planing tools prince dudhatra 9724949948

8/7/2019 Planing Tools Prince Dudhatra 9724949948

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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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prince dudhatra-9724949948

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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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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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

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