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