Layout based on marketing This layout is designed with an intention to
maximized the area available to display goods Examples of layout based on marketing can be
observed in the retail business such as book store or departmental store
Types of Layout (cont.)
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Example of Layout Based on Product
Filli
ng A
rea Office
Stea
min
gReceivingArea
FinishedGoodsStorage
Fruits Cleaning Area
Washing Area Frui
ts C
hopp
er
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Example of Layout Based on Process
MillingMachine
GrindingMachine
DrillingMachine
Office
ToolRoomStorage
Area
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Example of Layout Based on Marketing
Store
Cashier
Aisle
Frozen Food
Ais
lePast
ry P
rodu
cts
Aisle
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Cashier
Food Display CounterBeverages
Dining Area
Kitchen
StoreFoodC
ounter
Toilet
Example of Layout in a Restaurant
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
PRODUCTION PLANNING It is important to make sure that the business is
able to produce output or to provide services that is enough to fulfill the expected market demand or sales
This can be achieved by having a good production planning
In production planning, the business will determine how much output to produce for a certain period of time such as in a day, a week or a month
The business may need the information from the marketing plan, e.g. average sales forecast
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Example of calculation for output per day
Average sales forecast per month = RM 25,200.00Price per unit = RM 15.00Number of output per month = RM 25,200.00
RM 15.00 = 1,680 unitsIf the number of working days per month is 24 daysThe amount of output to be produced per day is:= 1,680 units 24 days= 70 units per day
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
MATERIAL PLANNING
Material planning is done to determine the type and amount of raw materials need for the production
Material planning involved four steps:o Identify and list down the raw materials requiredo Prepare the Bills of Materialso Calculate the quantity of raw material requiredo Identify the suppliers of raw materials
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Identify and list down the raw materials required
Usually in manufacturing business, the raw materials used is easily identified
For example, to manufacture pencils, raw materials needed are hollow wood, lead, eraser, metal band, paint, glue and packaging box
In case of retail business, the raw materials is known as goods. The business need to estimate the amount of initial goods to be purchased to start the business operation
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Prepare the bills of materials
The bills of materials will contains a complete list of materials, parts or components and the amount needed to produce a unit of product
To prepare the bill of material, the entrepreneur must understand the design of the product
This bill of material is important information for purchasing activities
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Example of Bills of Materials
To produce a unit of pencil, the bills of materials is as follows:
Product No. Description Specification Quantity101 Half hollow wood 17 cm long 2102 Lead 17 cm long
1.5mm diameter1
103 Eraser 0.75 cm long6mm diameter
1
104 Metal band 2 cm long 1105 Paint 0.5 ml 1106 Glue 0.5 ml 1
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Examples of Materials Requirement Schedule
Material Quantity SafetyStock
Total Material Requirement
Price / unit (RM)
Total price (RM)
Flour 50 Kg 5 kg 55 1.2 66Sugar 50 Kg 5kg 55 2.8 154Eggs 200 units 20 220 0.15 33Corn Syrup 100 Liter 10 110 3 330
Margarine 100 Kg 10 110 2 220
Total 803
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
MACHINE & EQUIPMENT PLANNING
1. List out all machine and equipment required base on the process flow chart or process plan
2. Determine the amount of machine and equipment required based on the venture capacity requirement
3. Identify the suppliers that are reliable in term of price and after sale services
Steps to determine machine and equipment requirement:
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Factors to be considered in purchasing machine and equipment
• Price• Quality and reliability• Availability of spare parts• Break down maintenance facility• Technology & user friendly• Supplier reputation• After sale services
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
No. Machine Quantity Price / Unit (RM)
Total Price (RM)
1. Mixer 1 2000 20002. Cutter 2 1000 20003. Cash Register 1 1500 1500
Total 5500
Examples of Machine & Equipment Requisition Planning Schedule
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Steps to determine quantity for machine & equipment
1. Determine the planned rate of production per day
2. Determine the standard production time per unit for the planned machine
3. Determine the machine productive time:Operation hours – (Setting up time + Down Time)
4. Calculate the amount of machine required using the formula given in the next slide
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Formula To Calculate the amount of machine require:
Machine Productive Time per day
Planned Rate of Production per dayX
Standard ProductionTime / Unit
=No. of Machine Required
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
MANPOWER PLANNINGSteps to determine the amount of direct labor required by the venture:
1. Determine the planned rate of production per day for the particular section of job
2. Determine the standard time for a worker to produce one unit of product or to complete a particular job
3. Determine workers productive hours:
Working hours per day – rest time or workers idling time
4. Calculate the amount of direct labor required
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Formula To Calculate the amount of direct labor required
Worker Productive Time per day
Planned Rate of Production per dayX
Worker Standard Production Time / Unit
=No. of Worker Required
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Example of Direct Labour Planning Schedule
No Position No. of Staff Required
Salary/Month (RM)
EPF (RM)13 %
Socso (RM)2%
Total (RM)
1 Operation Manager
1 2000.00 260.00 2260.00
2
Total
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
OVERHEADS REQUIREMENT
Determine the overheads that are required in the operations
Overheads refers to requirements other than direct raw materials and direct labour
Examples of overheads are indirect labour costs, indirect material, insurance, maintenance and utilities
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
LOCATION PLAN
The entrepreneur has to make decision which premise is the best for the business to operate
Choice of location is important because it will affect:•Sales revenue•Business operation cost•Long term investment
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Factors that Influence the Choice of Location
1. MANUFACTURING ACTIVITY – Priority should be given to the cost factors– In manufacturing cost saving would contribute to
profit2. SERVICE ACTIVITY
– In service priority should be given to distance from market or customers.
– Distance from customers will influence sales revenue– In service business cost saving may not contribute to
sales revenue– Increase in revenue will contribute to increase in profit
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Factors to be considered for Choice of Location
• Distance from raw material / suppliers
• Labor supply• Transportation• Price of Land or
rentals• Infrastructure• Climate
• Local Government Policy
• Security
• Facility for expansion and business development
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
BUSINESS AND OPERATIONS HOURS
Business hours refer to the time the business is open to the customers
Operation hours refer to the hours the workers have to work.
For manufacturing, usually the business will operate on 8-hours per shift. Thus the entrepreneur will only decide whether the business will runs for one shift or more. This will depends upon the planning for production
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
BUSINESS AND OPERATIONS HOURS (cont.) For service business, the entrepreneur will has to
state the business hours in terms of days and hours For example, a restaurant may open to the
customer from 7 a.m. to 10 p.m. every day However, the operations hours for the workers will
be different The working hours may be from 5 a.m. to 12.a.m The entrepreneur may have 2 shifts for the
workers; the first shift will starts from 5 a.m. to 3 p.m. and the second shift starts from 3p.m. to 12 a.m.
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
LICENSE, PERMITS and REGULATIONS
Find out and list down all the license/permits/ regulations that are required to operate the business
Identify which agency is responsible to approve the particular license/permit
For example, a restaurant among others will need the following license/permit/regulations:o License for signboardo Permits for emigrant workerso Typhoid injection for the workers
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
OPERATIONS BUDGET
The business need to estimate the budget for the operations activities
The operations budget can be categorized into:• Fixed asset expenditure• Monthly expenses• Other expenses
This operation budget is important because it will be one of the input to prepare the financial plan
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
OPERATIONS BUDGET (cont.)•Fixed Asset Expenditure
o Refers to the investment on long term assets used in the operations to produce the product or services
o Examples are the purchase of machines and equipment
•Monthly Expenseso Refers to the payment made every month in the
operations departmento Examples are wages for workers and raw
materials purchased
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
OPERATIONS BUDGET (cont.)•Other Expenses
o These are expenses that are made and could not be categorized as fixed asset expenditure or monthly expenses
o Examples are deposits and insurance
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Example of Operations Budget
Item Fixed Asset Monthly Expenses
Other Expenses
Machine and EquipmentFactory RenovationRaw MaterialsWages + EPF + SOCSOUtilities Factory RentDeposit for rentDeposit for utilities
RM 35,500RM 45,000
RM 20,000RM 6,500
RM 600 RM 3,000 RM 6,000
RM 1,000
Total RM 80,500 RM 30,100 RM 7,000
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
IMPLEMENTATION SCHEDULE Implementation scheduling involves
sequencing and allotting time to all project activities
To prepare implementation schedule, entrepreneurs has to decide how long each activity and compute the requirement on people and other resources
Scheduling normally use Gantt Chart which is a planning chart used to schedule resources and allocate time
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
The Importance of Project Scheduling
Project scheduling serves several purposes:1. It shows the relationship of each activity to
others and to the whole project2. It identifies the precedence relationship
among activities3. It encourages the setting of realistic time
and cost estimate for each activity4. It helps make better use of people, money
and material by identifying critical bottlenecks in the project
Nawawi Hj. Mohd Jan, Rahimah Sarmidy & Sodri Ariffin© Entrepreneurship Department, Faculty of Business Management, Universiti Teknologi MARA 2008
ENT/ETR300 – FUNDAMENTALS OF ENTREPRENEURSHIPTHE OPERATIONS PLAN
Example of Project Implementation Schedule
Activities Deadlines DurationsIncorporation of business Jan – Mac 2009 3 months
Application for permits and license
Jan – April 2009 4 months
Searching for business premise
Feb – Mac 2009 3 months
Renovation of premise April 2009 1 month
Procurement of machines and raw material
April – June 2009 3 months
Recruitment of labours June 2009 1 month
Installation of machines June 2009 1 month