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Lecture 6

BSNS105 Lecture Notes - Lecture 6: Skytrax, Coral Springs, Florida, Continual Improvement Process

Business Studies
Course Code
Diane Ruwhiu

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Lecture 6: Managing Organisations; Organisation of Operations Part Chapter 19,20
Key Focuses of this lecture:
- Operational resource planning and control
- Operations improvement
- Strategic operations management
1. Operational Planning and Control
* Planning and controlling processes to deliver desired performance (as per the operations
strategy and the parameters set by design)
* Planning of Key resources: appropriately design and implemented operating systems.
* Balancing capacity and demand: short, medium and long-term planning
What is the role of resource planning?
Supply side; inputs; transformed/transforming
Outputs; goods and/or services
- Objective is to accurately forecast demand so they can produce and deliver the right quantities
at the right time at the right cost.
- Operations must find ways to better match supply and demand to achieve optimal levels of cost,
quality and customer service to enable them to compete with other supply chains.
Resource planning and control systems
Planning and control is concerned with the reconciliation between what the market requires and
what the operations resources can deliver.
* That is those activities that provide the systems procedures and decisions which bring together
aspects of supply and demand.
- Planning, control
Materials requirements
planning (MRP)
Manufacturing resource
planning (MRPII)
Enterprise resource planning (ERP)
Web integrated enterprise resource planning
Increasing integration of information systems
Increasing impact on the
supply network

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* Enterprise resource planning (ERP) systems: collects, processes and provides information about
an organisations entire enterprise. (Different models are available; all have similar modules and stages)
- Customer needs
- Receipt of orders
- Distribution of products
- Receipt of payments
First stage: Balancing Capacity and Demand
* Most operations will try to balance capacity with demand
- Cost of capacity vs. Expected requirement
- Staff available vs. expected demand
* Balancing available capacity to expected demand is important
- Maintains profitability of operation; efficiency/costs and effectiveness/value
* Maintains service level of operation
- Response times, queues and quality of experience
* Capacity planning:
* Demand:
Process of determining people, machines and
major physical resources such as buildings,
necessary to meet production objectives of the
- Planning time horizon: short, medium,
- Matching capacity across whole process
- Capacity can be fixed or flexible
A measure of requirement from the customer;
- Operations respond to demand
- Often volatile/uncertain demand
- Dependent or independent demand
- Forecasting
Aggregate planning
* Planning how to match supply & product or service demand over a medium period of time
* Main approaches to coping with fluctuating demand
- Pay overtime,
- Temp./part-time/casual staff
- Multi-skill staff
- Subcontract/outsource
- Build inventory

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Master production schedule
Assess capacity and demand requirements:
- Specifies capacity requirements; what inventory/resources required?
- Provides information on the specific products or services to be offered.
Materials requirements planning/Manufacturing resource planning
* Computer-based inventory control system that projects the materials needed for goods and
services listed in the MPS, and initiates action
* Inputs: MPS/Bill of materials, inventory status
Capacity requirements planning: Technique for determining what personnel and equipment are
needed to meet short term production objectives
The goods that the organisation keeps on hand for use in the production process up to the point
of selling the final products to customers
* All production operations require
- Raw materials (parts, ingredients,
other inputs to production or service)
- Work-in-progress (items being made
into a final product)
- Finished goods (finished goods,
* Why is it important? What is its role?
- Inventory = $$$$$$
- Manage uncertainty between capacity
and demand
- Requires extra space, people, &
- Can be stolen, damaged or perish
- Can become obsolete if held too
Forecasting Capacity
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