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ENT550
MODULE 4 :
THE 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
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
Entrepreneurship Dept, FBM
(2009)
Input
Transformation
Transformation
Process
Process
Output
Feedback
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
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
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
Entrepreneurship Dept, FBM
(2009)
Activity
Description
Operation
Transportation
Inspection
Delay
Storage
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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:
Layout based on process
Layout based on product
Layout based on marketing
Entrepreneurship Dept, FBM
(2009)
13
TYPES OF LAYOUT
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
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15
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Office
Receiving
Area
Washing Area
Fruits Chopper
Steaming
Finished
Goods
Storage
Filling Area
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Milling
Machine
Grinding
Machine
Drilling
Machine
Tool
Room
Storage
Area
18
Store
Aisle
Aisle
Aisle
Pastry Products
Frozen Food
Cashier
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Cashier
Food
Counter
Store
Kitchen
Dining Area
Toilet
Beverages
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PRODUCTION PLANNING
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MATERIAL PLANNING
Material planning is done to determine the type
and amount of raw materials need for the
production
Material planning involved four steps:
Identify and list down the raw materials
required
Prepare the Bills of Materials
Calculate the quantity of raw material
required
Identify the suppliers of raw materials
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Description
101
17 cm long
102
Lead
17 cm long
1.5mm diameter
103
Eraser
0.75 cm long
6mm diameter
104
Metal band
2 cm long
105
Paint
0.5 ml
106
Glue
0.5 ml
Specification
Quantity
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Quantity
Safety
Stock
Total Material
Requirement
Price /
unit
(RM)
Total price
(RM)
Flour
50 Kg
5 kg
55
1.2
66
Sugar
50 Kg
5kg
55
2.8
154
Eggs
200 units
20
220
0.15
33
Corn Syrup
100 Liter
10
110
330
Margarine
100 Kg
10
110
220
Total
803
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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
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Machine
1.
Mixer
2000
2000
2.
Cutter
1000
2000
3.
Cash Register
1500
1500
Total
5500
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No. of
Machine =
Required
Standard
Production
Time / Unit
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MANPOWER PLANNING
Steps 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
Entrepreneurship Dept, FBM
(2009)
33
No. of
Planned Rate of Production per day
Worker Standard
X
Worker =
Production
Worker Productive Time per day
Required
Time / Unit
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Position
No. of
Staff
Required
Salary/
Month
(RM)
EPF
(RM)
13 %
Operation
Manager
2000.00
260.00
Socso
(RM)
2%
Total
(RM)
2260.00
2
Total
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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
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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
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MANUFACTURING ACTIVITY
Priority should be given to the cost factors
In manufacturing cost saving would contribute to profit
2.
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
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Local Government
Policy
Security
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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
Entrepreneurship Dept, FBM
(2009)
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Fixed
Asset
RM 35,500
RM 45,000
Total
RM 80,500
Monthly
Expenses
Other
Expenses
RM 20,000
RM 6,500
RM 600
RM 3,000
RM 6,000
RM 1,000
RM 30,100
RM 7,000
46
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
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Deadlines
Durations
Incorporation Of Business
3 Months
4 Months
3 Months
April 2009
1 Month
3 Months
Recruitment Of Labours
June 2009
1 Month
Installation Of Machines
June 2009
1 Month
Renovation Of Premise
Procurement Of Machines And
Raw Material
49
END OF MODULE 4