2. Agenda
understand the concept of operations function in
business
understand the topics that are included in an
operations plan
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3. Operations
One of an important function in a business organization
Managing operations is crucial
Operations management can be defined as the process of
marshalling business input to transform them into output in
the form of product or services
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4. 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
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6. Operations plan
One of the section that is included in the business plan
Covers the operational aspect of the business
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
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7. The operations plan comprises
Process Planning
Operations Layout
Production Planning
Material Planning
Machine and Equipment Planning
Manpower Planning
Overheads Requirement
Location Plan
Business and Operations Hours
Operations Budget
Implementation Schedule
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8. 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
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9. 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 process
o Layout based on product
o Layout based on marketing
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10. 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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12. 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
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14. 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
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MSN INSTITUTE OF MANAGEMENT
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16. 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
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17. • Average sales forecast per month = RM 25,200.00
• Price per unit = RM 15.00
• Number of output per month = RM 25,200.00
RM 15.00
= 1,680 units
• If the number of working days per month is 24 days
• The amount of output to be produced per day is:
= 1,680 units
24 days
= 70 units per day
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18. 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 required
o Prepare the Bills of Materials
o Calculate the quantity of raw material required
o Identify the suppliers of raw materials
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19. 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
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MSN INSTITUTE OF MANAGEMENT
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20. Machine & Equipment Planning
Steps to determine machine and equipment requirement:
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
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21. Machine & Equipment Requisition Planning
Schedule
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22. 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
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24. 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
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26. Direct Labour Planning Schedule
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27. 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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28. 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
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29. Business and Operation 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
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30. Overhead 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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31. 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
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32. •Fixed Asset Expenditure
o Refers to the investment on long term assets used in the
operations to produce the product or services
•Monthly Expenses
o Refers to the payment made every month in the operations
department
•Other Expenses
o These are expenses that are made and could not be
categorized as fixed asset expenditure or monthly expenses
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33. Example of Operations Budget
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34. 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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