Entrepreneurship

Chapter 5.3

Operation / Production
Plan

McGraw-Hill/Irwin – 10th Edition

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 OPERATION/PRODUCTION PLAN

 Operation/Production plan is the process of converting the

input into output through a conversion process. The inputs
are in the form of land, labour, raw material, machinery,
capital and information. Transformation takes place through
machinery in manufacturing unit and through employees
skills in service sector.

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Dimension of production plan

Monitoring Budgeting
Plant Plant Inventory
stock turn & QMS TQM production
location layout mgmt
coverage plan

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 DIMENSION TO BE COVERED WHILE DRAFTING PRODUCTION
OR OPERATION PLAN

 Plant location : refers to geographic location were the

infrastructure of company will be built and operations of the
company will take place. Following aspects should be taken
care of before choosing plant location :
a. Vicinity to raw materials
b. Availability of raw materials
c. Availability of labour
d. Proximity to market
e. Climate condition
f. Cost of location
g. Tax, subsidies and loans
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may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 1-4
DIMENSION TO BE COVERED WHILE DRAFTING PRODUCTION OR
OPERATION PLAN

 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. 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 are provision for emergency exit
f. There is flexibility to introduce changes in future

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DIMENSION TO BE COVERED WHILE DRAFTING PRODUCTION OR
OPERATION PLAN

 Inventory management : inventory management refers to

maintaining inventory in form of raw materials more than
production requirement to meet future un predicted obligations.
 Monitoring stock turn and coverage : monitoring individual stock
items will identify fast and slow movers depending on the industry.
 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.

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may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 1-6
DIMENSION TO BE COVERED WHILE DRAFTING PRODUCTION OR
OPERATION PLAN

 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.
 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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may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 1-7