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Chap09
1.
Chapter 9 PLANNING TOOLS AND TECHNIQUES ©
Prentice Hall, 2002 9-1
2.
Learning Objectives You should
learn to: – Describe three techniques for assessing the environment – Describe four techniques for allocating resources – Tell why budgets are popular planning tools – Differentiate Gantt and load charts – Identify the steps in developing a PERT network © Prentice Hall, 2002 9-2
3.
Learning Objectives (cont.) You
should learn to: – Describe the requirements for using linear programming – Explain the concept of project planning – Tell how managers might use scenarios in planning © Prentice Hall, 2002 9-3
4.
Techniques For Assessing
The Environment Environmental Scanning – the screening of information to anticipate and interpret changes in the environment – competitor intelligence - gathering information about one’s competitors • a variety of sources of information is easily accessible – reverse engineering - analyze a competitor’s product • becomes illegal corporate spying when proprietary materials or trade secrets are stolen – fine line between what is legal and ethical and what is legal but unethical © Prentice Hall, 2002 9-4
5.
Assessing The Environment
(cont.) Environmental Scanning (cont.) – global scanning - screening of information on global forces that might affect an organization that has global interests • requires more extensive procedures than those used for scanning the domestic environment © Prentice Hall, 2002 9-5
6.
Assessing The Environment
(cont.) Forecasting – used to predict future events to facilitate decision making – Techniques • quantitative - applies a set of mathematical rules to a series of past data to predict outcomes • qualitative - uses the judgment and opinions of knowledgeable individuals to predict outcomes • collaborative forecasting and replenishment (CFAR) – standardized way for businesses to use the Internet to exchange data – information used to calculate a demand forecast for a particular product © Prentice Hall, 2002 9-6
7.
Forecasting Techniques © Prentice
Hall, 2002 9-7
8.
Assessing The Environment
(cont.) Forecasting (cont.) – Effectiveness - managers have had mixed success • forecasts are most accurate in relatively stable environments • forecasts are relatively ineffective in predicting nonseasonal events, unusual occurrences, and the actions of competitors • to improve forecasts - use simple forecasting methods – compare every forecast with “no change” – use several forecasting methods – shorten the length of forecasts – practice forecasting © Prentice Hall, 2002 9-8
9.
Assessing The Environment
(cont.) Benchmarking – the search for the best practices in other organizations that lead to superior performance – standard tool of many organizations in quest for performance improvement – analyze and then copy the methods used by leaders in various fields – important to identify appropriate targets for benchmarking – organizations may share benchmarking information © Prentice Hall, 2002 9-9
10.
Steps In Benchmarking Form
a benchmarking planning team Best Practices Prepare and implement action plan Gather internal and external data Analyze data to identify performance gaps © Prentice Hall, 2002 9-10
11.
Suggestions for Improving
Benchmark Efforts © Prentice Hall, 2002 9-11
12.
Techniques For Allocating
Resources Resources – the assets of the organization – take many forms, including financial, physical, human, intangible, and structural Budgeting – budgets - numerical plans for allocating resources to specific activities • are prepared for revenues, expenses, and large capital expenditures • are applicable to a wide variety of organizations and activities • force financial discipline © Prentice Hall, 2002 9-12
13.
Suggestions for Improving
Budgeting © Prentice Hall, 2002 9-13
14.
Suggestions For Improving
Budgeting • Be flexible • Goals should drive budgets -- budgets 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 © Prentice Hall, 2002 9-14
15.
Techniques For Allocating
Resources (cont.) Scheduling – detailing what activities have to be done, the order in which they are to be completed, who is to do each, and when they are to be completed – Gantt Charts - show when tasks are supposed to be done • allow comparison with the actual progress on each task – serve as a control tool • a bar graph with time on the horizontal axis and the activities to be scheduled on the vertical axis • shading represents actual progress © Prentice Hall, 2002 9-15
16.
A Gantt Chart Activity Month 1 2 3 4 Edit
Manuscript Design Sample Pages Draw Artwork Print Galley Proofs Print Page Proofs Design Cover Goals Actual Progress © Prentice Hall, 2002 Reporting Date 9-16
17.
Techniques For Allocating
Resources (cont.) Scheduling (cont.) – Load Charts - modified Gantt Chart • schedule capacity by work areas – vertical axis lists either entire departments or specific resources • allow managers to plan and control capacity utilization © Prentice Hall, 2002 9-17
18.
A Load Chart Editors Month 1 2 3 4 5 6 Anne Antonio Kim Maurice Dave Penny Work
scheduled © Prentice Hall, 2002 9-18
19.
Techniques For Allocating
Resources (cont.) Scheduling (cont.) – Program Evaluation and Review Technique (PERT) Network Analysis • used to schedule complex projects • flowchartlike diagram that depicts the sequence of activities needed to complete a project • indicates the time or costs associated with each activity • can compare the effects alternative actions might have on scheduling and costs © Prentice Hall, 2002 9-19
20.
Techniques For Allocating
Resources (cont.) Scheduling (cont.) – PERT (cont.) - nomenclature • events - end points that represent the completion of major activities • activities - time or resources required to progress from one event to another • slack time - amount of time an activity can be delayed without delaying the entire project • critical path - the most time-consuming sequence of events and activities in a PERT network – delays on critical path will delay completion of the entire project (zero slack time) © Prentice Hall, 2002 9-20
21.
Steps in Developing
a PERT Network © Prentice Hall, 2002 9-21
22.
A PERT Network
for Constructing an Office Building © Prentice Hall, 2002 9-22
23.
A PERT Network
For Constructing An Office Building 4 D Start A 6 B 14 3 C 3 5 6 10 I E 3 5 J G 5 H 1 K 3 5 F © Prentice Hall, 2002 9-23
24.
Techniques For Allocating
Resources (cont.) Scheduling (cont.) – Breakeven Analysis - used to determine how many units must be sold to have neither profit nor loss • used to make profit projections • points out relationships between revenues, costs, and profits – breakeven point - total revenue is just enough to equal total costs © Prentice Hall, 2002 9-24
25.
Techniques For Allocating
Resources (cont.) Scheduling (cont.) – Breakeven Analysis (cont.) - nomenclature • P - unit price of product • VC - variable cost per unit • TFC - total fixed costs • Fixed costs - costs that do not change as volume increases • Variable costs - costs that change in proportion to output TFC BE = P − VC © Prentice Hall, 2002 9-25
26.
Breakeven Analysis $90,000 80,000 Profi t Total RevenueArea Revenue/Cost($) 70,000 60,000 Breakeven
Point 50,000 Total Costs 40,000 30,000 20,000 10,000 Loss Area 100 Variable Costs Fixed Costs 200 300 400 500 600 Output (in thousands) © Prentice Hall, 2002 9-26
27.
Techniques For Allocating
Resources (cont.) Scheduling (cont.) – Linear Programming • requirements – resources are limited – outcome optimization is the goal – alternative methods exist for combining resources to produce a number of output mixes – a linear relationship exists between variables • technique has a variety of applications © Prentice Hall, 2002 9-27
28.
Techniques For Allocating
Resources (cont.) Scheduling (cont.) – Linear Programming (cont.) - nomenclature • objective function - a mathematical equation that predicts the outcome of all proposed alternatives • production capacity of departments involved in producing the outputs – acts as a constraint on overall capacity – constraints define the feasibility region • feasibility region - defines the optimal resource allocation © Prentice Hall, 2002 9-28
29.
Production Data for
Cinnamon Scented Products © Prentice Hall, 2002 9-29
30.
Quantity of Selected
Candles Graphical Solution To Linear Programming Problem 700 600 500 400 F 300 B 200 100 A © Prentice Hall, 2002 Feasibility Region 100 C D 200 300 400 500 Quantity of Potpourri Bags E 600 9-30
31.
Contemporary Planning Techniques Project
Management – the task of getting a project’s activities done on time, within budget, and according to specifications • project - a one-time-only set of activities that has a definite beginning and ending point in time – standardized planning procedures often are not appropriate for projects – Project Management Process • team created from appropriate work areas • team reports to a project manager • project manager coordinates activities • team disbands when project is completed © Prentice Hall, 2002 9-31
32.
Project Management Process Define objectives Identify
activities and resources Establish sequences Estimate time for activities Determine project completion date Compare with objectives Determine additional resource requirements © Prentice Hall, 2002 9-32
33.
Contemporary Planning Techniques
(cont.) Project Management (cont.) – Role of the Project Manager • role is affected by the one-shot nature of the project • role is difficult because team members still linked to their permanent work areas – members may be assigned to several projects simultaneously • managers must rely on their communication skills and powers of persuasion © Prentice Hall, 2002 9-33
34.
Contemporary Planning Techniques
(cont.) Scenario Planning – scenario - a consistent view of what the future is likely to be – contingency planning - developing scenarios • if this is what happens, then these are the actions we need to take – intent is to reduce uncertainty by playing out potential situations under different specified conditions © Prentice Hall, 2002 9-34
35.
Preparing for Unexpected
Events © Prentice Hall, 2002 9-35
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