Lecture 10 - Resources Principles of Business Operations

Principles of Business
Operations

Lecture 10:
Resources

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Learning Objectives
On completion of this unit, students will be able to:

• Understand resource planning and management for

goods and services

• Appreciate issues of scheduling activities

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Part One: Resource Planning

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Introduction

• Resource management includes:

- Planning
- Execution
- Control
of all resources used to produce goods or provide
services in a value chain

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Resource Planning Framework 1

Resources planning is a 3-stage process:
• Aggregate planning – long-term output and
resource plan
• Disaggregation – translation of aggregate plans into
short-term operation plans
• Execution – getting the job done!

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Resource Planning Framework 2

• Services do not have the advantage of physical

inventory but many service organisations use the
same basic model as described on the last slide
• Having the right people at the right place at the right
time is imperative for successful services resource
planning

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Aggregate Planning 1

• If demand fluctuates over time aggregate planning

is more difficult

• There are several strategies organisations can use

for aggregate planning decisions …

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Aggregate Planning 2

Demand management
• Pricing, promotions and advertising
Production rate
• Overtime, short-time, subcontracting
Workforce
• Hiring, layoffs, full and part-time labour mix

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Aggregate Planning 3
Inventory
• Anticipation inventories (keep more stock)
• Allowing stock-outs
• Plan for back orders
Facilities, equipment and transportation
• Open/closed facilities and hours
• Resource utilisation
• Use of truck, rail, ship, air

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Aggregate Planning For Services

• Aggregate planning decisions in services are very

similar to those in manufacturing
• Managersg need to make aggregate
gg g p
planning
g
decisions relating to: production, workforce,
facilities, equipment, etc.

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Disaggregation In Manufacturing 1

• This provides the link between aggregate plans and

execution

• This includes 3 important techniques:

- Master production scheduling (MPS)
- Materials requirements planning (MRP)
- Capacity requirements planning (CRP)

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Disaggregation In Manufacturing 2

• Master Production Schedule – what needs to be

produced and when
• Helps
p managers
g g
generate p
priorities for scheduling
g
work
• Sets due dates for production of individual items

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Disaggregation In Manufacturing 3

• Materials Requirement Planning – forward looking,

demand-based plan for what materials are needed
for production

• Aim is to minimise inventory and thus reduce costs

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Disaggregation In Manufacturing 4

• Capacity Requirement Planning:

- Determines the amount of labour and machine resources

required to produce goods

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Disaggregating Service Plans

• Service resource planning requires less levels than

manufacturing (no MPS or MRP)

• Developing executable plans for services is more

concerned with labour requirements

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Class Activity
• Work in groups of about 5

• Develop a Master Production Schedule for a

children’s
children s birthday party
party.
• 15 minutes

• Feedback to the class

• 5 minutes

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Part Two: Scheduling

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Introduction

• Scheduling is assigning start and completion times

to jobs, people and equipment, etc.

• Sequencing is the order in which jobs or tasks are

processed

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Scheduling and Sequencing 1

• Fundamental to all levels of aggregation and
disaggregation planning

• Good sched
scheduling
ling leads to efficienc
efficiency

• For example at level 3 (execution) – dispatching the

correct number of parts, labour and equipment to
achieve production goals

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Scheduling and Sequencing 2

• Manufacturing often uses computer scheduling to
aid efficiency
• Service managers (e.g.) in a hospital can also use
computer
p support
pp
• Supply chain effectiveness depends on excellent
scheduling across the chain – sharing information is
paramount to success

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Scheduling Approaches 1

• Scheduling is a major component of Materials

Resource Planning
• Basis for level 3 (execution) sequencing decisions
• Plays a critical role in determining employees
working hours and determining shifts, etc.

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Scheduling Approaches 2

• Staff Scheduling – matching available personnel

with the needs of the organisation
• Determining staff required to perform the work to
meet deadlines
• Determining available staff and full/part-time mix
• Matching capacity to demand

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Scheduling Approaches 3

• Appointment Systems – used to reserve service

time and capacity

• Aim is to maximise use of time-dependent service

capacity and reduce the risk of “no-shows”

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Sequencing 1

• Determines the order in which things are done

• Necessary when several activities use a common

resource

• Sequencing can be planned (creating a schedule)

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Sequencing 2

• Schedule Monitoring and Control – important to

keep track of actual performance versus planned,
as things can and do go wrong, such as machinery
breakdowns, staff illness, etc.

• Thus, rescheduling is a normal part of scheduling!

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Class Activity
• Work in groups of about 5

• Determine an appropriate sequence of events (with

justification) for the children
children’s
s birthday party you designed
earlier in this lecture
• 10 minutes

• Feedback to the class

• 5 minutes

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Conclusions
• Resource planning is an important part of an
operations manager’s job role, to determine what is
needed to meet customer requirements and
deadlines

• Scheduling and sequencing are the tools used to

plan what, when and in which order things are done

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References
• Evans & Collier (2007) “Operations Management:
An Integrated Goods & Services Approach”,
Thomson

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Lecture 10 – Resources

Any Questions?

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