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ninth editionninth edition
STEPHEN P. ROBBINSSTEPHEN P. ROBBINS
PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie CookThe University of West AlabamaThe University of West Alabama
MARY COULTERMARY COULTER
prince dudhatraprince dudhatra--97249499489724949948
Planning ToolsPlanning Tools
and Techniquesand Techniques
ChapterChapter
99
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L E A R N I N G O U T L I N EL E A R N I N G O U T L I N EFollow this Learning Outline as you read and study this chapter.Follow this Learning Outline as you read and study this chapter.
Techniques for Assessing the EnvironmentTechniques for Assessing the Environment
List the different approaches to assess the environment.List the different approaches to assess the environment.
Explain what competitor intelligence is and ways thatExplain what competitor intelligence is and ways that
managers can do it legally and ethically.managers can do it legally and ethically.
Describe how managers can improve the effectiveness ofDescribe how managers can improve the effectiveness of
forecasting.forecasting.
List the steps in the benchmarking process.List the steps in the benchmarking process.
Techniques for Allocating ResourcesTechniques for Allocating Resources
List the four techniques for allocating resources.List the four techniques for allocating resources.
Describe the different types of budgets.Describe the different types of budgets.
Explain what a Gantt chart and a load chart do.Explain what a Gantt chart and a load chart do.
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L E A R N I N G O U T L I N E (contd)L E A R N I N G O U T L I N E (contd)Follow this Learning Outline as you read and study this chapter.Follow this Learning Outline as you read and study this chapter.
Techniques for Allocating Resources (contd)Techniques for Allocating Resources (contd)
Describe how PERT network analysis works.Describe how PERT network analysis works.
Understand how to compute a breakeven point.Understand how to compute a breakeven point.
Describe how managers can use linear programming.Describe how managers can use linear programming.Contemporary Planning TechniquesContemporary Planning Techniques
Explain why flexibility is so important to todays planningExplain why flexibility is so important to todays planning
techniques.techniques.
Describe project management.Describe project management.
List the steps in the project planning process.List the steps in the project planning process.
Discuss why scenario planning is an important planningDiscuss why scenario planning is an important planning
tool.tool.
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Assessing the EnvironmentAssessing the Environment
Environmental ScanningEnvironmental ScanningThe screening of large amounts of information toThe screening of large amounts of information to
anticipate and interpret change in the environment.anticipate and interpret change in the environment.
Competitor IntelligenceCompetitor Intelligence
The process of gathering information about competitorsThe process of gathering information about competitorswwhohothey are; what they are doingthey are; what they are doing
Is not spying but rather careful attention to readilyIs not spying but rather careful attention to readily
accessible information from employees, customers,accessible information from employees, customers,
suppliers, the Internet, and competitors themselves.suppliers, the Internet, and competitors themselves.
May involveMay involve reverse engineeringreverse engineeringof competing products toof competing products to
discover technical innovations.discover technical innovations.
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Assessing the Environment (contd)Assessing the Environment (contd)
Environmental Scanning (contd)Environmental Scanning (contd)Global ScanningGlobal Scanning
Screening a broad scope of information on global forces thatScreening a broad scope of information on global forces that
might affect the organization.might affect the organization.
Has value to firms with significant global interests.Has value to firms with significant global interests. Draws information from sources that provide globalDraws information from sources that provide global
perspectives on worldperspectives on world--wide issues and opportunities.wide issues and opportunities.
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Assessing the Environment (contd)Assessing the Environment (contd)
ForecastingForecastingThe part of organizational planning that involvesThe part of organizational planning that involves
creating predictions of outcomes based oncreating predictions of outcomes based on
information gathered by environmental scanning.information gathered by environmental scanning.
Facilitates managerialFacilitates managerialdecision making.decision making.
Is most accurate inIs most accurate in
stable environments.stable environments.
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Assessing the Environment (contd)Assessing the Environment (contd)
Forecasting TechniquesForecasting TechniquesQuantitative forecastingQuantitative forecasting
Applying a set of mathematical rules to a series ofhard dataApplying a set of mathematical rules to a series ofhard data
to predict outcomes (e.g., units to be produced).to predict outcomes (e.g., units to be produced).
Qualitative forecastingQualitative forecasting
Using expert judgments and opinions to predict less thanUsing expert judgments and opinions to predict less than
precise outcomes (e.g., direction of the economy).precise outcomes (e.g., direction of the economy).
Collaborative Planning, Forecasting, andCollaborative Planning, Forecasting, and
Replenishment (CPFR) SoftwareReplenishment (CPFR) Software
A standardized way for organizationsA standardized way for organizations
to use the Internet to exchange data.to use the Internet to exchange data.
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Exhibit 9Exhibit 911 Forecasting TechniquesForecasting Techniques
Quantitative
Time series analysis
Regression models
Econometric models
Economic indicators
Substitution effect
Qualitative
Jury of opinion Sales force composition
Customer evaluation
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Making Forecasting More EffectiveMaking Forecasting More Effective
1.1. Use simple forecasting methods.Use simple forecasting methods.2.2. Compare each forecast with its correspondingCompare each forecast with its corresponding
no change forecast.no change forecast.
3.3. Dont rely on a single forecasting method.Dont rely on a single forecasting method.
4.4. Dont assume that the turning points in a trendDont assume that the turning points in a trend
can be accurately identified.can be accurately identified.
5.5. Shorten the time period covered by a forecast.Shorten the time period covered by a forecast.
6.6. Remember that forecasting is a developedRemember that forecasting is a developedmanagerial skill that supports decision making.managerial skill that supports decision making.
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BenchmarkingBenchmarking
The search for the best practices amongThe search for the best practices amongcompetitors and noncompetitors that lead tocompetitors and noncompetitors that lead to
their superior performance.their superior performance.
By analyzing and copying these practices, firmsBy analyzing and copying these practices, firms
can improve their performance.can improve their performance.
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Exhibit 9Exhibit 922 Steps in BenchmarkingSteps in Benchmarking
Source: Based on Y.K. Shetty, Aiming High: Competitive Benchmarking
for Superior Performance, Long Range Planning. February 1993, p. 42.
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Allocating ResourcesAllocating Resources
Types of ResourcesTypes of ResourcesThe assets of the organizationThe assets of the organization
Financial:Financial: debt, equity, and retained earningsdebt, equity, and retained earnings
Physical:Physical: buildings, equipment, and raw materialsbuildings, equipment, and raw materials
Human:Human: experiences, skills, knowledge, and competenciesexperiences, skills, knowledge, and competencies
Intangible:Intangible: brand names, patents, reputation, trademarks,brand names, patents, reputation, trademarks,
copyrights, and databasescopyrights, and databases
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Allocating Resources: BudgetingAllocating Resources: Budgeting
BudgetsBudgetsAre numerical plans for allocating resources (e.g.,Are numerical plans for allocating resources (e.g.,
revenues, expenses, and capital expenditures).revenues, expenses, and capital expenditures).
Are used to improve time, space, and use of materialAre used to improve time, space, and use of material
resources.resources.
Are the most commonly usedAre the most commonly used
and most widely applicableand most widely applicable
planning technique forplanning technique for
organizations.organizations.
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Exhibit 9Exhibit 933 Types of BudgetsTypes of Budgets
Source: Based on R.S. Russell and B.W. Taylor III. Production and Operations
Management(Upper Saddle River, NJ: Prentice Hall, 1995), p. 287.
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Exhibit 9Exhibit 944 Suggestions for Improving BudgetingSuggestions for Improving Budgeting
Collaborate and communicate.
Be flexible.
Goals should drive budgetsbudgets should not
determine goals.
Coordinate budgeting throughout the organization.
Use budgeting/planning software when appropriate.
Remember that budgets are tools.
Remember that profits result from smart
management, not because you budgeted for them.
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Allocating Resources: SchedulingAllocating Resources: Scheduling
SchedulesSchedulesPlans that allocate resources by detailing whatPlans that allocate resources by detailing what
activities have to be done, the order in which they areactivities have to be done, the order in which they are
to be completed, who is to do each, and when theyto be completed, who is to do each, and when they
are to be completed.are to be completed.Represent the coordination of various activities.Represent the coordination of various activities.
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Exhibit 9Exhibit 955 A Gantt ChartA Gantt Chart
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Exhibit 9Exhibit 966 A Load ChartA Load Chart
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Allocating Resources: AnalysisAllocating Resources: Analysis
Program Evaluation and Review Technique (PERT)Program Evaluation and Review Technique (PERT) A flow chart diagram that depicts the sequence of activitiesA flow chart diagram that depicts the sequence of activities
needed to complete a project and the time or costsneeded to complete a project and the time or costs
associated with each activity.associated with each activity.
Events:Events: endpoints for completion.endpoints for completion.
Activities:Activities: time required for each activity.time required for each activity.
Slack time:Slack time: the time that a completed activity waits for anotherthe time that a completed activity waits for another
activity to finish so that the next activity, which depends on theactivity to finish so that the next activity, which depends on the
completion of both activities, can start.completion of both activities, can start.
Critical path:Critical path: the path (ordering) of activities that allows allthe path (ordering) of activities that allows alltasks to be completed with the least slack time.tasks to be completed with the least slack time.
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Exhibit 9Exhibit 977 Steps in Developing a PERT NetworkSteps in Developing a PERT Network
1. Identify every significant activity that must be achieved fora project to be completed.
2. Determine the order in which these events must be
completed.
3. Diagram the flow of activities from start to finish, identifyingeach activity and its relationship to all other activities.
4. Compute a time estimate for completing each activity.
5. Using the network diagram that contains time estimates for
each activity, determine a schedule for the start and finish
dates of each activity and for the entire project.
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Exhibit 9Exhibit 988 Events and Activities in Constructing an Office BuildingEvents and Activities in Constructing an Office Building
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Exhibit 9Exhibit 999 A Visual PERT Network for Constructing an Office BuildingA Visual PERT Network for Constructing an Office Building
Critical Path: A - B - C - D - G - H - J - K
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Allocating Resources: Analysis (contd)Allocating Resources: Analysis (contd)
Breakeven AnalysisBreakeven Analysis Is used to determine the point at which all fixed costsIs used to determine the point at which all fixed costs
have been recovered and profitability begins.have been recovered and profitability begins.
Fixed cost (FC)Fixed cost (FC)
Variable costs (VC)Variable costs (VC) Total Fixed Costs (TFC)Total Fixed Costs (TFC)
Price (P)Price (P)
The BreakThe Break--even Formula:even Formula:
CostsVariableUnit-PriceUnit
CostsFixedTotalBreakeven :
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Exhibit 9Exhibit 91010 Breakeven AnalysisBreakeven Analysis
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Allocating Resources: Analysis (contd)Allocating Resources: Analysis (contd)
Linear ProgrammingLinear ProgrammingA technique that seeks to solve resource allocationA technique that seeks to solve resource allocation
problems using the proportional relationshipsproblems using the proportional relationships
between two variables.between two variables.
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Exhibit 9Exhibit 91111 Production Data for CinnamonProduction Data for Cinnamon--Scented ProductsScented Products
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Exhibit 9Exhibit 91212 Graphical Solution to Linear Programming ProblemGraphical Solution to Linear Programming Problem
Max. Assembly
Max. Manufacturing
Max. Manufacturing
Max. Assembly
Max. Profits
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Exhibit 9Exhibit 91313 Project Planning ProcessProject Planning Process
Source: Based on R.S. Russell and B.W. Taylor III, Production and Operations
Management(Upper Saddle River, NJ: Prentice Hall, 1995), p. 287.
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Contemporary Planning TechniquesContemporary Planning Techniques
(contd)(contd)
ScenarioScenario
A consistent view of what the future is likely to be.A consistent view of what the future is likely to be.
Scenario PlanningScenario Planning
An attempt not try to predict the future but to reduceAn attempt not try to predict the future but to reduce
uncertainty by playing out potential situations underuncertainty by playing out potential situations under
different specified conditions.different specified conditions.
Contingency PlanningContingency Planning
Developing scenarios that allow managers determineDeveloping scenarios that allow managers determine
in advance what their actions should be should ain advance what their actions should be should a
considered event actually occur.considered event actually occur.
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Exhibit 9Exhibit 91414 Preparing for Unexpected EventsPreparing for Unexpected Events
Identify potential unexpected events.
Determine if any of these events would have
early indicators.
Set up an information gathering system to
identify early indicators.
Have appropriate responses (plans) in place if
these unexpected events occur.
Source: S. Caudron, Frontview Mirror, Business Finance, December 1999, pp. 2430.
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Terms to KnowTerms to Know
environmental scanningenvironmental scanning
competitor intelligencecompetitor intelligence
forecastsforecasts
quantitative forecastingquantitative forecasting
qualitative forecastingqualitative forecasting benchmarkingbenchmarking
resourcesresources
budgetbudget
schedulingscheduling Gantt chartGantt chart
load chartload chart
PERT networkPERT network
eventsevents
activitiesactivities
slack timeslack time
critical pathcritical path breakeven analysisbreakeven analysis
linear programminglinear programming
projectproject
project managementproject management scenarioscenario