OPERATIONS

PLAN
 Methods of Production or Service
Delivery - SUBCONTRACTING

• A subcontractor is an individual or in many cases a business that

signs a contract to perform part or all of the obligations of another's
contract.
• A subcontractor is hired by a general contractor (or prime contractor)
to perform a specific task as part of the overall project.
• The incentive to hire subcontractors is either to reduce costs or to
mitigate project risks. In this way the general contractor receives the
same or better service than the general contractor could have
provided by itself, at lower overall risk.
• Many subcontractors do work for the same companies rather than
different ones. This allows subcontractors to further specialize their
skills.
 Methods of Production or Service
Delivery – OWN PRODUCTION

• ASSEMBLY METHOD
An assembly line is a manufacturing process in
which parts (usually interchangeable parts) are
added to a product in a sequential manner using
optimally planned logistics to create a finished
product much faster than with handcrafting-type
methods.
 Sample of Time and Motion Study
Using Assembly Line Method
ACTIVITY Activity Worker TRIAL 1 TRIAL 2 TRIAL 3 ….TRIAL 10 AVERAGE

Description Code

A 3min 3min10sec

TOTAL TIME
 Sample of Time and Motion Study
Using Job Shop Method
• JOB-SHOP
METHOD – ACTIVITY Activity Worker1 Worker2 Worker3 ….Worker n AVERAGE

each worker Description Code

is timed in A 3min 3min10sec

producing B

one unit of C

the product .

or one full .

service cycle .

TOTAL TIME
 Capacity
• Minimum capacity = 8 hours x 60 min =
480min/190min =2.52 batches x 70 units =
175units
total operating hours/total time
• Maximum capacity =
total operating hours/longest activity time
• Average capacity =
max + min capacities/2
• The decision on production forecast depends on
the learning curve of workers and
subcontractors
 Quality Control

Random Full
Sampling Batch
 Production Cost per Unit

• Production cost per unit

– Direct materials (if contractor will purchase
materials for subcon)
– Direct Labor (subcon labor cost; labor cost of
own workers per unit)
– Manufacturing Overhead (transpo, rent,
depreciation of equipment, tools and machines)
 Production Forecast
Month # of units Prod cost/unit Assumptions

Sep

Oct

Nov

Dec

an

Feb

Mar

Apr

May

Jun

Jul

TOTAL