Business Enterprise Simulation

LAS 5
Prepared By: Mary Mildred P. De jesus

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OPENING PRAYER

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1. To Prepare a design an
operating plan to ensure
that the inputs and
processes required to
deliver the product or
service are identified, and
estimate the costs needed
for production.
ABM_BES12-Id-j-c7

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The information below
will help you be a
successful participant in
this course.
How is the course
designed?
 Lectures
 Video Lectures
 Worksheets
 Activity Game
 Exercises
 Quizzes
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CONTENT/ELEMENTS OF
BUSINESS PLAN
  Is the process of
converting the input into
output through a
conversion process. The
inputs are in the form of
PRODUCTION land, labor, raw
PLAN material, machinery,
capital and information.
 Transformation takes
place through machinery
in manufacturing unit
and through employee’s
skills in service sector.
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 Dim e nsio n o f p ro d uc tio n p la n

d. g.
Mo nito ring e . Qua lity f. To ta l Bud g e ting
a . Pla nt b . Pla nt c . Inve nto ry
Lo c a tio n La yo ut Ma na g e m e nt
Sto c k turn Ma na g e m e nt Qua lity
Pro d uc tio n
a nd Syste m Ma na g e m e nt
Pla n
c o ve ra g e

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  Refers to
geographic location
were the
a. PLANT infrastructure of
company will be
LOCATION built and
operations of the
company will take
place.
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 Following aspects should
be taken care of before
choosing plant location:
a) Vicinity to raw
materials
a. PLANT b) Availability of raw
materials
LOCATION c) Availability of labor
d) Proximity to market
e) Climate condition
f) Cost of Location
g) Tax, subsidies and
loans
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b. PLANT LAYOUT
 Is pattern in which space
would be arranged in order
to utilize the machinery,
equipment, and manpower.
 Effective designing of plant
layout reduces unnecessary
movement of employees
and helps in effective
utilization of time and
resources in company.

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b. PLANT LAYOUT
Variables to be considered while
planning plan layout:
a. Space is utilized properly
b. Proper light and ventilation in
all the area of premises.
c. Ensure smooth flow of operation
d. Supervision can be carried out
in smooth manner
e. There is provision for emergency
exit
f. There is flexibility to introduce
changes in future
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 d. MONITORING STOCK TURN
c. INVENTORY MANAGEMENT
AND COVERAGE

Inventory  Monitoring
management refers to
maintaining individual stock
inventory in form of items will identify
raw materials more fast and slow
than production movers depending
requirement to meet on the industry.
future un-predicted
obligations.
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 e. QUALITY MANAGEMENT
SYSTEM
Quality management refers
to maintaining quality in
terms of product produced
in company.
 As customers these days
are getting conscious about
quality day by day
maintaining quality
standards in product will
help in building company
image and also build
customer loyalty towards
company.
f. TOTAL QUALITY
MANAGEMENT
Management focuses on
perceptual
enhancement through
prevention of problems
and errors.
 It requires continuous
monitoring and control
process, performance
and quality etc.
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 g. BUDGETING PRODUCTION PLAN

 Depending on the selling price

per quantity, projected cost of
production at each quantity can
be estimated.

 The amount of production is

dependent on the capacity of
production unit.
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 It can be defined as the

OPERATION process of marshalling

business input to transform

PLAN them into output in the form

of products or services. One
of the important functions in
a business organization.
It will ensure the business is
able to produce the product
or to provide the services that
the business had planned in
the marketing plan. Covers
the operational aspect of the
business
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 THE OPERATIONS PLAN COMPRISES:
A. Process Planning
B. Operations Layout
C. Production Planning
D. Material Planning
E. Machine and Equipment planning
F. Manpower planning
G. Overheads requirements
H. Location Plan
I. Business and Operations hours
J. Operations Budget
K. Implementation schedule
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 B. OPERATIONS LAYOUT
 Layout refers to the There are three types of layout:
arrangement of 1. Layout based on product- This
machine, equipment, type of layout is suitable for a
workers and other business that has product focus
facilities used in the or continuous flow production.
operations. The layout
must be design in such
a way that the
production of goods
and services can be
done smoothly and
efficiently

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 B. OPERATIONS LAYOUT
2. Layout based on
process - This layout is
suitable for a business that
produce several products
using similar processes.
This type of layout is design
based on the similarity of
processes where by
machine and equipment
that perform similar
function will be grouped
together
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 B. OPERATIONS LAYOUT
3. Layout based on
marketing - This layout
is designed with an
intention to maximized
the area available to
display goods.

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 C. PRODUCTION PLANNING
 It is important to make Ave ra g e Sa le s Fore c a st = P 25, 200
sure that the business is
Pric e pe r/ unit 15.00
able to produce output or
=
to provide services that is Numbe r of output pe r/ month P 25,200 / 15
enough to fulfill the
expected market demand
1,680.00 units
or sales. If the numbe r of working da ys pe r
 In production month is 24 da ys
planning, the business The a m ount of outp ut to b e p rod uc e d
will determine how much p e r d a y is:
output to produce for a
1,680 units / 24 d a ys
certain period of time
such as in a day, a week 70 units pe r da y
or a month.
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 D. MATERIAL PLANNING
 Material planning is done  Bills of materials - The bills of
to determine the type and materials will contain a complete list
amount of raw materials
need for the production. of materials, parts or components
Material planning involved and the amount needed to produce a
four steps: unit of product.
A. Identify and list down the
raw materials required.
B. Prepare the Bills of
Materials
C. Calculate the quantity of
raw material required.
D. Identify the suppliers of
raw materials
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 E. MACHINE & EQUIPMENT PLANNING
 "Industrial fixture"
means an item
attached to a building
or to land. It must
have a function
relative to an
industrial fixture or a
device.
 To determine if some
portion of a building
is a support facility,
the parts of the
building are
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 F. MACHINE & EQUIPMENT PLANNING
 "Industrial fixture"
means an item
attached to a building
or to land. It must
have a function
relative to an
industrial fixture or a
device.
 To determine if some
portion of a building
is a support facility,
the parts of the
building are
examined. 23
 F. MACHINE & EQUIPMENT PLANNING
Steps to determine the amount of direct labor required by
the venture:

1. Determine the planned rate of production per day for

the particular section of job
2. Determine the standard time for a worker to produce
one unit of product or to complete a particular job
3. Determine workers productive hours:
 Working hours per day – rest time or workers
idling time
4. Calculate the amount of direct labor required

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 G. LOCATION PLAN
 The entrepreneur has to make decision which premise is
the best for the business to operate.

Choice of location is important because it will affect:

• Sales revenue
• Business operation cost
• Long term investment

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 H. BUSINESS AND OPERATION HOURS
 Business hours refer to the time the business is open
to the customers.
 Operation hours refer to the hours the workers
have to work.
 For manufacturing, usually the business will
operate on 8-hours per shift. Thus, the
entrepreneur will only decide whether the
business will run for one shift or more. This will
depend upon the planning for production.

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 I. OVERHEAD REQUIREMENT
 Determine the overheads that are required in the
operations. Overheads refers to requirements other
than direct raw materials and direct labor.
Examples of overheads are indirect labor costs,
indirect material, insurance, maintenance and
utilities.

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 J. OPERATIONS BUDGET
 The business needs to estimate the budget for the
operations activities.

The operations budget can be categorized into:

• Fixed asset expenditure
• Monthly expenses
• Other expenses
 This operation budget is important because it will
be one of the inputs to prepare the financial plan.

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 J. OPERATIONS BUDGET
 Fixed Asset Expenditure -
Refers to the investment on long
term assets used in the
operations to produce the
product or services.
 Monthly Expenses - Refers to
the payment made every month
in the operations department.
 Other Expenses - These are
expenses that are made and
could not be categorized as fixed
asset expenditure or monthly
expenses
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K. IMPLEMENTATION SCHEDULE
 Implementation scheduling involves
sequencing and allotting time to all project
activities.

 Implementation scheduling involves

sequencing and allotting time to all project
activities

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 REFERENCES
• BUSINESS ENTERPRISE SIMULATION (DIWA SENIOR HIGH
SCHOOL SERIES)

• https://www.infoentrepreneurs.org/en/guides/strategic-
planning/

• Original document, Strategic planning, © Crown copyright

2009
• Source: Business Link UK (now GOV.UK/Business)

• https://www.entrepreneur.com/article/70824 The 7 Ps of
Marketing - Brian Tracy, Chairman and CEO of Brian Tracy
International, Speaker and Author May 17, 2004 TREY 31
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