Production Planning

and
Control
TIE 5102
ENG B SAREMA
Decision Making in OM
 Decision Making in OM
 In a bigger way, Operations Managers manage by making
decisions about all the activities of production systems.
 Operations Managers are under steady pressure to make difficult
decisions about complex activities involving :-
 Valuable human resources
 Raw materials
 Technology
 Information
 Etc
 Despite their diversity, the multitude of decisions have a common
aim of coordination and smooth operation of several components
to achieve the organisation’s objectives
Decision Making in OM
• Confronted with so much complexity, management has the
major task of formulating a general framework and
employing a methodology that simplifies the stricture of
required decisions.
Classifying POM decisions
It may be difficult, but they fall in 3 general categories
1. Strategic decisions
– About products, processes and facilities
– Are of strategic importance and have long term significance for
the organisation
2. Operating Decisions
– About planning production to meet demand
– Are necessary if the ongoing production is to satisfy market
demand and provide all stakeholder satisfaction.
3. Control decisions
– About planning and controlling operations
– Concern the day-to-day activities of workers, quality of products
and services, production and overhead costs, and maintenance
of machines
1. Strategic decisions
• Concerns operations strategies and are long term
• People come together to study the business
opportunities carefully and to arrive as a decision
that puts the organisation in the best position for
achieving its long term goals.
• Operations/ Production
• Marketing
• Finance
Examples of Strategic decisions
• Deciding whether to launch a new-product
development project
• Deciding on the design for a production process for
a new product
• Deciding how to allocate scarce raw materials,
utilities, production capacity and personnel among
new and existing business opportunities
• Deciding what new factories are needed and where
to locate them.
2. Operating Decisions

• Must resolve all the issues concerning planning

production to meet customers’ demand.
• The principal responsibility of operations is to take
the orders for products and services for customers
in such a way that there are satisfied customers at
reasonable costs.
Examples of operating decisions

• Deciding how much finished goods inventory to

carry for each product
• Deciding what products and how much of each to
include in next month’s production schedule.
• Deciding whether to increase production capacity
next month by having overtime or to subcontract
• Deciding the details of a plan for purchasing raw
materials to support next month’s production
schedule
3. Control Decisions
• Concerned with a variety of problems in operations.
• Workers do not always perform as expected
• Product quality vary
• Equipment breaks down (usually when least expected)
• Decisions are done to ensure that these do not
negatively impact on company performance and
profitability
 Examples of control decisions

• Deciding :-
• What to do about a department’s failure to meet planned
labour cost target
• Developing labour cost standards for a revised product
design that is about to go into production.
• What the new quality control acceptance criteria should be
for a product that has had a change in design
• How often to perform preventive maintenance on key
equipment
Group Discussion [20min]
• You are a new company that wants to launch a new
product in advanced technology. Discuss the major
considerations that need to be done and the actual
decisions that you will make at all the 3 levels of
decision making.