Operations Planning

Lecture #7

Forecasting

Forecasting

• Estimating future events

• Has NO value to an organization unless the forecasts are included in organization’s decision-making process

Contingency Planning

• Preparation of a course of action to meet a situation that is not expected, but that, if it occurs, will have a significant impact on the organization.

Contingency Planning

• Example: Sales plummet 20% in a quarter

Operations Planning

Your example?

Contingency Planning

• Event could be positive

• A 20% increase in sales in a quarter

Keys to Successful Contingency Planning

• Identify contingent events

• Establish an action point

• Develop new strategies and plans (shhh!)

Identify Contingent Events

• A significant decline in sales

• A product recall

Establish an Action Point

• When sales decline at least 20% in two consecutive quarters

• When more than 5,000 vehicles of any single model are recalled

Strategies and Plans

• Lay off 30% of production line workers and first line supervisors

• Seniority?• Merit rating?

Layout Patterns

• How the flow of work is laid out for efficient production and minimal “bottlenecks”

Layout Patterns

• Process Layout

• Product Layout

• Fixed Position Layout

Process Layout(Functional Arrangement)

• Manufacturing of Chairs, Tables, and Hat Racks

Chairs, Tables, Hat Racks

Cutting Sanding

Finishing Assembling

Process Layout Example

• Chairs, tables and hat racks all pass through the four functional areas, but not necessarily in the same sequence.

• Major advantage is economy of scale in the functional areas.

Product Layout

• As product lines increase, and/or volume increases, this form tends to replace the Process Layout

Product Layout

• Chairs, Tables, and Hat Racks

CHAIRS Cut Assembly Sand Fin

TABLES Cut Sand Fin Assembly

HAT RACKS Cut Sand Assembly Fin

Product Layout Example

• Can make a change to any product line without affecting production of other products.

• Major disadvantage is duplication of resources in the production areas.

Fixed Position Layout

• Product remains stationary

• Labor and tools come to the product

Fixed Position Layout

TV Ads

How Many Units to Produce?

• Known (or firm) orders

• Forecasts of demand