Part Three

Deliver – Planning and controlling operations

Chapter 10
The nature of planning and control
Key questions What is planning and control?

What is the difference between planning and control?

How do supply and demand affect planning and control?

What are the activities of planning and control?

 Planning and control
Operations principle: Planning and control involves scheduling, co-ordination and organising
operations activities.

Planning is a formalisation of what is intended to happen at some time in the future.

A plan does not guarantee that an event will actually happen, it is a statement of intention.

Although plans are based on expectations, during their implementation things do not
always happen as expected.

Control is the process of coping with any changes that affect the plan. It may also mean
that an ‘intervention’ will need to be made in the operation to bring it back ‘on track’.
 Planning and control (continued)

Planning is deciding What activities should take place in the

operation?
When they should take place?

What resources should be allocated to them?

Control is Understanding what is actually happening in the

operation

Deciding whether there is a significant deviation from

what should be happening

If there is deviation, changing resources in order to

affect the operation’s activities
Forecast

Forecast – a statement about the future value of a variable of interest

• We make forecasts about such things as weather, demand, and resource availability
• Forecasts are an important element in making informed decisions
Two Important Aspects of Forecasts

Expected level of demand

• The level of demand may be a function of some structural variation such as trend or seasonal variation

Accuracy
• Related to the potential size of forecast error
Features Common to All Forecasts

1. Techniques assume some underlying causal system that existed in the past
will persist into the future
2. Forecasts are not perfect
3. Forecasts for groups of items are more accurate than those for individual
items
4. Forecast accuracy decreases as the forecasting horizon increases
Elements of a Good Forecast

The forecast

• should be timely
• should be accurate
• should be reliable
• should be expressed in meaningful units
• should be in writing
• technique should be simple to understand and use
• should be cost effective
Steps in the Forecasting Process

1. Determine the purpose of the forecast

2. Establish a time horizon
3. Select a forecasting technique
4. Obtain, clean, and analyze appropriate data
5. Make the forecast
6. Monitor the forecast
Forecast Accuracy and Control

Forecasters want to minimize forecast errors

• It is nearly impossible to correctly forecast real-world variable values on a regular basis
• So, it is important to provide an indication of the extent to which the forecast might deviate from the value
of the variable that actually occurs
Forecast accuracy should be an important forecasting technique selection criterion
 Forecast Accuracy and Control (contd.)

Forecast errors should be monitored

• Error = Actual – Forecast
• If errors fall beyond acceptable bounds, corrective action may be necessary
Forecasting Approaches

Qualitative Forecasting
• Qualitative techniques permit the inclusion of soft information such as:
‒ Human factors
‒ Personal opinions
‒ Hunches
• These factors are difficult, or impossible, to quantify
Quantitative Forecasting
• Quantitative techniques involve either the projection of historical data or the development of associative
methods that attempt to use causal variables to make a forecast
• These techniques rely on hard data
Judgmental Forecasts

Forecasts that use subjective inputs such as opinions from consumer surveys, sales staff, managers,
executives, and experts
• Executive opinions
• Salesforce opinions
• Consumer surveys
• Delphi method
Time-Series Forecasts

Forecasts that project patterns identified in recent time-series observations

• Time-series - a time-ordered sequence of observations taken at regular time intervals
Assume that future values of the time-series can be estimated from past values of the time-series
Time-Series Behaviors

Trend
Seasonality
Cycles
Irregular variations
Random variation
Trends and Seasonality

Trend
• A long-term upward or downward movement in data
‒ Population shifts
‒ Changing income
Seasonality
• Short-term, fairly regular variations related to the calendar or time of day
• Restaurants, service call centers, and theaters all experience seasonal demand
 Planning and control (continued)
Long-term planning and control

Months/years
Uses aggregated demand forecasts
PLANNING Determines resources in aggregated form
Objectives set in largely financial terms.

Medium-term planning and control

Days/weeks/months
Time horizon

Uses partially disaggregated demand forecasts

Determines resources and contingencies
Objectives set in both financial and operations
terms.

Short-term planning and control

Uses totally disaggregated forecasts or
Hours/days

actual demand
CONTROL Makes interventions to resources to correct
deviations from plants
Ad hoc consideration of operations objectives.

Figure 10.2 The balance between planning and control activities changes in the long, medium and short term.
 Planning and control (continued)
Table 10.1 The volume–variety effect on planning and control

Customer Major
Planning Control
Volume Variety responsive- planning Robustness
horizon decisions
ness decision

Low High Slow Short Timing Detailed High

      

High Low Fast Long Volume Aggregated Low

Effect of supply and demand - dependent and independent
demand
Dependent demand, Independent demand,
e.g. input tyre store in car plant e.g. tyre-fitting service

The effect of supply and demand on planning and control

Figure 10.3 Dependent demand is derived from the demand for something else; independent demand
is more random
 Responding to demand
Lower volume
Higher variety Examples: advertising agency, construction project

Design, resource, create and deliver to order

Design Obtain resources Create Deliver Customer

P=D

Examples: website development, custom furniture production

Design, create and deliver to order

Design
Create Deliver Customer
Obtain
resources D
P

Higher volume
Lower variety

Figure 10.4 The P:D ratio of an operation indicates how long the customer has to wait for the
service or product as compared with the total time to carry out all the activities to make the service
or product available to the customer.
 Responding to demand (continued)
Lower volume
Higher variety
Examples: hair blow-dry bar, house builder with standard designs
Choose

Create and deliver to order

Obtain resources Create Deliver Customer
D
P

Examples: internet retail fulfilment, assemble to order computers (e.g. Dell)

Choose
Partially create and deliver to order
Obtain resources Create Create Deliver Customer
D
P
Higher volume
Lower variety

Figure 10.4 The P:D ratio of an operation indicates how long the customer has to wait for the
service or product as compared with the total time to carry out all the activities to make the
service or product available to the customer (continued).
 Planning and control activities

When to do How much to

things? do?

Scheduling Loading

Monitoring
Sequencing and control
Are activities going
In what order
to plan?
to do things?

Figure 10.6 Planning and control activities

Loading

• Is amount of work allocated to a work centre – Example a machine on the shop floor
is available 168 hours a week. However that does not mean that 168 hours of work
can be loaded onto that machine. (7 days x 24 hours per day)

• See figure on next slide which shows what erodes this available time.
• Weekends/holidays
• Change over from making one component to another
• Breakdowns
• Reliability data
• Waiting for parts to arrive ‘idling’
• Allowance for quality losses
• (Capacity planning dealt with in the next chapter, chapter 11).
Finite and infinite loading
• Finite
• Its possible to limit the load – possible to run appointment system for hairdresser,
doctor etc.
• Its necessary to limit the load – safety reasons only a finite number of people and
weight luggage are allowed on a aircraft
• The cost of limiting the load is not prohibitive – the cost of maintaining a finite order
book at a specialist sports car manufacturer does not adversely affect demand.
(example: Morgan has stated that they produce 850 cars per year, all assembled
by hand. The waiting list for a car is approximately six months, and has sometimes
been as long as ten years).

• Infinite
• Its not possible to limit the load – accident emergency department in a hospital
• Its not necessary to limit the load – fast food outlets are designed to flex capacity
up and down
• The cost of limiting the load is prohibitive – if a retail bank turned away customers
at the door because a set number were inside.
Sequencing

• Whether work is infinite or not, when work arrives, decisions must be taken on the
order in which the work will be tackled.

• The priorities given to work in an operation are often determined by some predefined
set of rules, some which are relatively complex.
• Physical constraints – lighter shades of paints before darker shades
• Customer priority
• Due date (DD)
• Last in first out (LIFO)
• First in first out (FIFO)
• Longest operation time (LOT)
• Shortest operation time (SOT)
 Sequencing
3 3 3 3 3 3 1 2 3 3 2 1 24 18

3 3 3 3 3 3 1 2 3 3 2 1 12 6

3 3 3 3 3 3 1 2 3 3 2 1 23 17

3 3 3 3 3 3 1 2 3 3 2 1 11 5

2 2 2 2 2 2 1 2 3 3 2 1 22 16

2 2 2 2 2 2 1 2 3 3 2 1 10 28 4

2 2 2 2 2 2 1 2 3 3 2 1 21 15

2 2 2 2 2 2 1 2 3 3 2 1 9 27 3

1 1 1 1 1 1 1 2 3 3 2 1 20 14

1 1 1 1 1 1 1 2 3 3 2 1 8 26 2

1 1 1 1 1 1 1 2 3 3 2 1 19 13

1 1 1 1 1 1 1 2 3 3 2 1 7 25 1

Block (conventional) method Wilma method Steffen method

Figure 10.9 The best way to sequence passengers onto an aircraft
Scheduling

• Once the sequence how work will be tacked is decided on, some organisations need
a detailed timetable showing at what time or date jobs should start and when they
should end.

• Some examples: Bus schedule – more busses are put on routes at more frequent
intervals during peak hours.

• Schedules of work are used in operations where some planning is required to ensure
that customer demand is met.
Gantt charts – simple method of scheduling

Process Week Week Week Week Week Week Week

stage 12 13 14 15 16 17 18

Initial spec Job A Job B Job C Job D Job E

Pre-coding Job W Job A Job B Job C Job D

Coding Job X Job A Job B Job C

Compat. check Job Y Job X Job A Job B

Final test Job Z Job Y Job X Job A Job B

Figure 10.10 Gantt chart showing the schedule for jobs at each process stage
Scheduling work patterns

• Dominant resource in an operation is its staff

• Make sure that sufficient number of people are working at any point in time to
provide a capacity appropriate for the level of demand at that point in time.
• Examples: call centres; postal delivery, policing, holiday couriers, retails shops and
hospitals.
• Agree time with individual staff members. It’s the most complex of scheduling
problems.
 Shift allocation

(a) On a daily basis (b) On a weekly basis

Mon Tue Wed Thu Fri Sat Sun

Number of staff 3 5 5 5 3 2 2
required
Lerato
Lerato X X X X O O X

Vusi Jo Pumla X X X X X O O

Jo Fatima X X X X O O X
Pumla Fatima Jo
Vusi O X X X X X O

Jo O X X X X X O
04:00 08:00 12:00 16:00 20:00

Shift pattern X Full day O Day off

Figure 10.13 Shift scheduling in a hotline support service

Monitoring and controlling the operation

Operation or
Input process Output

Intervention Monitor
Plans

Compare/replan

Figure 10.14 A simple model of control

Push and Pull control

• In a push system of control, activities are scheduled by means of a central system

and completed in line with central instructions, such an MRP system.

• In a pull system of control, the pace and specification of what is done are set by the
customer workstation which pulls work from the preceding workstation. The customer
acts as a trigger for movement.
The inventory consequences of push and pull

Figure 10.15 Push versus pull: the gravity analogy

Drum buffer rope

• Comes from the theory of constraints and a concept called optimised production
technology.

• Bottlenecks in the process should be the control point of the whole process. It is
called the drum because it sets the beat for the rest of the process to follow.
 The drum, buffer, rope concept

Buffer of
inventory

Activity Activity Activity Activity Activity

A B C D E

Communication rope controls prior Bottleneck

activities drum sets
the beat

Figure 10.16 The drum, buffer, rope concept

Possible essay question

1. Planning and control requires the reconciliation of supply and demand in terms
of volumes, timing and quality. There are four planning and control activities.
You are required to list and explain these four activities. Page 241.