-What will you need to produce
-How will you allocate resources
-Will you allocate for average production or maximum production
-If you allocate for average production, how will you handle periods of maximum
-Example; Producing Ice Cream: Assume may-Aug max out in ice cream and then the
rest of the time minimizes production. Some people like ice cream more in the summer time
rather than the winter time and vice versa. Solution; deal with resource company and make
sure they can ship on time and deal with what you need, with raw materials. (just-in-time
inventory systems). If you don’t carry lts of inventory you expect suppliers to supply you
just-in-time for example the Dell computers (vustomizing your dell and purchasing. Bring
equipment in from supplier and then mark computer, and then send it to customers. Do not
need big/heavy inventory, no big warehouse, or story it and being it back, do not need
money, inventory/ warehouses are expensive. To buy stuff and carry it for 6 months it is
expensive. For machinery; should you over buy machinery? Typical problem with modern
machine production. Use machinery to produce product, in alternate use. Rent?
-Farm production, most farmers have big tractor, and few have corn machines to collect
machines because they run around in corn season and harvest them all, makes more sense
for one farmer to do his farm and other farmer’s corn (renting equipment)depends if you can
be effective rather than efficient.
-plan for maximum production (blood clinc and getting blood, do not want to go to clint and
realize there is not any blood for you)
-Where will you locate the plant, or the service office
-How will you balance the costs of transportation of resources and the costs of
moving finished goods.
- Location planning is important but not something that happens very often, do not
move plant around on weekly basis.