Business Functions Explained

LESSON 1
FUNCTIONS WITHIN BUSINESS ORGANIZATIONS

Overview:
An organizational or business function is a core process or set of
activities carried out within a department or areas of a company. Just as different
functions in the human body are performed and regulated by different organs,
different functions within a business are performed and controlled by different
parts of the business. One of the reasons for separating business operations into
functional areas is to allow each to operate within its area of expertise, thus
building efficiency and effectiveness across the business as a whole.
Learning Outcomes:
At the end of this lesson, the students can:
1. Discuss the management processes;
2. Explain the 5 functions of business organization; and
3. Relate the history of production and operations management.
Materials Needed:
Hand-outs; Whiteboard and Boardmarkers; Computer units plus LCD projector
and slides (if available); Etc.
Duration: 3 hours
Learning Content:
Five Functions of business Organization
1. Organizing Function:
One of the main functions of a business is organizing function. Man,
machine, materials, and money are essential factors for any business. organizing
function collects and coordinates all the necessary factors of the business.
Proper organizing function is helpful in the smooth running of the business and
helps to achieve its objectives.
2 .Financing Function:
Finance is the life-blood and back bone of any business. The availability
of factors of production depends upon the availability of finance. So every
business needs finance for its success. Therefore, under this function of
business required capital is estimated, accumulated and properly utilized. A
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proper capital structure according to the size and nature of the business is
essential for the success of the business.
3 .Production Function:
The production function is another important function of the business.
Converting raw materials into finished products to satisfy human wants by
creating utility is known as production. Under this function, raw materials and
semi-finished products are processed and assembled to create utility. Hence the
next important function of business is to create utility for the satisfaction of the
consumers by the production of goods.
4.Marketing Function :
The function of business is not complete with the production of goods and
services only. The main goal of production is to satisfy human wants through the
consumption of goods and services. Therefore, marketing function helps to
transfer goods and services from the producer to the ultimate consumer.
Marketing functions can be divided into concentrating and dispersing which
include buying, selling, transportation, storage, risk taking, market information,
etc.
5 .Employment Function:
The next important function of business is to provide employment
opportunities in the country. Every business requires a large number of
manpower to perform their activities. So they are helpful in solving employment
problem of the country by providing maximum employment opportunities.
Business sectors are possibly the largest employment generating sector in the
world. The success of any business depends upon the satisfaction of the
consumers. Therefore, giving the priority of consumer satisfaction the above
functions of business must be conducted efficiently and effectively in order to run
a business successfully.
1.1 Features of Production System

Production System in Production and Operation Management
The production system of an organization is that part, which produces products
of an organization. It is that activity whereby resources, flowing within a defined
system, are combined and transformed in a controlled manner to add value in
accordance with the policies communicated by management. A simplified
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production system is shown above. The production system has the following
characteristics:
Production is an organized activity, so every production system has an objective.

The system transforms the various inputs to useful outputs.
It does not operate in isolation from the other organization system.
There exists a feedback about the activities, which is essential to control and
improve system performance.
Classification of Production System

Production systems can be classified as Job Shop, Batch, Mass and Continuous
Production systems.
Classification of production systems
JOB SHOP PRODUCTION

Job shop production are characterized by manufacturing of one or few quantity of
products designed and produced as per the specification of customers within
prefixed time and cost. The distinguishing feature of this is low volume and high
variety of products.
A job shop comprises of general purpose machines arranged into different

departments. Each job demands unique technological requirements, demands
processing on machines in a certain sequence.
Characteristics
The Job-shop production system is followed when there is:
1. High variety of products and low volume.
2. Use of general purpose machines and facilities.
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3. Highly skilled operators who can take up each job as a challenge because
of uniqueness.
4. Large inventory of materials, tools, parts.
5. Detailed planning is essential for sequencing the requirements of each
product, capacities for each work Centre and order priorities.
Advantages
Following are the advantages of job shop production:
1. Because of general purpose machines and facilities variety of products
can be produced.
2. Operators will become more skilled and competent, as each job gives
them learning opportunities.
3. Full potential of operators can be utilized.
4. Opportunity exists for creative methods and innovative ideas.
Limitations
Following are the limitations of job shop production:
1. Higher cost due to frequent set up changes.
2. Higher level of inventory at all levels and hence higher inventory cost.
3. Production planning is complicated.
4. Larger space requirements.
BATCH PRODUCTION
Batch production is defined by American Production and Inventory Control
Society (APICS) “as a form of manufacturing in which the job passes through the
functional departments in lots or batches and each lot may have a different
routing.”It is characterized by the manufacture of limited number of products
produced at regular intervals and stocked awaiting sales.
Characteristics
Batch production system is used under the following circumstances:
1. When there is shorter production runs.
2. When plant and machinery are flexible.
3. When plant and machinery set up is used for the production of item in a
batch and change of set up is required for processing the next batch.
4. When manufacturing lead time and cost are lower as compared to job
order production.
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Advantages
Following are the advantages of batch production:
1. Better utilization of plant and machinery.
2. Promotes functional specialization.
3. Cost per unit is lower as compared to job order production.
4. Lower investment in plant and machinery.
5. Flexibility to accommodate and process number of products.
6. Job satisfaction exists for operators.
Limitations
Following are the limitations of batch production:
1. Material handling is complex because of irregular and longer flows.
2. Production planning and control is complex.
3. Work in process inventory is higher compared to continuous production.
4. Higher set up costs due to frequent changes in set up.
MASS PRODUCTION
Manufacture of discrete parts or assemblies using a continuous process are
called mass production. This production system is justified by very large volume
of production. The machines are arranged in a line or product layout. Product
and process standardization exists and all outputs follow the same path.
Characteristics
Mass production is used under the following circumstances:
1. Standardization of product and process sequence.
2. Dedicated special purpose machines having higher production capacities
and output rates.
3. Large volume of products.
4. Shorter cycle time of production.
5. Lower in process inventory.
6. Perfectly balanced production lines.
7. Flow of materials, components and parts is continuous and without any
back tracking.
8. Production planning and control is easy.
9. Material handling can be completely automatic.
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Advantages
Following are the advantages of mass production:
1. Higher rate of production with reduced cycle time.
2. Higher capacity utilization due to line balancing.
3. Less skilled operators are required.
4. Low process inventory.
5. Manufacturing cost per unit is low.
Limitations
Following are the limitations of mass production:
1. Breakdown of one machine will stop an entire production line.
2. Line layout needs major change with the changes in the product design.
3. High investment in production facilities.
4. The cycle time is determined by the slowest operation.
CONTINUOUS PRODUCTION
Production facilities are arranged as per the sequence of production operations
from the first operations to the finished product. The items are made to flow
through the sequence of operations through material handling devices such as
conveyors, transfer devices, etc.
Characteristics
Continuous production is used under the following circumstances:
1. Dedicated plant and equipment with zero flexibility.
2. Material handling is fully automated.
3. Process follows a predetermined sequence of operations.
4. Component materials cannot be readily identified with final product.
5. Planning and scheduling is a routine action.
Advantages
Following are the advantages of continuous production:
1. Standardization of product and process sequence.
2. Higher rate of production with reduced cycle time.
3. Higher capacity utilization due to line balancing.
4. Manpower is not required for material handling as it is completely
automatic.
5. Person with limited skills can be used on the production line.
6. Unit cost is lower due to high volume of production.
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Limitations
Following are the limitations of continuous production:
1. Flexibility to accommodate and process number of products does not
exist.
2. Very high investment for setting flow lines.
3. Product differentiation is limited. (Wisdom Jobs, n.d.)
1.2 The Operations Manager and The Management Process
A Framework for Managing Operations

Managing operations can be enclosed in a frame of general management
function . Operation managers are concerned with planning, organizing, and
controlling the activities which affect human behavior through models.
PLANNING
Activities that establishes a course of action and guide future decision-
making is planning.
The operations manager defines the objectives for the operations subsystem of
the organization, and the policies, and procedures for achieving the objectives.
This stage includes clarifying the role and focus of operations in the
organization’s overall strategy. It also involves product planning, facility designing
and using the conversion process.
ORGANIZING
Activities that establishes a structure of tasks and authority.
Operation managers establish a structure of roles and the flow of information
within the operations subsystem. They determine the activities required to
achieve the goals and assign authority and responsibility for carrying them out.
CONTROLLING
Activities that assure the actual performance in accordance with planned
performance.
To ensure that the plans for the operations subsystems are accomplished, the
operations manager must exercise control by measuring actual outputs and
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comparing them to planned operations management. Controlling costs, quality,
and schedules are the important functions here.
BEHAVIOUR
Operation managers are concerned with how their efforts to plan, organize, and
control affect human behavior. They also want to know how the behavior of
subordinates can affect management’s planning, organizing, and controlling
actions. Their interest lies in decision- making behavior.
MODELS
As operation managers plan, organize, and control the conversion process, they
encounter many problems and must make many decisions. They can simplify
their difficulties using models like aggregate planning models for examining how
best to use existing capacity in short-term, break even analysis to identify break
even volumes, linear programming and computer simulation for capacity
utilization, decision tree analysis for long-term capacity problem of facility
expansion, simple median model for determining best locations of facilities etc.
General model for managing operations
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Objectives of Operations Management
Objectives of operations management can be categorized into customer service
and resource utilization.
CUSTOMER SERVICE
The first objective of operating systems is the customer service to the satisfaction
of customer wants. Therefore, customer service is a key objective of operations
management. The operating system must provide something to a specification
which can satisfy the customer in terms of cost and timing. Thus, primary
objective can be satisfied by providing the ‘right thing at a right price at the right
time’.
These aspects of customer service specification, cost and timing are described
for four functions in the following table. They are the principal sources of
customer satisfaction and must, therefore, be the principal dimension of the
customer service objective for operations managers.
Aspects of customer service
Generally an organization will aim reliably and consistently to achieve certain

standards and operations manager will be influential in attempting to achieve
these standards. Hence, this objective will influence the operations manager’s
decisions to achieve the required customer service.
RESOURCE UTILISATION
Another major objective of operating systems is to utilize resources for the
satisfaction of customer wants effectively, i.e., customer service must be
provided with the achievement of effective operations through efficient use of
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resources. Inefficient use of resources or inadequate customer service leads to
commercial failure of an operating system.
Operations management is concerned essentially with the utilization of
resources, i.e., obtaining maximum effect from resources or minimizing their loss,
under utilization or waste. The extent of the utilization of the resources’ potential
might be expressed in terms of the proportion of available time used or occupied,
space utilization, levels of activity, etc. Each measure indicates the extent to
which the potential or capacity of such resources is utilized. This is referred as
the objective of resource utilization.
Operations management is also concerned with the achievement of both

satisfactory customer service and resource utilization. An improvement in one will
often give rise to deterioration in the other. Often both cannot be maximized, and
hence a satisfactory performance must be achieved on both objectives. All the
activities of operations management must be tackled with these two objectives in
mind, and many of the problems will be faced by operations managers because
of this conflict. Hence, operations managers must attempt to balance these basic
objectives.
The following table summarizes the twin objectives of operations management.

The type of balance established both between and within these basic objectives
will be influenced by market considerations, competitions, the strengths and
weaknesses of the organization, etc. Hence, the operations managers should
make a contribution when these objectives are set.
The twin objectives of operations management
(Wisdom Jobs, n.d.)
1.3 The Historical Evolution of POM

For over two centuries, operations and production management has been
recognized as an important factor in a country’s economic growth. The traditional
view of manufacturing management began in eighteenth century when Adam
Smith recognized the economic benefits of specialization of labor. He
recommended breaking of jobs down into subtasks and recognizes workers to
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specialized tasks in which they would become highly skilled and efficient. In the
early twentieth century, F.W. Taylor implemented Smith’s theories and developed
scientific management. From then till 1930, many techniques were developed
prevailing the traditional view. Brief information about the contributions to
manufacturing management is shown in the following table.
Historical summary of operations management
Production management becomes the acceptable term from 1930s to 1950s.

As F.W. Taylor’s works become more widely known, managers developed
techniques that focused on economic efficiency in manufacturing. Workers were
studied in great detail to eliminate wasteful efforts and achieve greater efficiency.
At the same time, psychologists, socialists and other social scientists began to
study people and human behavior in the working environment. In addition,
economists, mathematicians, and computer socialists contributed newer, more
sophisticated analytical approaches.
With the 1970s emerge two distinct changes in our views. The most obvious of
these, reflected in the new name operations managementwas a shift in the
service and manufacturing sectors of the economy. As service sector became
more prominent, the change from ‘production’ to ‘operations’ emphasized the
broadening of our field to service organizations. The second, more suitable
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change was the beginning of an emphasis on synthesis, rather than just analysis,
in management practices. (Wisdom Jobs, n.d.)
Learning Activities:
Reporting: topics were given ahead of time to students:
Quiz:
1. Based on your understanding, discuss the processes in management.
2. Explain each function of business organization.
Learning Evaluation:
Assignment:
1. Relate yourself in the history of POM, among the listed contributors which do
you think for you has the great impact in your life and why?
References:
Web Sources
(n.d.). Retrieved from Wisdom Jobs:

https://www.wisdomjobs.com/e-university/production-and-operations-
management-tutorial-295/production-system-9436.html
management-tutorial-295/operations-management-9440.html
management-tutorial-295/historical-evolution-of-production-and-
operations-management-9434.html
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LESSON 2
QUALITY: THE BASICS
Overview:
Rework and defects are a direct outcome of lack of attention to
quality. The higher the rework, more time and money being wasted and busting
the cost and schedule baseline. Lack of attention to quality needlessly add
considerable risk to the project which results in the tremendous amount of rework
and added expense. It is important to know at the onset of the project on what
acceptable quality is and how it will be measured on the project. This process of
performing the Quality Management process helps avoid many issues at a later
stage of the project.
Learning Outcomes:
1. Enumerate the different definitions of quality;
2. Discuss the total quality management; and
3. Explain the importance of ISO certification in business.
Materials Needed:
Duration: 6 hours
Learning Content:
7 Definitions of Quality
Quality is what quality does.
Any business that can't manage the quality of its processes and products tends
to fall apart. Quality is critical to sales, cost control, productivity, risk management
and compliance.
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As important as quality is, there's little agreement as to its definition. The
following definitions look at quality from a management, quality assurance,
product, marketing, manufacturing and economic point of view.
1. Fit for Purpose

Perhaps the most useful business definition of quality is "fit for purpose". This
definition evolved in quality management circles. It's useful because it's
applicable to any process, service or product. However, it can be difficult to
measure.
Quality Definition: Fit for Purpose

A quality process or product is fit for its purpose.
It's easy to think of examples of fit for purpose. If the purpose of an aircraft is to
be fast, efficient, comfortable and safe — then that's the definition of a quality
aircraft.
Fit for purpose is a practical and flexible definition that's the cornerstone of most
quality management initiatives.
2. Conformance to Requirements
Quality is often measured in terms of conformance to requirements. For example,
business users define requirements for a sales system. The sales system is
developed and its quality is measured against the requirements.
Quality Definition: Conformance to Requirements

A quality process or product conforms to requirements.
This definition is ideal for quality assurance teams that need to validate
processes, systems, services and product quality. Working from requirements,
they can easily validate conformance and identify non-conformance.
The problem with this definition is that requirements may offer a biased and
subjective view of quality. In many cases, requirements represent little more than
the ideas of business stakeholders. There's often no objective validation that
these ideas will yield a quality result.
3. Quality Is Cost
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Traditionally, product quality was thought of in terms of material costs. A watch
that's made of gold is higher quality than a watch made of plastic. High quality
sheets have a thread count of 180 or higher. High quality hand moisturizer has a
high Shea butter content.
Quality Definition: Proportional to Cost

A quality product costs more to produce.
This type of quality definition works well for some simple products. However, it's
inapplicable to technology, art and culture. The history of technology is filled with
cheaper products that have higher quality.
4. Quality is Price
Quality is an essential part of economic models. Economists have developed
various definitions of quality.
Economists tend to judge quality by the price consumers are willing to pay.
Quality Definition: Quality is Price

Quality is the price consumers are willing to pay for a product or service.
If you're an economist and you need to measure quality across an entire
economy — you need a quality definition that's easy to measure. According to
economists, if something is expensive, it's high quality.
5. Quality is a Standard
The manufacturing industry was the first to take a hard, scientific look at quality.
Manufacturers are concerned both with the quality of products and the quality of
the manufacturing process itself.
If you're manufacturing one million cars a month you can't afford to produce sub-
standard products that will be returned by your customers. You can't afford
product liability issues that result from sub-standard product. You also can't
afford inefficient processes.
Manufacturers use standards and continual process improvement methodologies

to improve both processes and product quality. They view quality in terms of
measurements and statistics.
Quality Definition: Quality is a Standard

Quality is compliance to best known standards, processes and specifications.
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As other industries mature, the standards approach to quality starts to make
sense. For example, there is great interest in standards for IT services.
6. Quality is Value for Performance

Marketing teams look for practical definitions of quality that explain why
consumers and businesses buy.
One of the best ways to model purchasing behavior is with the following definition
of quality.
Quality Definition: Value

Quality is value for price.
According to estimates, McDonald's sells 550 million Big Macs each year in the
US alone1. Obviously, customers see value in the Big Mac. It's not always
practical to measure quality by the yardstick of a 3-star restaurant.
According to this definition a $3 disposable tooth brush may be higher quality
than a $3000 golden tooth brush because it offers more value.
7. Quality is An Experience
As economies have shifted from a product to a service focus marketers have
sought definitions of quality that explain why customers purchase services.
Quality Definition: Experience

Quality is a satisfying experience.
You don't go to a fine French restaurant for the quality of food (product) alone.
You go for the end-to-end experience from calling to make the reservation to
paying the check and walking out the door. Customers judge fine dining by
aesthetics, service, atmosphere, decor, taste, smell, etc.
Experiences are measured by establishing relationships with customers to elicit

dialog and feedback. Experience quality can also be measured by bottom line
metrics such as revenue, return visits and lifetime customer value. (Mar, 2013)
2.1 Modern Quality Management

Modern quality management approaches relate in many ways to modern project
management approaches overall. More and more attention is being paid to the
human aspect of the processes, the team approach to quality, and the concept of
total quality management. The quality management process is more oriented
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toward permanent small incremental improvements and multiple inspection
points in the processes than it was in the past.
In Figure 1 it can be seen that one of the major changes in our attitude toward
quality is that everyone is responsible for quality. This allows for many more
inspection points and allows for
Figure1: Changes in management concepts corrections to be made before

additional work is done. Scrap and rework cost is significantly reduced.
2.2 Total Quality Management
Total Quality Management - Meaning and Important Concepts

To understand the meaning of “Total quality management”, let us first know what
does Quality mean?
Quality refers to a parameter which decides the superiority or inferiority of

a product or service. Quality can be defined as an attribute which differentiates
a product or service from its competitors. Quality plays an essential role in every
business. Business marketers need to emphasize on quality of their brands over
quantity to survive the cut throat competition.
Why would a customer come to you if your competitor is also offering the same
product? The difference has to be there in quality. Your brand needs to be
superior for it to stand apart from the rest.
Total Quality management is defined as a continuous effort by the

management as well as employees of a particular organization to ensure
long term customer loyalty and customer satisfaction. Remember, one
happy and satisfied customer brings ten new customers along with him whereas
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one disappointed individual will spread bad word of mouth and spoil several of
your existing as well as potential customers.
You need to give something extra to your customers to expect loyalty in return.
Quality can be measured in terms of durability, reliability, usage and so on. Total
quality management is a structured effort by employees to continuously improve
the quality of their products and services through proper feedbacks and research.
Ensuring superior quality of a product or service is not the responsibility of a
single member.
Every individual who receives his/her paycheck from the organization has to
contribute equally to design foolproof processes and systems which would
eventually ensure superior quality of products and services. Total Quality
management is indeed a joint effort of management, staff members, workforce,
suppliers in order to meet and exceed customer satisfaction level. You can’t just
blame one person for not adhering to quality measures. The responsibility lies on
the shoulder of everyone who is even remotely associated with the organization.
Total quality management ensures that every single employee is working

towards the improvement of work culture, processes, services, systems
and so on to ensure long term success.
Total Quality management can be divided into four categories:

 Plan
 Do
 Check
 Act
Also referred to as PDCA cycle.
Planning Phase
Planning is the most crucial phase of total quality management. In this phase
employees have to come up with their problems and queries which need to be
addressed. They need to come up with the various challenges they face in their
day to day operations and also analyze the problem’s root cause. Employees are
required to do necessary research and collect relevant data which would help
them find solutions to all the problems.
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Doing Phase
In the doing phase, employees develop a solution for the problems defined in
planning phase. Strategies are devised and implemented to overcome the
challenges faced by employees. The effectiveness of solutions and strategies is
also measured in this stage.
Checking Phase
Checking phase is the stage where people actually do a comparison analysis of
before and after data to confirm the effectiveness of the processes and measure
the results.
Acting Phase
In this phase employees document their results and prepare themselves to
address other problems. (Juneja, n.d.)
2.3 ISO
International Organization for Standardization (ISO)
What Is the International Organization for Standardization (ISO)?
The International Organization for Standardization (ISO) is an international
nongovernmental organization made up of national standards bodies; it develops
and publishes a wide range of proprietary, industrial, and commercial standards
and is comprised of representatives from various national standards
organizations.
The organization's abbreviated name—ISO—is not an acronym; it derives from
the ancient Greek word ísos, meaning equal or equivalent. Because the
organization would have different acronyms in different languages, the founders
of the organization decided to call it by the short form ISO.
KEY TAKEAWAYS
 The International Organization for Standardization (ISO) is an international
nongovernmental organization made up of national standards bodies that
develops and publishes a wide range of proprietary, industrial, and
commercial standards.
 The International Organization for Standardization (ISO) was founded in

1947 and is headquartered in Geneva, Switzerland.
 In addition to producing standards, ISO also publishes technical reports,

technical specifications, publicly available specifications,
technical corrigenda, and guides.
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The ISO plays an important role in facilitating world trade by providing common
standards among different countries.
How do businesses become ISO certified?

The process of getting certified for an ISO standard can be expensive, time-
consuming and potentially disruptive to the business. Before taking any steps to
get certified, determining the need for certification can be the most important
step.
The first step in becoming certified is determining whether certification is worth

the costs. Some reasons that organizations pursue certifications include the
following:
1. Regulatory requirements. Some businesses and products require

certification that they meet common standards.
2. Commercial standards. When certification is not a regulatory
requirement, products and services that are certified to meet minimum
standards are a necessity for some industries.
3. Customer requirements. Even where there is an industry standard or
regulatory requirement for certification, some customers such as
government agencies, may prefer or require certification.
4. Improved consistency. Certification can help large organizations deliver
consistent quality assurance across business units as well as across
international borders.
5. Customer satisfaction. Enterprise customers that use a product or
service in different contexts and countries appreciate consistent
performance. Compliance with standards can also help the certified
organization resolve customer issues.
The certification process for ISO standards varies, depending on the standard
and the certifying body. For popular standards, organizations may need to first
review and select a suitable certification body. Recommendations for the steps to
follow to get certified in the ISO's quality management standard, ISO 9001:2015,
include the following:
 understand the ISO standard;

 identify trouble areas, where operations do not meet ISO requirements;
 formally document processes, procedures and plans to improve trouble
areas;
 implement ISO standards;
 conduct an internal audit to check conformance with the standard before
the official audit; and
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 undergo formal compliance audit or certification process. (Loshin, 2021)
Quiz:
1. List down the 7 definitions of quality

2. Discuss the TQM based on your understanding
Assignment:
1. Explain why do business should have an ISO certification? What is the
importance of having ISO certication?
References:
Web Sources
Juneja, P. (n.d.). Retrieved from Management Study Guide:

https://www.managementstudyguide.com/total-quality-management.htm
Loshin, P. (2021, October). Retrieved from Tech target:

https://searchdatacenter.techtarget.com/definition/ISO
Mar, A. (2013, March 14). Retrieved from Simplicable:

https://business.simplicable.com/business/new/7-definitions-of-quality
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LESSON 3
THE CONTINUOUS IMPROVEMENT PROCESS
Overview:
Continuous improvement business strategy is also known as a
continual or continuous improvement process. It’s an ongoing process to improve
the products, services or processes of an organization. The improvements
sought can be incremental over time or achieved with a breakthrough moment.
The delivery of those processes is in constant evaluation and change, so

further improvements can be developed and applied. The ruler to measure these
changes is the efficiency, effectiveness and flexibility of these processes.
Some see continuous improvement as a meta-process, such as W.

Edwards Deming, an early proponent, who saw it as part of a larger system of
organizational goals. But a bigger definition considers continuous improvement
as a gradual and never-ending process that tries to increase effectiveness and
efficiencies to fulfill a company’s objectives.
Learning Outcomes:
1. Define the continuous improvement process;
2. Describe the methods and tools used in continuous improvement;
3. Discuss the plan-do-check-act cycle; and
Materials Needed:
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Duration: 6 hours
Learning Content:
The Continuous Improvement Process (CIP) is an ongoing effort to improve

products, services, or processes. It’s a six-step systematic approach to plan,
sequence and implement improvement efforts using data and elaborates on the
Shewhart Cycle (Plan, Do, Study Act). The CIP provides a common language
and methodology which enables understanding the improvement process. The
CIP always links back to each organization’s own goals and priorities.
Definition: Continuous improvement is the act of continually looking to improve

upon a process, product, or service through small incremental steps.
Why Use a Continuous Improvement Process (CIP)
Implementing a Continuous Improvement Process in an organization should be

standard practice now. Studies have shown the main benefits of a CIP are:
 Increase productivity
 Better teamwork and morale
 Greater agility
 Less waste
 More efficiency
 Increase customer satisfaction
 Increase in profit
Phases of the Continuous Improvement Process (CIP)
There are four phases associated with the CIP. These phases are associated
with the Shewhart Cycle:
 Phase 1 “Plan”: Plan for change and identify improvement

opportunities.
 Phase 2 “Do”: Implement changes identified.
 Phase 3 “Study”: Check to determine if the change had the desired
outcome.
 Phase 4 “Act”: If successful, implement across the organization and
process.
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Figure 1: Shewhart Cycle
The Six (6) Steps of the Continuous Improvement Process (CIP)
Step 1: Identify Improvement Opportunity: Select the appropriate process for

improvement.
 Evaluate Process:
 Select a challenge/problem
Step 2: Analyze: Identify and verify the root cause(s).

Step 3: Take Action: Plan and implement actions that correct the root cause(s).
Step 4: Study Results: Confirm the actions taken to achieve the target.
Step 5: Standardize Solution: Ensure the improved level of performance is
maintained.
Step 6: Plan for the Future:
 Plan what is to be done with any remaining problems
 Evaluate the team’s effectiveness Set a target for improvement
The Best Time to Start a Continuous Improvement Process (CIP)
There is no bad time to start using a continuous improvement process but the
sooner the better. Below is a list of the times I believe a CIP should be
implemented:
 Beginning of a new project

 Development of processes and procedures
 Developing a new or improved product, or service
 Planning data collection and analysis
 Implementing any change to a process
 Whenever a failure occurs
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Tools that can be used to help with the Continual Improvement Process
(CIP) are:
 Benchmarking
 Force Field Analysis
 Flowcharts
 Affinity Diagram
 Delphi Technique
 Pareto Chart
 Cause and Effect Diagram
 Scatter Diagram
 Check Sheet
 Control Chart
 Process Capability Index and Ratio
 ISO 14000 (Acqnotes, n.d.)
3.1 Standardization
Standardization is a framework of agreements to which all relevant parties in an

industry or organization must adhere to ensure that all processes associated with
the creation of a good or performance of a service are performed within set
guidelines.
Standardization ensures that the end product has consistent quality and that any
conclusions made are comparable with all other equivalent items in the same
class.
KEY TAKEAWAYS
 Standardization ensures that certain goods or performances are produced
in the same way via set guidelines.
 Standardized lots are used in trading stocks, commodities, and futures to
allow for greater liquidity, efficiency, and reduced costs.
 Standardization is used in accounting practices and for establishing quality
and production standards in manufacturing.
How Standardization Works

Standardization is achieved by setting generally accepted guidelines with regard
to how a product or service is created or supported, as well as to how a business
is operated or how certain required processes are governed. The goal of
standardization is to enforce a level of consistency or uniformity to certain
practices or operations within the selected environment.
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An example of standardization would be the generally accepted accounting
principles (GAAP) to which all companies listed on U.S. stock exchanges must
adhere. GAAP is a standardized set of guidelines created by the Financial
Accounting Standards Board (FASB) to ensure that all financial statements
undergo the same processes so that the disclosed information is relevant,
reliable, comparable, and consistent.
Standardization ensures that certain goods or performances are produced in the

same way via set guidelines.
Examples of Standardization in Business

Standardization can be found throughout the business world when companies
want to achieve a consistent level of quality, production standards, manufacturing
output, and brand recognition.
Franchises
For example, many fast-food franchises have detailed processes documented to
make sure that a burger is prepared in the same manner, regardless of which
establishment in its franchise a consumer visits.
Product Standards
Certain production and manufacturing businesses adhere to agency standards to
ensure all products of the same category are created to the same specifications
between different facilities or companies.
For example, the wood products industry participates in international standards

to maintain consistency of like products. This can include references to
acceptable product sizing, water-solubility, grading, and composite properties.
These standards ensure that when a person goes to a retail store to purchase an
item, such as a two-by-four, the sizing is consistent regardless of the store visited
or the product manufacturer.
Brand Names
The marketing of products sold internationally may be standardized to keep a
uniform image among the varying markets. For example, the Coca-Cola
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Company uses global standardization in marketing by keeping the appearance of
the product relatively unchanged between different markets. The company uses
the same design theme even when different languages are presented on the
products. Coca-Cola's marketing also maintains a consistent theme to help
reinforce the image it is presenting.
Standardization is commonplace in the financial markets, which helps facilitate

trades and financial transactions involving all of the participants, such as
investors, brokers, and fund managers. (Grant, 2021)
3.2 The Plan-Do-Check-Act Cycle

Plan-Do-Check-Act cycle is a model for carrying out change. It is an essential
part of the lean manufacturing philosophy and a key prerequisite for continuous
improvement of people and processes.
First, proposed by Walter Shewhart and later developed by William Deming, the
PDCA cycle became a widespread framework for constant improvements in
manufacturing, management, and other areas.
PDCA is a simple four-stage method that enables teams to avoid recurring

mistakes and improve processes.
Where Does Plan-Do-Check-Act Cycle Come From?

The American statistician and physicist Walter Shewhart is considered the father
of PDCA. He was passionate about statistical analysis and quality improvement,
and he built the foundation of PDCA recorded in numerous publications.
Years later, inspired by Shewhart’s ideas, William Deming actually developed the

model into a learning and improvement cycle, becoming popular as PDCA. This
is why the model is also known as the Shewhart cycle or Deming cycle.
27
PDCA cycle is an iterative process for continually improving products, people,
and services. It became an integral part of what is known today as Lean
management. The Plan-Do-Check-Act model includes solutions testing,
analyzing results, and improving the process.
For example, imagine that you have plenty of customer complaints about the
slow response rate of your support team. Then you will probably need to improve
the way your team works to keep customers satisfied. That is the point where
PDCA comes into play.
Let’s take a closer look at the four stages of the PDCA process.
PLAN
At this stage, you will literally plan what needs to be done. Depending on the
project's size, planning can take a major part of your team’s efforts. It will usually
consist of smaller steps so that you can build a proper plan with fewer
possibilities of failure.
Before you move to the next stage, you need to be sure that you answered some
basic concerns:
 What is the core problem we need to solve?

 What resources do we need?
 What resources do we have?
 What is the best solution for fixing the problem with the available
resources?
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 In what conditions will the plan be considered successful? What are the
goals?
Keep in mind, you and your team may need to go through the plan a couple of
times before being able to proceed. In this case, it is appropriate to use a
technique for creating and maintaining open feedback loops such as Hoshin
Kanri Catchball. It will enable you to collect enough information before you
decide to proceed.
DO
After you have agreed on the plan, it is time to take action. At this stage, you will
apply everything that has been considered during the previous stage. Be aware
that unpredicted problems may occur at this phase. This is why, in a perfect
situation, you may first try to incorporate your plan on a small scale and in a
controlled environment.
Standardization is something that will definitely help your team apply the plan
smoothly. Make sure that everybody knows their roles and responsibilities.
CHECK
This is probably the most important stage of the PDCA cycle. If you want to
clarify your plan, avoid recurring mistakes, and apply continuous improvement
successfully, you need to pay enough attention to the CHECK phase.
Here, you need to audit your plan’s execution and see if your initial plan actually
worked. Moreover, your team will be able to identify problematic parts of the
current process and eliminate them in the future. If something went wrong during
the process, you need to analyze it and find the root cause of the problems.
ACT
Finally, you arrive at the last stage of the Plan-Do-Check-Act cycle. Previously,
you developed, applied, and checked your plan. Now, you need to act. If
everything seems perfect and your team managed to achieve the original goals,
then you can proceed and apply your initial plan.
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It can be appropriate to adopt the whole plan if objectives are met. Respectively,
your PDCA model will become the new standard baseline. However, every time
you repeat a standardized plan, remind your team to go through all steps again
and try to improve carefully.
The PDCA cycle is a simple but powerful framework for fixing issues on any level
of your organization. It can be part of a bigger planning process, such as Hoshin
Kanri. The repetitive approach helps your team find and test solutions and
improve them through a waste-reducing cycle.
The PDCA process includes a mandatory commitment to continuous

improvement, and it can have a positive impact on productivity and efficiency.
Finally, keep in mind that the PDCA model requires a certain amount of time, and
it may not be appropriate for solving urgent issues.
In Summary
Plan-Do-Check-Act cycle is a useful tool that can help your team solve problems
much more efficiently. PDCA has some significant advantages:
 It stimulates continuous improvement of people and processes.

 It lets your team test possible solutions on a small scale and in a
controlled environment.
 It prevents the work process from recurring mistakes (Kanbanize, n.d.)
3.3 Methods and Tools

5S
5S is the name of a workplace organization method that was originally applied in
manufacturing, but many organizations in a wide variety of industries have since
found that 5S is an effective way to achieve rapid continuous improvement.
5S revolves around five ideas that make people more effective and efficient in
their work. It earned its name because each of these five principles starts with
the letter "S."
1. Sort: Keep only what is regularly used nearby
2. Straighten: Arrange the space so workers can find exactly what they
need to use in less than 30 seconds
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3. Shine: Ensure that the workplace and equipment are ready for immediate
use
4. Standardize: Each job is done in the same way and everyone is

challenged to offer ideas to improve it
5. Sustain: Foster a safe, efficient and effective workplace is everyone’s

responsibility
DMAIC
DMAIC is a project methodology with five phases; define, measure, analyze,

improve, control. These steps are used to help ensure that improvements are
data-driven, measurable, and repeatable. The DMAIC improvement cycle is an
effective technique for structured change management. The emphasis on
measurement and analysis helps ensure that opportunities for improvement are
executed in a way that ensures the most positive impact.
1. Define
The Define phase is all about selecting high-impact opportunities for

improvement and understanding which metrics will indicate project success.
During this phase the leaders will perform activities such as identifying the
improvement opportunity, outline the scope of the project, estimating the project
impact, and creating a team.
2. Measure
During the Measure phase, existing processes are documented and a baseline is
established. Critical activities at this point include (but are not limited to)
developing the methodology by which data will be collected to evaluate success,
and gathering, plotting, and analyzing current state data.
3. Analyze
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The goal of the Analyze phase is to find and validate the root causes of business
problems and ensure that improvement is focused on causes, rather than
symptoms. Doing this includes, in part, developing a problem statement,
completing a root cause verification analysis, designing measurable improvement
experiments, and developing a plan for improvement.
4. Improve
Once you reach the Improvement phase, it is time to determine exactly which
steps will be taken and begin to roll out the changes that analysis has prescribed.
In this stage, it's common to generate and evaluate solution ideas, determine
expected solution benefits, and communicate solutions to all stakeholders.
5. Control
The objective of the last stage is to develop the monitoring processes and
procedures that will ensure long-term success. To do so, you'll need to do things
like verify reduction in failures due to the targeted root cause, determine if
additional improvement is necessary to achieve the project goal, update your
Standard Work documentation, and integrate lessons learned.
Standard Work
Standard work is the documentation of the best practices for any process or task.
It must be complete, accessible, and up to date. It forms the baseline for rapid
improvement activities.
Establishing standard work begins with creating, clarifying, and sharing

information about the most efficient method to perform a task that is currently
known with everyone performing that process.
Once this information has been shared, everyone practices this standard
consistently so that the work is done the best way every time.
This is where continuous improvement comes into play; standard work isn't a "set
it and forget it" process, announced once and then permanently unchanging.
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Instead, everyone should work to improve the standard, and share new best
practices as they're discovered.
The 5 Whys
The 5 Whys is a technique for finding the root cause of a problem.

The practice of the 5 Whys is deployed when a problem arises and a team wants
to find and fix, not just the symptom, but the root cause of the issue. A problem
statement is created and then the team simply asks, “Why,” until the root cause
is revealed. The actual number of “whys” needed varies, but five seems to be
about right. Unless you're my toddler, in which case you're definitely going to
demand more than five.
When deploying the 5 Whys, keep in mind that you are looking for flawed
processes, not people. The idea is not to place blame, it is rather to uncover
problems with processes, procedures or standard work. (Banna, 2020)
Quiz:
1. Define continuous improvement process?

2. List down Tools that can be used to help with the Continual Improvement
Process
Assignment:
1. Discuss briefly the model plan-do-check-act cycle
References:
Web Sources
(n.d.). Retrieved from Acqnotes:

https://acqnotes.com/acqnote/careerfields/continuous-improvement-
process
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(n.d.). Retrieved from Kanbanize:
https://kanbanize.com/lean-management/improvement/what-is-pdca-cycle
Banna, M. (2020, May 13). Retrieved from Kainexus:

https://blog.kainexus.com/continuous-improvement/11-rapid-continuous-
improvement-tools-and-techniques-explained
LESSON 4
DESIGN PROCESS
Overview:
A design process defines every designer’s journey to solve wicked
problems. It’s a phrase that appears at talks, in job descriptions, and during job
interviews. Each company interprets it differently. And, each designer interprets
that interpretation differently too. And, when asked to clarify, they fear that we are
being too prescriptive and the process should be unique to an individual. No
matter what a project is about, whether it is application design, package design
or chair design, it is important to understand the essence of it.
During this stage, it is crucial to get as much information as possible about

a product and its’ users. In my opinion, this stage is the most important in the
design process, as all our further design decisions should be based on the facts
34
and data we received at the research stage. Don’t hesitate to ask clients and
stakeholders a lot of questions in order to get specific information regarding a
project. Very often the number of correctly asked questions has a direct
correlation with the quality of the final decision
Learning Outcomes:
1. Define what is design process;
2. Enumerate the 7 steps of design process; and
3. Discuss the Product Design Process.
Materials Needed:
Duration: 6 hours
Learning Content:
What is the design process
The design process is a project management guide used to oversee the

execution of a large project, typically involving breaking it up into smaller chunks
and evaluating progress at several specific milestones. The design process
usually consists of a series of steps that designers, engineers, architects or
scientists follow to produce a solution to a specific problem. The scope of
solutions they come up with are required to meet the criteria specified in the
definition of the problem or perform a specific task.
7 steps of the design process

The design process begins by asking a few questions regarding the pain point
you're trying to solve. This is crucial to defining the specific need in order to come
up with a viable solution. The general steps of a design process should resemble
the ones below, customized to your project:
 Define the problem

 Conduct research
 Brainstorm and conceptualize
 Create a prototype
 Build and market your product
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 Product analysis
 Improve
1. Define the problem

To begin developing helpful products, you have to identify a pain point that needs
to be addressed and define opportunities and requirements to fulfill that need.
Defining said opportunities requires asking questions to decide what the specific
need is, what your goals for the project are and how you'll compete with other
companies producing similar items. Basically, you need to figure out who has a
need, what that need is and why you should solve it. Try answering the following
questions to help you define the problem that demands a solution:
 What are the main goals of this project?
 Who is the end-user of this product?
 What is the pain point that this product will address?
 How will this product address the pain point?
 What resources will you need to complete this project?
 How will you measure success?
 What is this product's unique value proposition?
 Are there similar products on the market?
 How will this be better than similar products on the market?
2. Conduct research
Considering the anticipated user as well as current solutions on the market, study
similar projects and take note of the weak points and well as the positive
outcomes. This information may begin to provide inspiration for your project and
the steps you'll take to avoid previous mistakes and improve on the outcomes.
Work with your marketing and R&D teams to conduct competitive analysis,
consumer behavior and market trends to better understand the scope of the
overall market. Here are some questions to help kickstart your research and get
you to know your user:
 Why would a user choose this product?
 How often will a user realistically use this product?
 What other solutions to this pain point has the user tried?
 Where do users generally shop for similar products?
 What changes would make an existing product better serve the user?
3. Brainstorm and conceptualize

After you've defined the basis for your project and its specific requirements, ideas
will begin to form. Come together with your team to brainstorm and compare
ideas to decide on the best features for your product. Use personas, scenarios
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and storyboards to help you get a clear view from the perspective of a user. This
will help you form an outline upon which your product will be developed and
marketed with the user at the forefront of the design's intention.
4. Create a prototype
Testing out your concepts requires creating a prototype that mimics the finished
product. Your outline will begin to fill in and flesh out and throughout your
prototyping process, you'll likely find new areas of improvement as well as
validation of your existing concepts regarding the user experience. User testing
of your prototype will clarify answers to important questions as well as identify
obvious flaws or drawbacks. This feedback will help you go back and reiterate
your prototype as many times as needed to produce a final product.
5. Build and market your product

This phase requires considering all the feedback you gathered from the prototype
testing to begin building the 'final' product (there will be instances of going back
to reiterate as the process moves along). When your finished product is ready to
be released to the public, it's time to prepare for the next step, which is product
analysis.
6. Product analysis
When your product has been bought, used and reviewed, you can begin to gain
insight into how your product accomplished solving the originally stated problem.
Feedback about the user experience is extremely important to consider when
developing the next version of your product. It will tell you what needs to be
adjusted, why the adjustments are necessary and how an updated version will
better serve the needs of the end-user. Listening to your users will ensure that
future iterations of your product will fare well against the competition going
forward.
7. Improve
During the process, you'll definitely run into issues pertaining to marketability,
design or functionality. Those problems present opportunities for improvement
and growth to maximize the future success of the product.
What is the purpose of the design process?
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The design process provides a guideline to follow to ensure the development of
your product remains on track and meets all the required milestones. Other uses
for this process include:
 Identifying a problem and implementing a viable solution
 Making the design and production process less messy and more cost-
efficient
 Keeping your team focused on what's important, remaining on schedule
and efficiently tracking the progression of the project
Supporting the creation of an exceptional user experience with your finished

product. (Indeed, 2021)
4.1 Research and Development

Is the part of a company's operations that seeks knowledge to develop, design,
and enhance its products, services, technologies, or processes. Along with
creating new products and adding features to old ones, investing in R&D
connects various parts of a company's strategy and business plan, such as
marketing and cost reduction.
Some advantages of research and development are clear, such as the possibility
for increased productivity or new product lines. The Internal Revenue Service
offers an R&D tax credit for businesses. Some investors look for firms with
aggressive R&D efforts. In some cases, small businesses are bought out by
larger firms in the industry for their R&D.
Investing in Research and Development (R&D)

Research and development consist of the investigative activities that a person or
business chooses to do with the desired result of a discovery that will either
create an entirely new product, product line, or service.
R&D isn’t just about creating new products, as it can be used to strengthen an
existing product or service with additional features.
Research refers to any new science or thinking that will result in a new product or
new features for an existing product. Research can be broken down into either
basic research or applied research. Basic research seeks to delve into scientific
principles from an academic standpoint, while applied research seeks to use that
basic research in a real-world setting.
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The development portion refers to the actual application of the new science or
thinking so that a new or increasingly better product or service can begin to take
shape. Research and development is essentially the first step in developing a
new product, but product development is not exclusively research and
development. An offshoot of R&D, product development can refer to the entire
product life cycle, from conception to sale to renovation to retirement. (Ross,
2019)
4.2 Standardization
Standardization is the process of creating protocols to guide the creation of a
good or service based on the consensus of all the relevant parties in the industry.
The standards ensure that goods or services produced in a specific industry
come with consistent quality and are equivalent to other comparable products or
services in the same industry.
Standardization also helps in ensuring the safety, interoperability, and

compatibility of goods produced. Some of the parties involved in the
standardization processes include users, interest groups, governments,
corporations, and standards organizations.
Goal of Standardization
The goal of standardization is to ensure uniformity to certain practices within the
industry. Standardization focuses on the product creation process, operations of
businesses, technology in use, and how specific compulsory processes are
instituted or carried out.
One example of standardization is the Generally Accepted Accounting Principles

(GAAP) that companies must follow when preparing or reporting their annual
financial statements. They ensure uniformity in how financial reports are
prepared and improve the clarity of the financial information presented to the
public.
Standardization of Business Processes

The most common form of standardization is in the area of business processes.
Typically, companies with a global presence or operate franchises utilize detailed
process documentation to ensure that the quality of their product or service is the
same regardless of the geographical location that a customer visits.
39
Manufacturing businesses
Businesses engaged in manufacturing often form framework agreements that
ensure that the products they produce meet the same specifications as other
businesses in the industry. The standardization may cover products sold in one
geographical location or in the global arena.
For example, manufacturers of LED and LCD television follow certain product
standardization rules that ensure that the products sold in the market have
similar features. The standards cover specifications such as screen resolution
and size, inputs (HDMI port, USB ports, etc.), internet connectivity, etc. The
standards are continually modified to mirror advancements in technology.
Standardization among manufacturing businesses ensures that customers get

similar products regardless of the manufacturer or geographical location of the
store where customers buy from.
Product marketing
Standardizing products that are available in various states, countries, or
continents ensures that customers receive the same product or service
regardless of where they buy it. This applies to big brands that customers are
already very familiar with, where any change in the product would likely be
noticed immediately. One example of a company that uses this form of
standardization is Coca-Cola.
Companies that operate globally also standardize their advertising, maintaining a

uniform design theme across the different markets as a way of reinforcing its
brand image among its global audience. The same design theme and color
scheme are applied even when the product packaging is presented in a different
language.
Standardization of Trading
Standardization in the trading industry is set by the exchanges on which the
security is traded. This provides greater liquidity for investors. It also makes the
trading process the same for all investors.
For example, standardization in the options markets means that exchanges set
standards as a way of establishing the minimum trade bases for contracts. In
40
options trading, every option contract that an investor holds represents 100
shares of the underlying stock.
In the futures trading market, the size of the futures contract depends on the type
of asset that is being traded. Futures contracts are available on different types of
assets, such as commodities, currencies, and stock exchange indexes.
Effects of Standardization
Some of the effects of standardization include the following:
Firms
When competing firms standardize their products and services, the competition
shifts from integrated systems to individual components. This means that
companies whose main selling point is the integrated system must change
strategy to focus on the individual components of the system.
Companies can create a competitive advantage by selling components or
subsystems of the integrated system to other businesses that are compatible
with their business model.
Consumers
One of the benefits that consumers reap from standardization is increased
compatibility and interoperability between products. For example, when
communication gadgets and services are standardized, consumers can share
information across a large number of people who are not limited by a specific
service or product.
Also, consumers can match up the components of a system in a way that fits
their specific preferences. However, standardization can also adversely affect
consumers. For one, it means that options will be limited for consumers. Also,
standardization may limit producers from providing more value to consumers
than their competitors, because they are constrained by the standards.
Technology
The effect of standardization on technology is mixed, and it may yield both
positive and negative outcomes. The positive effect of standardization is that it
can help weed out incompatible technologies in the market that slow the growth
of technology. There will be an increased uptake of standardized technology,
which will spur the growth of the technology industry. A familiar example of
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standardized technology is that of software programs that are compatible with the
Windows operating system.
On the downside, standardizing technology restricts the innovative quality of new

and existing technologies and may reduce competition.
4.3 Product Design

the process of creating a new product for sale to customers is known as product
design. Thought this definition tends to oversimplify, product design is actually a
broad concept which encompasses a systematic generation and development of
ideas that eventually leads to the creation of new products. Design experts work
on concepts and ideas, eventually turning them into tangible products and
inventions.
The product design expert works with art, science and technology to create these
products. This increasingly complex process is now supported by evolving digital
tools and techniques that reduce the involvement of a large team and help
visualize a product in great deal before it is created.
PRODUCT DESIGN PROCESS

Every design team may follow a different process for product design and
development. The process flows from problem identification to brainstorming
ideas, prototype creation and eventually creating the product. This is followed up
the formal manufacture of the product and a critical evaluation to identify any
improvements that may be needed.
This method includes three stages. The later two may need to be looked at
repeatedly during the process.
Analysis
At the beginning of the process there needs to be extensive research involving
concrete facts and figures. This data then feeds into possible solutions to the
problem at hand, and the best way to achieve these solutions. Formally, two
stages are involved here:
Accept Situation – The designers commit to the project and identifying a
solution. Available resources are consolidated to reach this goal most efficiently
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Analyze – The team now collectively begins research to collect all relevant data
to help reach a solution
Concept
Once the problem and potential solutions are narrowed, the final solution is
identified and conceptualized in detail. This includes working out adherence to
standards and how closely the visualized solution meets identified customer
needs. One basic stage here is:
Define – Here, the team identifies the key issue or issues. Using the problem
conditions as objectives and constraints as parameters within which to operate,
the team narrows down the information
Synthesis
At this stage, the solutions are turned into ideas and the best ones are
highlighted. These ideas of design turn into prototypes on which actual products
will be based.
This stage can be broken down into 4 steps:
1. Ideate – Different ideas and solutions are brainstormed here. The best
idea bank is created when there is no bias or judgment towards ideas
presented
2. Select – The ideas brainstormed are narrowed down to a few which can
give the best results. Plans for production can now be created
3. Implement – A prototype can now be created and the plan becomes a
product
4. Evaluate – In the final stage, the prototype should be tested and any
tweaks necessary should be made. If the prototype does now perform as
anticipated, further ideas may need to be brainstormed.
PRODUCT DESIGN STAGES

Within the broad stages mentioned in the previous section, detailed stages can
be followed in a systematic manner to design successful products. These stages
include:
The Design Brief
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A statement of intent, the design brief states the problem to be addressed. It
serves as a starting point from where the design team can orient themselves. By
itself however, it does not offer sufficient information with which to begin the
actual design process.
The Product Design Specification (PDS)

A vitally important but often overlooked and misunderstood stage, the PDS
document lists the problem in detail. Before working on producing a solution,
there needs to be a deep understanding of the actual problem identified. This
document should be designed after conversations with the customer and an
analysis of the market and competitors. The design team should refer back to it
often for correct orientation at later stages.
PRODUCT DESIGN TYPES

Two basic categories encompass most product designs. These are:
1. Demand – Pull Innovation
2. Demand – Pull happens when a product design can directly take
advantage of an opportunity in the market. A new design works towards
solving an existing design issue. This happens either through a new
product or a variation of an existing product.
3. Invention – Push Innovation
This innovation occurs with an advancement in technology or intelligence.

This is driven through research or a creative new product design.
FACTORS AFFECTING PRODUCT DESIGN
Cost
One major factor that affects product design is the cost of production including
material costs and labor costs. These in turn affect the pricing strategy, which
needs to be in line with what the customer is prepared to pay for it.
Ergonomics
The product needs to be user friendly and afford convenience in its function.
Using ergonomic measurements, minor or major changes may need to be made
to product design to meet essential requirements.
Materials
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Whether the requisite materials are available easily is an important consideration
in product design. In addition, an eye needs to be kept on new developments in
materials and technology.
Customer Requirements
One major and obvious influence on the design on the product is the customer
and their requirements. It is vital to capture customer feedback on any prototype
as well as during the planning and conceptual stages. Even a technologically
advanced and exciting feature may need to be removed if it causes dislike or
negative feelings in an end user.
Company Identity
The company’s identity is a point of pride and as a matter of course, a product’s
very design or color schemes and features may be determined by this identity.
The logo may need to be featured in a specific manner or subtle or overt features
of the company identity may need to be built into the design.
Aesthetics
The product may need to appear stylish or of a certain shape. This form may end
up determining the technology that it built into the product. This may in turn also
affect the manufacturing process that needs to be followed.
Fashion
The current fashion and trends may also affect a certain product’s design.
Customers will want the most updated options and this needs to be considered
during product design.
Culture
If a product is for a certain market with its own individual culture, this needs to be
kept in mind during product design. A product acceptable in one culture may end
up being offensive or not desirable in another one.
Functions
How many problems is the product trying to solve? The number of uses and
functions a product has will impact its design.
Environment
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Another consideration to product design is its impact on the environment. The
average customer these days may be more discerning and concerned about the
environment than before. Things to consider here may include whether the
materials used are recyclable, how the product will be disposed of at the end of
its life or how the packaging can be disposed of.
CONSIDERATION IN PRODUCT DESIGN

Product design is a complex process, since all the relevant stakeholders have
different requirements from the product. An example of conflicting needs that will
require attention during product design are:
Economic Viability
The manufacturer will want the product to be created at the lowest cost possible,
in order to maximize profit and ensure sales. A prohibitively expensive product
will have higher price tag and may drive away customers. Often, this may mean a
product redesign or a compromise on quality.
Price, Appearance, and Prestige Value

The customer will always want a well presented product with a functional yet
aesthetically appealing design. They will also want it to be priced reasonably.
The appearance may not always be vital to function, but if there are multiple
nearly similar products in the market, the look of the product may become the
deciding factor.
Functionality
There needs to be equal focus on the functionality of the product or how well it
performs. This is a given as the product foremost needs to perform as it claims
to. The end user may purchase for the external appearance. But long term
satisfaction and repeat usage will only occur if the product performs at an optimal
level
Maintenance
Product designers, manufacturers and maintenance workers may all favor a
modular construction for a product. The more easily different parts can be
worked on individually, the more versatility the product offers. A re-design effort
may only need to focus on changing certain parts rather than the whole, the
manufacturer can easily tweak elements without changing entire production
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processes and maintenance workers may not need to disassemble everything,
thereby reducing repair time and effort.
EXAMPLES OF SUCCESSFUL PRODUCT DESIGN

The Apple iPhone
Apple is consistently ranked as one of the most innovative companies in the
world. Though not always successful initially, Apple has managed to create
unique products with superior designs that have great appeal with end users.
The Apple iPhone revolutionized the cell phone market with its innovative
features, streamlined design and an entire supporting universe through the app
store. Though it was not the pioneer in smart phones, Apple is extremely
successful because it created a beautiful product that gives a superior user
experience to a consumer. (Luenendonk, 2019)
4.4 Service Design

Service design is a roadmap comprising the steps and processes a customer of
a service will undertake when using it.
BENEFITS OF SERVICE DESIGN

Service Design ensures that the service actually gets used by users in the
intended way and creates positive experiences, thus minimizing the need for
costly and lengthy customer services. Engaging in a service design process
benefits an organization in several ways:
Improves Sales
The application of the service design structure helps a business to understand
the customers’ needs, demands and expectations, and create solutions in
accordance to them. It adds enrichment to the customer’s experience and
creates value for them. Customers’ positive interaction with the product or
service means their retention and ultimately greater success and profitability for
the business.
Creates Loyalty
The ultimate challenge for businesses in today’s competition driven era is not just
attracting new clients but also retaining them in the long run. With availability of a
wide range of service options, customers can switch services and brands very
easily and thus are spoilt for choice. So enterprises have to look for ways to
make their service or product distinct from their competition. Service design
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allows businesses to understand what customers are looking for and expecting
from a service. They can then make their offerings adaptable and better suited to
those needs. This vintage point can help them stand apart from their competition
and retain their customers’ loyalty.
Strengthen the Brand and Identity

The service design approach allows enterprises to strengthen their brand. The
service design process helps service managers to progress from the known to
the unknown. It consists of the basic and yet critical evaluation of how the new
envisaged product or service fits into the overall image and objectives of the
company. Thus, the process helps an organization to stay true to its image and
reaffirm its brand and stop it from steering away from its core values and
objectives while offering a new service. Service design puts a brand to work,
unlock its hidden potentials, and create and deliver value to the customers.
Improve Efficiency
Creative and imaginative steps involved in the service design process help firms
improving the efficiency of their employees and procedures. It helps in
elimination of wastage and allows team members to pinpoint areas where there
is a resource drain or a bottleneck. Service design blueprints help businesses
locate problematic areas and potential failure points and rectify them before
hand. Engaging teams in the service design procedure allows them to envision
the bigger picture and situate their role in it. It helps them understand why
change and innovation is necessary in what they are offering and how they are
offering it.
Reduce Redundancies
Envisioning the whole cycle of the service design process allows companies to
take a bird’s eye view of their service and remove duplicative segments. It helps
managers pinpoint where services might be converging or overlapping and it can
help them straighten them out before hand. This way inconsistencies and
ambiguities can be discovered within the process on and can be rectified. The
process of elimination of redundancies conserves energy, improves staff’s
efficiency and reduces costs.
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This process can be a fairly simple and straightforward one or a complex one
with several converging and diverging points. Breaking down the entire process
into steps, tracing and retracing your step backwards and forwards and around
different areas of the service ensures that even the minutest details are covered,
steps are thought through, problems are identified and rectified, promises are
set, service is delivered, and expectations are met. (Belyh, 2019)
Quiz:
1. Define and elaborate what is design process

2. List down the 7 steps of design process
Assignment:
1. Discuss briefly the Product Design Process
References:
Web Sources
(2021, July 22). Retrieved from Indeed:

https://www.indeed.com/career-advice/career-development/design-
49
process
Belyh, A. (2019, September 23). Retrieved from cleverism:
https://www.cleverism.com/ultimate-guide-service-design/
Grant, M. (2021, February 14). Retrieved from Investopedia:

https://www.investopedia.com/terms/s/standardization.asp
Luenendonk, M. (2019, September 18). Retrieved from clevirism:

https://www.cleverism.com/product-design/
Ross, S. (2019, July 22). Retrieved from investopedia:

https://www.investopedia.com/ask/answers/043015/what-are-benefits-
research-and-development-company.asp
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LESSON 5
CAPACITY PLANNING
Overview:
Capacity planning is a process that balances the available hours of
teams against what the project needs. Capacity, in this case, is the most work
that can be done over a certain timeframe. It’s a bit of a juggling act that has to
keep several balls in the air, such as the availability of the team, the money in the
budget for those hours and what is demanded by the client, stakeholder or
customer. Capacity and project planning obviously go hand-in-hand. Planning is
how one schedules the hours of the team members so that the work gets done in
time.
Learning Outcomes:
1. Define what is capacity planning;
2. Differentiate the 3 types of capacity planning; and
3. Explain the benefits of using capacity planning software.
Materials Needed:
Duration: 6 hours
Learning Content:
Capacity Planning
Capacity planning is the practice of planning/determining production capacity and
workforce needs to make sure your supply chain is equipped to meet demand.
Capacity planning lets businesses know how and when to scale, identify
bottlenecks, create better design capacity, and mitigate risk, within a planned
period of time.
The 3 Types of Capacity Planning

The three types of capacity planning make sure you have enough, but not too
much, of three major resources for both the long- and short-term. You’ll want to
plan weeks, months, or even a year in advance.
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1. Product capacity planning
Product capacity planning ensures you have enough products or ingredients for
your deliverables. For a florist, this would be flowers, vases, and cards. For a
pool maintenance company, this would be things like chlorine that are required to
do the job.
2. Workforce capacity planning

Workforce capacity planning ensures you have enough team members and work
hours available to complete jobs. This type of planning will also show you when
you need to hire more employees and help you determine how far in advance
you need to start recruiting based on the length of your onboarding process.
3. Tool capacity planning

Tool capacity planning ensures you have enough tools to complete jobs. This
includes any trucks, assembly line components, or machinery you need to
manufacture and deliver your product.
How to Start Capacity Planning

There are three basic steps to capacity planning
1. Measure
First, you’ll need to measure your resource capacity. How many deliveries can
each of your drivers make in a given period? How many orders can fit onto each
of your trucks? How many hours does it take your fleet manager to plan 50
deliveries? It’s important to answer these types of questions as accurately as
possible because the rest of your plan will be based on these numbers.
2. Analyze
Once you have accurate measurements, you can spend time analyzing this
information. Making graphs will help you understand the numbers and make
demand forecasting easier.
3. Formulate
The final step is taking all of the information you’ve gathered and formulating a
plan. You can make calculations to see how much it will cost to fund new projects
or hire a full-time employee vs. bringing on seasonal part-time workers. You
could also calculate the ROI for upgrading a piece of machinery or adding
assembly lines to your production facilities. The formulation stage helps you see
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what the likely outcomes are for various options, so you can make the best
decision.
Capacity Planning
 It’s a planning process designed to help you determine if the organization
has enough people resources according to skill sets.
 It looks at the availability of those resources at the skill set/team level.
 Then it facilitates the decision-making process to hire resources or
defer/approve/cancel projects.
 Capacity planning is about supply and demand.
Capacity Planning Checklist

Here’s a short checklist for high-level capacity planning.
Establish Cross-Functional Team: To collaborate and communicate about

resources, as you’re looking across different projects or programs, you want a
cross-functional team with different levels and different functions.
Calculate Resource Capacity: Before you can plan, you need to have an idea
of what you’re working with, which is why it’s important to note the gap between
what you want and what you need, and then figure out how to narrow it.
Determine Resources Required by the Project: For each project, look at the
scope and what resources are required to do the task for the project.
Prioritize Projects: Which projects are most important, and which can be put
aside for the time being? You can’t do everything at once.
Allocate Resources Based on Project Priority: Now allocate those prioritized

projects and make sure that they are aligned with the goals of the organization.
Tips for Capacity Planning

The following are three tips for when you’re capacity planning.
1. Keep the lines of communications open between executives, project
management leaders and stakeholders.
2. Document known risks (such as union strikes, weather, government
regulations) that stop a project or create new ones unexpectedly.
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3. Plan for how to handle too much capacity (where is it and how to resolve
it, such as reassigning) or not enough capacity (again, where/how.)
(Bridges, 2019)
5.1 Tools for Capacity Planning

What Is A Capacity Planning Tool
A capacity planning tool is one of the easiest ways to deal with incoming
workloads. It gives you accurate insights about your resource capacity,
helping you deal with varying business requirements. Capacity planning
software helps companies evaluate their resource capacity needs to keep up
with demand fluctuations in the market.
But what are these resources?

A resource can be anything that a business needs, from people and
technology to infrastructure and financial resources.
So how do capacity planning tools help?

Sort a like a magic crystal ball, capacity planning tools help a resource
manager forecast future resource needs and ensure you have adequate
capacity to meet them. And the best part is, you don’t have to be a psychic to
use one!
Benefits of using a capacity planning software:

 Eliminates guesswork from demand forecasts and resource planning
 Easily identifies any existing and potential process bottleneck
 Streamlines capacity management workflows
 Analyzes your team’s workload and productivity
 Automates routine resource scheduling processes
 Ensures that you have adequate capacity to meet demands
But remember, you need a dedicated capacity planning tool for this. (Peck,
n.d.)
Quiz:
1. Define and elaborate what is capacity planning

2. Differentiate the 3 types of capacity planning and site an example.
54
Assignment:
1.What are the benefits of using capacity planning software? Explain each
benefits briefly.
References:
Web Sources
Bridges, j. (2019, November 26). Retrieved from projectmanager:

https://www.projectmanager.com/training/3-capacity-planning-tips-teams
Peck, H. (n.d.). Retrieved from click up: https://clickup.com/blog/capacity-

planning-tools/
55
LESSON 6
GLOBALIZATION
Overview:
Globalization means the interconnection of national economies
across the world on issues such as trade, investment, labor, banking and the
movement of people, goods and services. That seems like a mouthful, but it
basically boils down to governments increasingly allowing their citizens do
business across borders. Globalization also captures in its scope the economic
and social changes that have come about as a result. It may be pictured as the
threads of an immense spider web formed over millennia, with the number and
reach of these threads increasing over time. People, money, material goods,
ideas, and even disease and devastation have traveled these silken strands, and
have done so in greater numbers and with greater speed than ever in the present
age.
Learning Outcomes:
1.
Materials Needed:
Duration: 6 hours
Learning Content:
What Is Globalization?
Globalization is the spread of products, technology, information, and jobs across
national borders and cultures. In economic terms, it describes an
interdependence of nations around the globe fostered through free trade.
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KEY TAKEAWAYS
 Globalization is the spread of products, technology, information, and
jobs across nations.
 Corporations in developed nations can gain a competitive edge
through globalization.
 Developing countries also benefit through globalization as they tend to
be more cost-effective and therefore attract jobs.
 The benefits of globalization have been questioned as the positive
effects are not necessarily distributed equally.
 One clear result of globalization is that an economic downturn in one
country can create a domino effect through its trade partners.
Understanding Globalization
Corporations gain a competitive advantage on multiple fronts through
globalization. They can reduce operating costs by manufacturing abroad, buy
raw materials more cheaply because of the reduction or removal of tariffs,
and most of all, they gain access to millions of new consumers.
Globalization is a social, cultural, political, and legal phenomenon.
Socially, it leads to greater interaction among various populations.
Culturally, globalization represents the exchange of ideas, values, and

artistic expression among cultures.
Globalization also represents a trend toward the development of a single

world culture. Politically, globalization has shifted attention to
intergovernmental organizations like the United Nations (UN) and the World
Trade Organization (WTO).
Legally, globalization has altered how international law is created and

enforced. On one hand, globalization has created new jobs and economic
57
growth through the cross-border flow of goods, capital, and labor. On the
other hand, this growth and job creation are not distributed evenly across
industries or countries.
Globalization's motives are idealistic, as well as opportunistic, but the

development of a global free market has benefited large corporations based
in the Western world. Its impact remains mixed for workers, cultures, and
small businesses around the globe, in both developed and emerging nations.
Advantages and Disadvantages of Globalization

Advantages
 Proponents of globalization believe it allows developing countries to catch
up to industrialized nations through increased manufacturing,
diversification, economic expansion, and improvements in standards of
living.
 Outsourcing by companies brings jobs and technology to developing
countries, which help them to grow their economies. Trade initiatives
increase cross-border trading by removing supply-side and trade-related
constraints.
 Globalization has advanced social justice on an international scale as well,

and advocates report that it has focused attention on human rights
worldwide that might have otherwise been ignored on a large scale.
Disadvantages
 One clear result of globalization is that an economic downturn in one
country can create a domino effect through its trade partners. For
example, the 2008 financial crisis had a severe impact on Portugal,
Ireland, Greece, and Spain. All these countries were members of the
European Union, which had to step in to bail out debt-laden nations, which
were thereafter known by the acronym PIGS.
 Globalization detractors argue that it has created a concentration of wealth
and power in the hands of a small corporate elite that can gobble up
smaller competitors around the globe.
 Globalization has become a polarizing issue in the U.S. with the
disappearance of entire industries to new locations abroad. It's seen as a
major factor in the economic squeeze on the middle class.
 For better and worse, globalization has also increased homogenization.
Starbucks, Nike, and Gap dominate commercial space in many nations.
The sheer size and reach of the U.S. have made the cultural exchange
among nations largely a one-sided affair. (Fernando, 2020)
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6.1 Managing Global Operations
Global Operations Management (GOM) is managing operations in a global
context. The focus will be on contemporary issues related to operations function
which are of relevance in a firm’s ability to effectively collaborate with its supply
chain partners in order to remain competitive in a global economy.
OPERATIONS MANAGEMENT AND COMPETITIVE ADVANTAGE

• Competing on differentiation
• Competing on cost
• Competing on response
a. flexible response b. reliability of scheduling c. quickness
IMPORTANCE OF MANAGING GLOBAL OPERATIONS

1. Reduce cost
2. Reduce risk
3. Secure supply sources
4. Improve customer services
5. Attract new markets
6. Learn to improve operations
7. Attract global talent
(Slideshare, 2017)
Key issues to be considered for Managing Global Operations Management

Managing global operations would focus on the following key issues:
 To acquire and properly utilize the following concepts and those related to
global operations, supply chain, logistics, etc.
 To associate global historical events to key drivers in global operations
from different perspectives.
 To develop criteria for conceptualization and evaluation of different global
operations.
 To associate success and failure cases of global operations to political,
social, economical and technological environments.
 To envision trends in global operations.
 To develop an understanding of the world vision regardless of their
country of origin, residence or studies in a respectful way of perspectives
of people from different races, studies, preferences, religion, politic
affiliation, place of origin, etc.
59
Quiz:
1. Define and elaborate what is globalization.

2. List down the advantages and disadvantages of globalization
Assignment:
1. Discuss briefly the importance of managing global operations. What do you
think are the most positive impact if managed properly?
References:
Web Sources
(2017, April 24). Retrieved from Slideshare:

https://www.slideshare.net/nithinroy121/global-operations-management-
75341423
Fernando, J. (2020, December 12). Retrieved from Investopedia:

https://www.investopedia.com/terms/g/globalization.asp
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LESSON 7
LAYOUT PLANNING
Overview:
Layout planning is deciding on the best physical arrangement of all resources
that consume space within a facility. These resources might include a desk, a
work center, a cabinet, a person, an entire office, or even a department.
Decisions about the arrangement of resources in a business are not made only
when a new facility is being designed; they are made any time there is a change
in the arrangement of resources, such as a new worker being added, a machine
being moved, or a change in procedure being implemented. Also, layout planning
is performed any time there is an expansion in the facility or a space reduction.
Learning Outcomes:
1. Define what is layout planning;
2. Enumerate the 7 steps of design process;
3. Explain the purpose of design process; and
4. Draw your own office layouts.
Materials Needed:
Duration: 6 hours
Learning Content:
Types of Layouts
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Four basic layout types consisting of:
– Process layouts - Group similar resources together
– Product layouts - Designed to produce a specific product efficiently
– Group technology – designed for mid-volume mid variety product
– Fixed-Position layouts - Product is two large to move; e.g. a
building
What is the design process

The design process is a project management guide used to oversee the
execution of a large project, typically involving breaking it up into smaller chunks
and evaluating progress at several specific milestones. The design process
usually consists of a series of steps that designers, engineers, architects or
scientists follow to produce a solution to a specific problem. The scope of
solutions they come up with are required to meet the criteria specified in the
definition of the problem or perform a specific task.
7 steps of the design process

The design process begins by asking a few questions regarding the pain point
you're trying to solve. This is crucial to defining the specific need in order to come
up with a viable solution. The general steps of a design process should resemble
the ones below, customized to your project:

2. Conduct research
6. Product analysis
7. Improve

To begin developing helpful products, you have to identify a pain point that needs
to be addressed and define opportunities and requirements to fulfill that need.
Defining said opportunities requires asking questions to decide what the specific
need is, what your goals for the project are and how you'll compete with other
companies producing similar items. Basically, you need to figure out who has a
need, what that need is and why you should solve it. Try answering the following
questions to help you define the problem that demands a solution:
 What are the main goals of this project?
 Who is the end-user of this product?
 What is the pain point that this product will address?
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 How will this product address the pain point?
 What resources will you need to complete this project?
 How will you measure success?
 What is this product's unique value proposition?
 Are there similar products on the market?
 How will this be better than similar products on the market?
2. Conduct research
Considering the anticipated user as well as current solutions on the market, study
similar projects and take note of the weak points and well as the positive
outcomes. This information may begin to provide inspiration for your project and
the steps you'll take to avoid previous mistakes and improve on the outcomes.
Work with your marketing and R&D teams to conduct competitive analysis,
consumer behavior and market trends to better understand the scope of the
overall market. Here are some questions to help kickstart your research and get
you to know your user:
 Why would a user choose this product?
 How often will a user realistically use this product?
 What other solutions to this pain point has the user tried?
 Where do users generally shop for similar products?
 What changes would make an existing product better serve the user?

After you've defined the basis for your project and its specific requirements, ideas
will begin to form. Come together with your team to brainstorm and compare
ideas to decide on the best features for your product. Use personas, scenarios
and storyboards to help you get a clear view from the perspective of a user. This
will help you form an outline upon which your product will be developed and
marketed with the user at the forefront of the design's intention.
Testing out your concepts requires creating a prototype that mimics the finished
product. Your outline will begin to fill in and flesh out and throughout your
prototyping process, you'll likely find new areas of improvement as well as
validation of your existing concepts regarding the user experience. User testing
of your prototype will clarify answers to important questions as well as identify
obvious flaws or drawbacks. This feedback will help you go back and reiterate
your prototype as many times as needed to produce a final product.
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This phase requires considering all the feedback you gathered from the prototype
testing to begin building the 'final' product (there will be instances of going back
to reiterate as the process moves along). When your finished product is ready to
be released to the public, it's time to prepare for the next step, which is product
analysis.
6. Product analysis
When your product has been bought, used and reviewed, you can begin to gain
insight into how your product accomplished solving the originally stated problem.
Feedback about the user experience is extremely important to consider when
developing the next version of your product. It will tell you what needs to be
adjusted, why the adjustments are necessary and how an updated version will
better serve the needs of the end-user. Listening to your users will ensure that
future iterations of your product will fare well against the competition going
forward.
7. Improve
During the process, you'll definitely run into issues pertaining to marketability,
design or functionality. Those problems present opportunities for improvement
and growth to maximize the future success of the product.
What is the purpose of the design process?

The design process provides a guideline to follow to ensure the development of
your product remains on track and meets all the required milestones. Other uses
for this process include:
 Identifying a problem and implementing a viable solution
 Making the design and production process less messy and more cost-
efficient
 Keeping your team focused on what's important, remaining on schedule
and efficiently tracking the progression of the project
 Supporting the creation of an exceptional user experience with your
finished product. (Indeed, 2021)
7.1 Office Layouts, Designing Product Layouts, Line Balancing
What is an Office Layout
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An office layout reflects the corporate statement of your business. More than
that, it creates a wholesome environment that can make everybody at ease but
efficient in their work at the same time. Hence, it is best to plan your office floor
plan as per the atmosphere you want to create in your office.
The term office layout deals with the design and décor of an office. It takes into
account all the equipment, supplies, accessories, and designs an arrangement
needed for the proper functioning of an office. All are within the available floor
space so that all procedures and personnel can work efficiently and effectively.
In simpler words, it is the blueprint of the office floor, and hence, called the office
floor plan. An office layout can be practical only when it makes your employees
more efficient in their tasks. Let’s say, for example, an office floor plan where all
the employees in your accounts department get grouped into one area or floor
depending on the space available. It will help them to carry out their tasks more
efficiently as they can now communicate within themselves much better than
before.
Main Objectives of Office Layouts.

There are a few aspects you need to consider while designing a good office floor
plan or layout. There are some minimum standards or objectives that an office
layout needs to suffice. The main aim, however, remains to be the streamlined
workflow, keeping in mind employee satisfaction. The following are the main
objectives of an office floor plan:
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 To ensure proper and effective use of the floor space available;
 To facilitate managers with better supervision and control of their
workforce;
 To ensure steady and effective workflow to increase production;
 To provide a wholesome environment to employees to make them feel
safe and comfortable at the workplace;
 To facilitate better inter-communication between various departments by
interlinking them as needed;
 To provide adequate privacy for your staff working on confidential projects;
 To ensure a disturbance-free working environment by insulating the office
floor from external noises;
 To include provisions for future expansion of the company.
A whole amount of planning makes an excellent office floor plan needed for
satisfying the high standards or objectives is always favorable to your business.
Different Types of Office Layouts.

1. Open-Plan Office Layout
In an Open-Plan office layout, there are no walls or separators between
workstations. Instead, they get defined by furniture in the office area, including
cupboards, shelves, cabinets, etc. The desks may get stacked up side-by-side or
replaced altogether with work-tables capable of facilitating multiple employees at
one go.
Pros & Cons:
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2. Private Office Layout
A private office layout uses a cellular style workstation, with the interior walls
reach up to the ceiling. It means that these parts are completely sealed off from
the rest of the office floor. It is the most widely preferred seating arrangement for
the senior managers of an organization. Sometimes more than one manager
would share a private office.
Pros & Cons:
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3. Cubicle Office Layout
A cubicle office layout is the most used type. It is a type of open plan layout
where the workspaces are separated from one another using partitioning walls to
form a shape of a cube, hence cubicle. It is the most cost-efficient type of office
layout. You can see this type of plan in combination with private offices for senior
staff and built-in meeting rooms.
4. Co-Working Office Layout
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It is one of the greatest innovations in office layout designing in this century.
These plans are best for the self-employed who generally are mobile with their
work. What’s more, is that you don’t need to create this workspace; but pay a
small fee and find a workstation you like or a spot on the lounge.
Pros & Cons:
Benefits of Good Office Layouts.
1. Economic stabilization of your business through cost reduction in office

maintenance;
2. Better morale and goodwill with both employees and clients;
3. Improved workforce efficiency through the best possible use of office
machines and equipment;
4. Improved production due to better supervision;
5. Enhanced inter-departmental communication through proper use of floor
space.
Principles of Office Layout.

1. More natural lighting by designing the layout in such a manner that the office
faces either the North or the East;
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2. Maximum utilization of available floor space to create a complete workspace
environment by accurately placing computer consoles and worktables keeping in
mind factors such as lightning, ventilation, etc.;
3. Ensuring proper flow of work by designing the layout after careful study of the
sequence of tasks to be carried out daily and implementation of unidirectional
workflow while designing;
4. To bring balance to the workflow by creating an aesthetically pleasing floor
plan;
5. Improving employee efficiency by provisioning necessary processes and tools
with easy access;
6. Enhancing employee morale by implementing provisions needed for every
employee based on their tasks in the layout design;
7. Restricting the number of private offices by carefully and accurately asserting
the need for such offices as they are quite costly to implement;
8. Inclusion of adequate exit routes in an office layout for safe passage in case of
an emergency, thus considering the safety of all;
9. Designing both informal and formal spaces in the layout, to set them
accurately;
10. Provisioning for the scope of future expansion. (wondershare edrawax, n.d.)
Quiz:
1. Define and elaborate what is layout planning?

2. List down the 7 steps of design process.
3. What is the main purpose of design process?
Assignment:
1. If you’ll given a chance to design your own office what would it be. Draw your
own office layout.
References:
Web Sources
(n.d.). Retrieved from wondershare edrawax: https://www.edrawmax.com/office-

layout/
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(2021, February 2021). Retrieved from Indeed: https://www.indeed.com/career-
advice/career-development/design-process
LESSON 8
OPERATING DECISIONS
Overview:
Operational decisions or Operating decisions are decisions made to
manage day to day business. Any firm which is into any kind of business is faced
with 100 decisions they have to take in a day. These will be as mundane as
refilling the water cooler, to as stressful as fulfilling a customers order within
minutes.
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Naturally, operational decisions have to be taken care of by a manager in
charge of the operations. However, it is not as easy as it sounds because the
number of operations can be mind boggling.
Learning Outcomes:
1. Define what is supply chain management;
2. Enumerate the supply chain management processes;
3. Explain what is distribution and purchasing; and
4. Justify why should focus on I.W.T. in measuring supply chain
performance.
Materials Needed:
Duration: 6 hours
Learning Content:
8.1 Overview of Supply Chain Management

Supply chain management (SCM) is a foundation that supports the fulfillment of
consumer needs carried out by manufacturing, retail and wholesale businesses.
In other words, SCM is also a determining factor for the success of these
businesses.
The supply chain in each business can be different. The most basic version
includes a company, its suppliers and customers. However, in larger businesses,
the coverage will most likely become wider.
What is Supply Chain Management

Supply Chain Management is a range of activities required to plan, control, and
execute a product’s flows. This includes the process of acquiring raw materials,
producing goods, and distributing products to end consumers, in the most
efficient and cost-effective way.
SCM is an expansive and complex effort that relies on each partner – from
suppliers to producers and so on – in order to perform well. The aim of supply
chain management itself is to maximize customer value and gain a competitive
advantage in the market. To achieve that, various endeavors are required, both
business strategies and specialized software.
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Supply Chain Management Processes
Supply Chain Management involves so many processes, from production
planning to consumer need fulfillment. There are at least six processes involved:
Planning
There are several activities involved during the planning stage, from the demand
forecasting, purchasing planning, and production planning, to preparation of labor
and transportation.
Demand forecasting should be performed so that the merchant is able to figure

out the type and quantity of products that must be prepared for a certain period of
time. This is important to ensure that the goods produced and sold are based on
consumer demand.
To generate the accurate forecasts, merchants must look into their sales and
inventory reports, and keep up with market trends. Merchants should consider
using an inventory management system, so they can forecast demand the right
way. Advanced inventory systems provide accurate inventory data and
forecasting tools that allow users to generate valid results in just a few seconds.
Procurement
After figuring out the type and quantity of items that must be available in stock,
the procurement department must then create purchase orders. Procurement is
the acquisition of goods at the best price, in the right amount, and at the right
time.
The procurement process usually involves several stages; purchase requisition,

purchase requisition review, purchase requisition review approval, and purchase
order submission to suppliers. Procurement admins are responsible for checking
and recording all the purchases and submitting purchase requests to the
procurement manager.
Procurement will be easier and simpler with the help of a purchasing

management system. With this software, the purchasing department can create
requests for quotations, purchase orders, purchase agreements, and blanket
orders instantly. Good procurement software even provides portal suppliers to
speed up the order procedures.
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Production
The production process is a process in which all raw materials will be turned into
finished products. This process usually involves both human labor and machines.
Manufacturing downtime can lead to order fulfillment delays and certainly cause
customer dissatisfaction. Therefore, downtime must be eliminated by ensuring
the productivity of labor, machines, and all the equipment.
Warehousing
After the goods have been produced, they must be stored in the warehouse.
Warehousing involves inbound processing, outbound processing, picking and
packing, cross-docking, and stock taking.
Inbound and outbound logistics must always be recorded. Stock taking must also
be carried out regularly so that there is no difference between the actual quantity
of items and the quantity of items recorded in the books. All of these time-
consuming warehouse activities can be automated with the help of warehouse
management software.
Order Fulfillment
After all the ordered items are picked and packed, then they must be delivered to
the customers. Couriers and transportation must be prepared in advance so that
the orders can be shipped immediately.
To ensure that customers receive their orders in a timely manner, merchants

should have software that enables them to track shipments. With EQUIP
Inventory, you can track your couriers on mobile devices. This system also
allows couriers to update the status of deliveries through their smartphones.
Returns
A return occurs when a consumer submits a refund request for lost, damaged, or
wrong, or delayed items. This process involves several activities such as product
inspection, return goods authorization, product replacement, shipment
scheduling, and refunds. (businesstechhashmicro, 2019)
8.2 Purchasing
Purchasing is the organized acquisition of goods and services on behalf of the
buying entity. Purchasing activities are needed to ensure that needed items are
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obtained in a timely manner and at a reasonable cost. A purchasing department
is especially necessary in a manufacturing business, where large amounts of raw
materials and components must be obtained on a recurring basis. The
purchasing department's primary goals are as follows:
 To locate suppliers that can provide goods and services in accordance

with the buyer's requirements.
 To buy items that meet the quality specifications of the buyer.
 To create a stream of deliveries into the buyer's premises that minimize
the raw materials inventory investment while still ensuring that goods are
available as needed.
 To minimize the amount of cash invested in inventory.
Common purchasing activities are as follows:

 Receive and verify purchase requisitions from around the company.
 Search for qualified suppliers that can fulfill the buyer's needs.
 Prepare and issue request for proposal (RFP) documents to qualified
suppliers.
 Evaluate supplier responses to RFPs, select a winner, and negotiate a
contract.
 Issue purchase orders to suppliers that authorize purchases. A master
purchase order may be issued when there are a number of deliveries
contemplated under a purchasing arrangement.
 Administer contracts that have a longer duration.
 Review open purchase orders to see if any should be closed.
There is a tendency for the purchasing function to be bogged down in paperwork,

which is related to the excessive use of bidding procedures and the issuance of
purchase orders. The function can be streamlined by replacing bidding with sole
source arrangements for most purchases. Also, lower-cost purchases are now
made with procurement cards, thereby avoiding the use of purchase orders.
The purchasing department may operate a freestanding purchasing software

package, though the system is more effective if integrated into the software of the
receiving and accounts payable functions. (accounting tools, 2021)
8.3 Distribution
The word "distribution" has several meanings in the financial world, most of them
pertaining to the payment of assets from a fund, account, or individual security to
an investor or beneficiary.
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Retirement account distributions are among the most common and are required
after the account holder reaches a certain age. A distribution also refers to a
company's or a mutual fund's payment of stock, cash, and other payouts to its
shareholders.
KEY TAKEAWAYS
 A distribution generally refers to the disbursement of assets from a fund,
account, or individual security to an investor.
 Mutual fund distributions consist of net capital gains made from the
profitable sale of portfolio assets, along with dividend income and interest
earned by those assets.
 With securities, like stocks or bonds, a distribution is a payment of interest,
principal, or dividend by the issuer of the security to investors.
 Tax-advantaged retirement accounts carry required minimum distributions
—mandatory withdrawals after the account holder reaches a certain age.
 A lump-sum distribution is a cash disbursement that is paid out all at once,
as opposed to being paid out in steady installments.
Understanding Distributions
In finance, a distribution can mean many things. However, the term is used most
commonly to describe the following situations:
1. When a mutual fund distributes capital gains, dividend, or interest income

to fund owners
2. When a publically traded company distributes interest or returns capital to
shareholders
3. When a retirement account owner takes distributions in the form of taxable
income
Regardless of the situation, distributions can generally be regarded as "cash"

that goes straight into your pocket. (Chen, 2021)
8.4 Measures Of Supply-Chain Performance

The average Supply Chain management professional measures their Supply
Chain by reviewing cost reduction. Is cost reduction all that there is in measuring
Supply Chain performance? Sure, supply chain cost reduction is important in
reducing the cost of goods sold (COGS) and increasing profit, but there are other
measurements that should not be forgotten.
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3 Key Metrics for Measuring Supply Chain Performance Beyond Cost
Reduction
If cost reduction is not the only thing to measuring supply chain performance, that
begs the question: “Maybe we should be measuring other Supply Chain
Management activities and what would they be?”
1. Inventory measurement is critical and it is money after all in that it took a

capital expense to procure. The goal is to keep inventory levels at a
minimum to meet customer needs. A pull system is better than a push
system. Review Inventory turns and Return on Assets.
2. What about measuring working capital in the Supply Chain? The handful
of companies in the top quartile of working capital performance had
working capital expenditures as a percentage of overall revenues of
between 6% and 10%. In comparison, the poorest-performing companies
in the lowest quartile had a range of working capital between 23% and
39% as a percentage of revenues.measuring supply chain performance
working capital
3. Isn’t time important? Shouldn’t time, both international and domestic, be

measured? Absolutely time is a critical component of measuring supply
chain performance. What kinds of “time” measurements exist?
 Promise time,
 lead time,
 cycle time,
 transit time,
 delivery time,
 unloading time,
 processing time,
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 queue time,
 quality assurance time,
 processing time,
 turnaround time,
 receiving time,
 and shipping time to the customer, (and I bet you could think of more
“times” to measure!).
For clarity, in measuring supply chain performance, we should be focusing on:

inventory, working capital, and time.
Cost reduction is still very important. We just can’t forget cost reduction. It is the
main measurement benchmark in measuring supply chain performance, isn’t it?
Transportation is measured just as a cost rather than what it does for the rest of
the organization. Again, not saying cost reduction is an indicator of poorly
measuring supply chain performance, but it’s not the only thing to measure when
considering transportation. Other areas to consider measuring as it relates to
transportation:
 Managing inventory
 Ensuring that lost sales are minimized
 The supply chain is efficient by transit time
We still focus on costs. We are all in business to be successful and profitable,

aren’t we?
We should not forget that non-cost-based measurements could prove to be
beneficial to Supply Chain professionals. (Globaltranz, 2016)
Quiz:
1. Define and elaborate what is supply chain management;

2. List down the supply chain management processes
3. What is distribution and purchasing?
Assignment:
1. Justify your answer, why should we focus on inventory, working capital, and
time in measuring supply chain performance
References:
78
Web Sources
(2019, April 10). Retrieved from businesstechhashmicro:

https://www.hashmicro.com/blog/supply-chain-management-overview/
(2021, April 11). Retrieved from accounting tools:

https://www.accountingtools.com/articles/what-is-purchasing.html
Chen, J. (2021, May 7). Retrieved from Investopedia:

https://www.investopedia.com/terms/d/distribution.asp
(2016, April 25). Retrieved from Globaltranz:

https://www.globaltranz.com/measuring-supply-chain-performance/
LESSON 9
FORECASTING
Overview:
Forecasting is a technique that uses historical data as inputs to
make informed estimates that are predictive in determining the direction of future
trends. Businesses utilize forecasting to determine how to allocate their budgets
or plan for anticipated expenses for an upcoming period of time. This is typically
based on the projected demand for the goods and services offered.
Learning Outcomes:
1. Define what is forecasting;
2. Explain what is judgemental forecasting method ;
3. Differentiate casual forecasting and linear regression; and
4. Draw table of TSF model and write down the pros and cons.
Materials Needed:
Duration: 6 hours
Learning Content:
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9.1 Demand Characteristics
Demand characteristics are any aspect of an experiment that may reveal the
hypothesis being tested or that may cue participants as to what behaviors are
expected. Cues that may reveal the true purpose of an experiment can be
embedded in information conveyed in the solicitation of participants, instructions
given to participants, the tone of voice of the experimenter, gestures used by the
experimenter, feedback given to participants (e.g., feedback about performance
or personality characteristics), the laboratory setting, the design of the study, or
rumors spread by others who have participated in the study.
The possibility that demand characteristics are present within a study is
problematic. If participants guess what the hypothesis is, they might not act
naturally, causing the results of the experiment to be inaccurate. The presence of
demand characteristics could even lead to the good subject effect, where
participants are overly cooperative and behave in such a way that confirms the
hypothesis of a study. Put another way, if an experiment suffers from demand
characteristics, then its findings are considered neither valid nor meaningful.
Demand characteristics can ruin an experiment.
Judgemental Forecasting Method

Forecasting is a significant tool for many different sectors as it makes predictions
on the future by looking at historical data, present data and the analysing of
trends. However, some business forecasting is not done at a good level, as some
business people confuse it with goals and planning. Forecasting, Goals and
Planning, these three differ significantly, Forecasting is trying to calculate the
future a specific as possible, by using historical data, present data and the
analysing of trend, Goals for business is that the business would like to happen
for them in the near future.
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Goals are usually done with lacking any planning or forecasting, as the business
looks at their competitors and they either want to match them or exceed them in
the market. Planning is looking at the forecasting and goals and deciding the best
action that will make the business forecasting match their goals. As the business
world is moving more into analysing data, forecasting is and will be a vital part of
decision-making for the management team, as the forecasting can help with
short term, medium term and long term forecasting.
When a business has a lack of past data or the business is launching a new
product, the business can still use forecasting, and they will use
Judgement forecasting.
Judgement forecasting is the use of opinion, intuitive judgment and subjective

probability estimates. Judgment forecasting has few methods that can be used to
get the best statistical analysis and there are
Statistical surveys, Scenario building, Delphi methods, Technology forecasting
and forecast by analogy.
CAUSAL FORECASTING WITH LINEAR REGRESSION
Causal Forecasting
In some cases, the variable to be forecasted has a rather direct relationship with
one or more other variables whose values will be known at the time of the
forecast. If so, it would make sense to base the forecast on this relationship. This
kind of approach is called causal forecasting.
Causal forecasting obtains a forecast of the quantity of interest (the dependent

variable) by relating it directly to one or more other quantities
(the independent variables) that drive the quantity of interest.
Table 27.2 shows some examples of the kinds of situations where causal
forecasting sometimes is used. In each of the first three cases, the indicated
dependent variable can be expected to go up or down rather directly with the
independent variable(s) listed in the rightmost column. The last case also applies
when some quantity of interest (e.g., sales of a product) tends to follow a steady
trend upward (or downward) with the passage of time (the independent variable
that drives the quantity of interest).
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Linear Regression
We will focus on the type of causal forecasting where the mathematical
relationship between the dependent variable and the independent variable(s) is
assumed to be a linear one (plus some random fluctuations). The analysis in this
case is referred to as linear regression.
To illustrate the linear regression approach, suppose that a publisher of

textbooks is concerned about the initial press run for her books. She sells books
both through bookstores and through mail orders. This latter method uses an
extensive advertising campaign on line, as well as through publishing media and
direct mail. The advertising campaign is conducted prior to the publication of the
book. The sales manager has noted that there is a rather interesting linear
relationship between the number of mail orders and the number sold through
bookstores during the first year. He suggests that this relationship be exploited to
determine the initial press run for subsequent books.
Thus, if the number of mail order sales for a book is denoted by X and the
number of bookstore sales by Y, then the random variables X and Y exhibit
a degree of association. However there is no functional relationship between
these two random variables; i.e., given the number of mail order sales, one does
not expect to determine exactly the number of bookstore sales. For any given
number of mail order sales, there is a range of possible bookstore sales, and vice
versa.
What, then, is meant by the statement, “The sales manager has noted that there
is a rather interesting linear relationship between the number of mail orders and
the number sold through bookstores during the first year”? Such a statement
implies that the expected value of the number of bookstore sales is linear with
respect to the number of mail order sales, i.e.,
E[Y½X = x] = A + Bx.
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Thus, if the number of mail order sales is x for many different books, the average
number of corresponding bookstore sales would tend to be
approximately A + Bx. This relationship between X and Y is referred to as
a degree of association model.
As already suggested in Table 27.2, other examples of this degree of association

model can easily be found. A college admissions officer may be interested in the
relationship between a student’s performance on the college entrance
examination and subsequent performance in college. An engineer may be
interested in the relationship between tensile strength and hardness of a
material. An economist may wish to predict a measure of in- flation as a function
of the cost of living index, and so on.
The degree of association model is not the only model of interest. In some cases,
there exists a functional relationship between two variables that may be linked
linearly. In a forecasting context, one of the two variables is time, while the
other is the variable of interest. In Sec. 27.6, such an example was mentioned in
the context of the generating process of the time series being represented by a
linear trend superimposed with random fluctuations, i.e.,
Xt = A + Bt + et,
where A is a constant, B is the slope, and et is the random error, assumed to

have expected value equal to zero and constant variance. (The symbol Xt can
also be read as X given t or as X½t.) It follows that
E(Xt) = A + Bt.
Note that both the degree of association model and the exact functional
relationship model lead to the same linear relationship, and their subsequent
treatment is almost iden- tical. Hence, the publishing example will be explored
further to illustrate how to treat both kinds of models, although the special
structure of the model
E(Xt) = A + Bt,
with t taking on integer values starting with 1, leads to certain simplified

expressions. In the standard notation of regression analysis, X represents
the independent variable and Y represents the dependent variable of interest.
Consequently, the notational expression for this special time series model now
becomes
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Yt = A + Bt + et.
(engineering bachelors degree, 2015)
9.2 Time Series Forecasting

Time Series Forecasting is an important area of Machine Learning that is often
Neglected. Time Series Forecasting uses different Technologies like Machine
learning, Artificial neural networks, Support vector machines, Fuzzy logic,
Gaussian processes, Hidden Markov models
What is Time Series?

A time series is a sequence of measurements done over time, usually obtained
at equally spaced intervals, be it daily, monthly, quarterly or yearly. Time series
analysis comprises methods for analyzing time series data in order to extract
meaningful statistics and other characteristics of the data. Time series
forecasting is the use of a model to predict future values based on previously
observed values.
In other words, a time series is a sequence of data points being recorded at
specific times.
Some of the examples of time series may be:
 Daily air temperature or monthly precipitation in Bangalore, India

 Annual flow volume of the River Ganga at Patna
 Annual Indian population data
 Daily closing stock prices
 Weekly interest rates
Time Series Analysis Techniques:

Time Series can be defined as an ordered sequence of values of a variable at
equally spaced time intervals. The motivation to study time series models is
twofold:
 Obtain an understanding of the underlying forces and structure that

produced the observed data
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 Fit a model and proceed to forecasting, monitoring or even feedback and
feedforward control
Time Series Analysis can be divided into two main categories depending on the
type of the model that can be fitted. The two categories are:
 Kinetic Model: The data here is fitted as xt= f(t). The measurements or
observations are seen as a function of time.
 Dynamic Model: The data here is fitted as xt= f(xt-1 , xt-2 , xt-3 … ).
Time Series Forecasting Methods:

Time series forecasting methods produce forecasts based solely on historical
values and they are widely used in business situations where forecasts of a year
or less are required. These methods used are particularly suited to Sales,
Marketing, Finance, Production planning etc. and they have the advantage of
relative simplicity. Time series forecasting is a technique for the prediction of
events through a sequence of time.
The technique is used across many fields of study, from geology to economics.
The techniques predict future events by analyzing the trends of the past, on the
assumption that the future trends will hold similar to historical trends. Data is
organized around relatively deterministic timestamps, and therefore, compared to
random samples, may contain additional information that is tried to extract.
 Time series methods are better suited for short-term forecasts (i.e., less
than a year).
 Time series forecasting relies on sufficient past data being available and
that the data is of a high quality and truly representative.
 Time series methods are best suited to relatively stable situations. Where
substantial fluctuations are common and underlying conditions are subject
to extreme change, then time series methods may give relatively poor
results.
Examples may include:
 Forecasting the potato yield in tons by state each year

 Forecasting unemployment for a state each quarter
 Forecasting the birth rate at all hospitals in a city each year
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The plot below depicts the food, beer and wine sales in the U.S. for the year
2016 till 2020.
Basic Steps of Time Series Forecasting:

A Time Series Forecasting task usually involves five basic steps.
Step 1: Problem definition.
Step 2: Gathering information.
Step 3: Preliminary (exploratory) analysis.
Step 4: Choosing and fitting models.
Step 5: Using and evaluating a forecasting model.
There are many statistical techniques available for time series forecast however
we have found few effectives ones which are listed below:
 Simple Moving Average (SMA)

 Exponential Smoothing (SES)
 Autoregressive Integration Moving Average (ARIMA)
 Neural Network (NN)
 Croston
Some of the other Time-series forecasting methods are:
Trend Projection: This method used the underlying long-term trend of time
series of data to forecast its future values.
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Trend and Seasonal Components Method: This method uses seasonal
component of a time series in addition to the trend component.
Causal Method: This method uses the cause-and-effect relationship between

the variable whose future values are being forecasted and other related variables
or factors. The widely known causal method is called regression analysis, a
statistical technique used to develop a mathematical model showing how a set of
variables is related. This mathematical relationship can be used to generate
forecasts. There are more complex time-series techniques as well, such as
ARIMA and Box-Jenkins models.
In many modern applications, time series forecasting uses computer

technologies, including:
 Machine learning
 Artificial neural networks
 Support vector machines
 Fuzzy logic
 Gaussian processes
 Hidden Markov models
Concerns of Time Series Forecasting:

How much data is available and how much data you are able to gather? More
data is often more helpful, offering greater opportunity for exploratory data
analysis.
What is the time horizon of predictions that is required? Shorter time horizons are
often easier to predict with higher confidence.
Can forecasts be updated frequently over time? Updating forecasts results in

more accurate predictions.
Time series data often requires pre and post processing including cleaning,
scaling, and even transformation.
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Models used for Time series Forecasting:
Applications of Time Series Forecasting:

Time series Forecasting models are used in :
 Finance to forecast stock’s performance

 Finance to forecast interest rate
 It is used in forecasting weather
 It is used in Budget Analysis
 It is used in Military planning
 It is used in Workload projections (Learntek, 2018)
Components of Time Series

Time series analysis provides a body of techniques to better understand a
dataset. Perhaps the most useful of these is the decomposition of a time series
into 4 constituent parts:
 Level. The baseline value for the series if it were a straight line.
 Trend. The optional and often linear increasing or decreasing behavior of
the series over time.
 Seasonality. The optional repeating patterns or cycles of behavior over
time.
 Noise. The optional variability in the observations that cannot be explained
by the model.
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All time series have a level, most have noise, and the trend and seasonality are
optional.
Examples of Time Series Forecasting

There is almost an endless supply of time series forecasting problems.
Below are 10 examples from a range of industries to make the notions of time
series analysis and forecasting more concrete.
 Forecasting the corn yield in tons by state each year.
 Forecasting whether an EEG trace in seconds indicates a patient is having
a seizure or not.
 Forecasting the closing price of a stock each day.
 Forecasting the birth rate at all hospitals in a city each year.
 Forecasting product sales in units sold each day for a store.
 Forecasting the number of passengers through a train station each day.
 Forecasting unemployment for a state each quarter.
 Forecasting utilization demand on a server each hour.
 Forecasting the size of the rabbit population in a state each breeding
season.
 Forecasting the average price of gasoline in a city each day.
The main features of many time series are trends and seasonal variations …
another important feature of most time series is that observations close together
in time tend to be correlated (serially dependent)
Quiz:
1. Define and elaborate what is forecasting

2. Explain briefly what is judgemental forecasting method
3. Whats the difference between casual forecasting and linear regression
Assignment:
1. Draw a table of Time Series Forecasting model and write down their pros and
cons.
References:
Web Sources
89
(2015, December 2). Retrieved from engineering bachelors degree:
http://www.engineering-bachelors-degree.com/business-management/uncategori
zed/forecastingcausal-forecasting-with-linear-regression/
(2018, November 17). Retrieved from Learntek:

https://www.learntek.org/blog/time-series-forecasting/
LESSON 10
AGGREGATE PLANNING
Overview:
An organization can finalize its business plans on the
recommendation of demand forecast. Once business plans are ready, an
organization can do backward working from the final sales unit to raw materials
required. Thus annual and quarterly plans are broken down into labor, raw
material, working capital, etc. requirements over a medium-range period (6
months to 18 months). This process of working out production requirements for a
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medium range is called aggregate planning. Aggregate planning is a planning
method in the production process which is also considered a marketing activity
used to determine the required resource capacity to meet expected demand.
Learning Outcomes:
1. Define aggregate planning;
2. Explain the 3 aggregate planning strategies; and
3. Discuss planning process.
Materials Needed:
Duration: 6 hours
Learning Content:
The aggregate planning is done in advance of 6 – 18 months and includes a

combination of sub-contracting, sourcing, outsourcing, employment, labor
overtime, amount of inventory and planned output to match demand and supply
cost-effectively.
Aggregate planning is critical to an organization which wants to optimize its

operational activity because it helps in balancing short term production plans and
long term strategic plans.
Factors Affecting Aggregate Planning

Aggregate planning is an operational activity critical to the organization as it looks
to balance long-term strategic planning with short term production success.
Following factors are critical before an aggregate planning process can actually
start;
 A complete information is required about available production facility and
raw materials.
 A solid demand forecast covering the medium-range period
 Financial planning surrounding the production cost which includes raw
material, labor, inventory planning, etc.
 Organization policy around labor management, quality management, etc.
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For aggregate planning to be a success, following inputs are required;
 An aggregate demand forecast for the relevant period
 Evaluation of all the available means to manage capacity planning like
sub-contracting, outsourcing, etc.
 Existing operational status of workforce (number, skill set, etc.), inventory
level and production efficiency
Aggregate planning will ensure that organization can plan for workforce level,
inventory level and production rate in line with its strategic goal and objective.
Aggregate planning as an Operational Tool

Aggregate planning helps achieve balance between operation goal, financial goal
and overall strategic objective of the organization. It serves as a platform to
manage capacity and demand planning.
In a scenario where demand is not matching the capacity, an organization can try
to balance both by pricing, promotion, order management and new demand
creation.
In scenario where capacity is not matching demand, an organization can try to

balance the both by various alternatives such as.
 Laying off/hiring excess/inadequate excess/inadequate excess/inadequate
workforce until demand decrease/increase.
 Including overtime as part of scheduling there by creating additional
capacity.
 Hiring a temporary workforce for a fix period or outsourcing activity to a
sub-contrator.
10.1 Managerial importance of aggregate plans

Aggregate planning plays an important part in achieving long-term objectives of
the organization. Aggregate planning helps in:
 Achieving financial goals by reducing overall variable cost and improving
the bottom line
 Maximum utilization of the available production facility
92
 Provide customer delight by matching demand and reducing wait time for
customers
 Reduce investment in inventory stocking
 Able to meet scheduling goals there by creating a happy and satisfied
work force
Aggregate Planning Strategies

There are three types of aggregate planning strategies available for organization
to choose from. They are as follows.
1. Level Strategy
As the name suggests, level strategy looks to maintain a steady production rate
and workforce level. In this strategy, organization requires a robust forecast
demand as to increase or decrease production in anticipation of lower or higher
customer demand. Advantage of level strategy is steady workforce.
Disadvantage of level strategy is high inventory and increase back logs.
2. Chase Strategy
As the name suggests, chase strategy looks to dynamically match demand with
production. Advantage of chase strategy is lower inventory levels and back logs.
Disadvantage is lower productivity, quality and depressed work force.
3. Hybrid Strategy
As the name suggests, hybrid strategy looks to balance between level strategy
and chase strategy. (Management Study Guide, n.d.)
10.2 Planning Process

7 Vital Steps of Planning
Meaning of Planning
Planning is ascertaining prior to what to do and how to do. It is one of the primary
managerial duties. Before doing something, the manager must form an opinion
on how to work on a specific job. Hence, planning is firmly correlated with
discovery and creativity. But the manager would first have to set goals. Planning
is an essential step what managers at all levels take. It needs holding on to the
decisions since it includes selecting a choice from alternative ways of
performance.
Planning Process
93
As planning is an activity, there are certain reasonable measures for every
manager to follow:
(1) Setting Objectives

This is the primary step in the process of planning which specifies the objective
of an organisation, i.e. what an organisation wants to achieve.
The planning process begins with the setting of objectives.
 Objectives are end results which the management wants to achieve by its
operations.
 Objectives are specific and are measurable in terms of units.
 Objectives are set for the organisation as a whole for all departments, and
then departments set their own objectives within the framework of
organisational objectives.
Example:
A mobile phone company sets the objective to sell 2,00,000 units next year,
which is double the current sales.
(2) Developing Planning Premises

 Planning is essentially focused on the future, and there are certain events
which are expected to affect the policy formation.
 Such events are external in nature and affect the planning adversely if
ignored.
 Their understanding and fair assessment are necessary for effective
planning.
 Such events are the assumptions on the basis of which plans are drawn
and are known as planning premises.
Example:
The mobile phone company has set the objective of 2,00,000 units sale on the
basis of forecast done on the premises of favourable Government policy towards
digitisation of transactions.
(3) Identifying Alternative Courses of Action

 Once objectives are set, assumptions are made.
 Then the next step is to act upon them.
 There may be many ways to act and achieve objectives.
 All the alternative courses of action should be identified.
Example:
The Mobile company has many alternatives like reducing price, increasing
advertising and promotion, after sale service etc.,
(4) Evaluating Alternative Course of Action
94
 In this step, the positive and negative aspects of each alternative need to
be evaluated in the light of objectives to be achieved.
 Every alternative is evaluated in terms of lower cost, lower risks, and
higher returns, within the planning premises and within the availability of
capital.
Example:
The mobile phone company will evaluate all the alternatives and check its pros
and cons.
(5) Selecting One Best Alternative

 The best plan, which is the most profitable plan and with minimum
negative effects, is adopted and implemented.
 In such cases, the manager’s experience and judgement play an
important role in selecting the best alternative.
Example:
Mobile phone company selects moreX` T.V advertisements and online marketing
with great after sales service.
(6) Implementing the Plan

 This is the step where other managerial functions come into the picture.
 This step is concerned with “DOING WHAT IS REQUIRED”
 In this step, managers communicate the plan to the employees clearly to
convert the plans into action.
 This step involves allocating the resources, organising for labour and
purchase of machinery.
Example:
Mobile phone company hires salesman on a large scale, creates T.V
advertisement, and starts online marketing activities and set up service
workshops.
(7) Follow Up Action

 Monitoring the plan constantly and taking feedback at regular intervals is
called follow-up.
 Monitoring of plans is very important to ensure that the plans are being
implemented according to the schedule.
 Regular checks and comparisons of the results with set standards are
done to ensure that objectives are achieved.
Example:
A proper feedback mechanism was developed by the mobile phone company
throughout its branches so that the actual customer response, revenue
collection, employee response, etc. could be known.
95
10.3 Aggregate planning with mathematical methods
The following are some of the better known mathematical techniques that can be
used in more complex aggregate planning applications.
LINEAR PROGRAMMING.
Linear programming is an optimization technique that allows the user to find a

maximum profit or revenue or a minimum cost based on the availability of limited
resources and certain limitations known as constraints. A special type of linear
programming known as the Transportation Model can be used to obtain
aggregate plans that would allow balanced capacity and demand and the
minimization of costs. However, few real-world aggregate planning decisions are
compatible with the linear assumptions of linear programming. Supply Chain
Management: Strategy, Planning and Operation, by Sunil Chopra and Peter
Meindl, provides an excellent example of the use of linear programming in
aggregate planning.
MIXED-INTEGER PROGRAMMING.
For aggregate plans that are prepared on a product family basis, where the plan
is essentially the summation of the plans for individual product lines, mixed-
integer programming may prove to be useful. Mixed-integer programming can
provide a method for determining the number of units to be produced in each
product family.
LINEAR DECISION RULE.
Linear decision rule is another optimizing technique. It seeks to minimize total

production costs (labor, overtime, hiring/lay off, inventory carrying cost) using a
set of cost-approximating functions (three of which are quadratic) to obtain a
single quadratic equation. Then, by using calculus, two linear equations can be
derived from the quadratic equation, one to be used to plan the output for each
period and the other for planning the workforce for each period.
MANAGEMENT COEFFICIENTS MODEL.
The management coefficients model, formulated by E.H. Bowman, is based on

the suggestion that the production rate for
96
Figure 2
any period would be set by this general decision rule:
P t = aW t-1 − bI t -1 + cF t+1 + K, where
P t = the production rate set for period t
W t - 1 = the workforce in the previous period
I t-1 = the ending inventory for the previous period
F t+1 = the forecast of demand for the next period
a, b, c, and K are constants
It then uses regression analysis to estimate the values of a, b, c, and K. The end
result is a decision rule based on past managerial behavior without any explicit
cost functions, the assumption being that managers know what is important,
even if they cannot readily state explicit costs. Essentially, this method
supplements the application of experienced judgment.
SEARCH DECISION RULE.
The search decision rule methodology overcomes some of the limitations of the
linear cost assumptions of linear programming. The search decision rule allows
the user to state cost data inputs in very general terms. It requires that a
computer program be constructed that will unambiguously evaluate any
production plan's cost. It then searches among alternative plans for the one with
the minimum cost. However, unlike linear programming, there is no assurance of
optimality.
SIMULATION.
A number of simulation models can be used for aggregate planning. By

developing an aggregate plan within the environment of a simulation model, it
97
can be tested under a variety of conditions to find acceptable plans for
consideration. These models can also be incorporated into a decision support
system, which can aid in planning and evaluating alternative control policies.
These models can integrate the multiple conflicting objectives inherent in
manufacturing strategy by using different quantitative measures of productivity,
customer service, and flexibility.
FUNCTIONAL OBJECTIVE SEARCH APPROACH.
The functional objective search (FOS) system is a computerized aggregate

planning system that incorporates a broad range of actual planning conditions. It
is capable of realistic, low-cost operating schedules that provide options for
attaining different planning goals. The system works by comparing the planning
load with available capacity. After management has chosen its desired actions
and associated planning objectives for specific load conditions, the system
weights each planning goal to reflect the functional emphasis behind its
achievement at a certain load condition. The computer then uses a computer
search to output a plan that minimizes costs and meets delivery deadlines.
(Reference for business, n.d.)
Quiz:
1. Define and elaborate what is aggregate planning

2. What are the 3 aggregate planning strategies? Explain each of it.
Assignment:
1. Discuss briefly the planning process.
References:
Web Sources
(n.d.). Retrieved from Reference for business:

https://www.referenceforbusiness.com/management/A-Bud/Aggregate-
Planning.html
(n.d.). Retrieved from Management Study Guide:

https://www.managementstudyguide.com/aggregate-planning.htm
98

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LESSON 1

FUNCTIONS WITHIN BUSINESS ORGANIZATIONS

Five Functions of business Organization

1.1 Features of Production System

Production is an organized activity, so every production system has an objective.

Classification of Production System

Classification of production systems

JOB SHOP PRODUCTION

A job shop comprises of general purpose machines arranged into different

1.2 The Operations Manager and The Management Process

A Framework for Managing Operations

General model for managing operations

Aspects of customer service

Generally an organization will aim reliably and consistently to achieve certain

Operations management is also concerned with the achievement of both

The following table summarizes the twin objectives of operations management.

The twin objectives of operations management

(Wisdom Jobs, n.d.)

1.3 The Historical Evolution of POM

Historical summary of operations management

Production management becomes the acceptable term from 1930s to 1950s.

1. Based on your understanding, discuss the processes in management.

2. Explain each function of business organization.

(n.d.). Retrieved from Wisdom Jobs:

Quality is what quality does.

1. Fit for Purpose

Quality Definition: Fit for Purpose

Quality Definition: Conformance to Requirements

Quality Definition: Proportional to Cost

Quality Definition: Quality is Price

Manufacturers use standards and continual process improvement methodologies

Quality Definition: Quality is a Standard

6. Quality is Value for Performance

Quality Definition: Value

Quality Definition: Experience

Experiences are measured by establishing relationships with customers to elicit

2.1 Modern Quality Management

Figure1: Changes in management concepts corrections to be made before

2.2 Total Quality Management

Total Quality Management - Meaning and Important Concepts

Quality refers to a parameter which decides the superiority or inferiority of

Total Quality management is defined as a continuous effort by the

Total quality management ensures that every single employee is working

Total Quality management can be divided into four categories:

Also referred to as PDCA cycle.

 The International Organization for Standardization (ISO) was founded in

 In addition to producing standards, ISO also publishes technical reports,

How do businesses become ISO certified?

The first step in becoming certified is determining whether certification is worth

1. Regulatory requirements. Some businesses and products require

 understand the ISO standard;

1. List down the 7 definitions of quality

1. Explain why do business should have an ISO certification? What is the

importance of having ISO certication?

Juneja, P. (n.d.). Retrieved from Management Study Guide:

Loshin, P. (2021, October). Retrieved from Tech target:

Mar, A. (2013, March 14). Retrieved from Simplicable:

The delivery of those processes is in constant evaluation and change, so

Some see continuous improvement as a meta-process, such as W.

The Continuous Improvement Process (CIP) is an ongoing effort to improve

Definition: Continuous improvement is the act of continually looking to improve

Why Use a Continuous Improvement Process (CIP)