WEEK 3
CHAPTER 10
10.1 - What is planning and control?
-> concerned with the activities that attempt to reconcile the demands of
the market and the ability of the operation’s resources to deliver
-> provides the systems, procedures and decisions that bring different
aspects of supply and demand together
Planning = a formalisation of what is intended to happen at some time in the
future
– Doesn’t mean it will happen but it is a statement of intention
– e.g. customers change their minds about what they want / suppliers
don’t deliver on time etc
Control = the process of coping with these types of change
– Control activities make the adjustments that allow the operation to
achieve the objectives that the plan has set, even when the assumptions
on which the plan was based do not hold true
● Long-term planning and control:
○ Operations managers make plans concerning what they intend to do,
what resources they need and what objectives they hope to achieve
○ More emphasis on planning
○ Operations managers will focus mainly on volume and financial
targets
● Medium-term planning and control:
○ Looks ahead to assess the overall demand, which the operation must
meet in a partially disaggregated manner
○ Contingencies will be put into play to allow slight deviation from
plans -> act as “reserve” resources and make planning and control
easier in the short term
● Short-term planning and control:
○ Many resources will have been set and it will be difficult to make
large changes
○ Demand will have been assessed on a disaggregated basis, with all
, ○
types of activities treated individually
○ In making short-term interventions and changes to the plan,
operations managers will try to balance the quality, speed,
dependability, flexibility and costs of their operation dynamically
Volume-variety effect on planning and control
● For a more high variety, low volume operation -> planning occurs on a
relatively short-term basis
○ The details and requirements of each job will emerge only as each
individual client demands something
○ The individual decisions taken in the planning process will concern
the timing of activities and events
○ Control decisions will be at a relatively detailed level
○ High robustness -> can get on with a different part of the job if one
part fails
● For a high volume, low variety operation -> the planning horizon can be
long and decisions are made years in advance
○ Individual planning decisions are concerned with the volume of the
, ○
output (demand can be affected by e.g. customers, weather etc)
○ Control decisions will concern aggregated measures of output,
because the product is more or less homogenous
○ Low robustness -> if one part of the operation fails, the whole job
fails
10.2 - How do supply and demand affect planning and control?
Uncertainty in supply and demand
– Supply can be unpredictable e.g. uncertain supply of inputs, planned
activities may take more than expected
– Demand can be unpredictable e.g. uncertain number of customers
– The combination of supply and demand uncertainty make planning and
control more difficult
Dependent and independent demand
● Dependent demand = when demand can be predicted with relative
certainty, because it is dependent upon some other known factors
○ Planning and control in dependent-demand situations is concerned
with how the operation should respond when demand has occurred
● Independent demand = when demand cant be predicted -> operations
need to supply future demand without knowing exactly what the demand
will be
○ Independent demand planning and control attempt to make “guesses”
for the future, put resources in place to satisfy demand and respond
quickly if actual demand does not match the forecast
Responding to demand
-> The way an operation plans and controls its processes depends on how it
responds to customer demand, which is influenced by the type of product or
service offered
● Design, resource, create and deliver to order: Customised services (e.g.
advertising agencies) start planning after a contract is secured - every
step is tailored to client needs.
● Design, create and deliver to order: Operations (e.g. website design) have
resources ready but begin work only after understanding the customer’s
specific requirements.
, ● Create and deliver to order (Make to order): Standard products (e.g.
house building) are only created once a firm order is placed, though
suppliers and materials are prearranged.
● Partially create and deliver to order (Assemble to order): Components are
produced in advance, but final assembly (e.g. Dell Computers) happens
after the customer order.
● Create to stock (Make to stock): Standardised products are produced
ahead of time, based on expected demand, and stored until ordered.
● Collect/choose from stock: Customers select and collect pre-made items
themselves (e.g. IKEA, retail stores).
P:D ratio
-> contrasts the total length of time customers have to wait between asking
for the service or product and receiving it (demand time, D) and the total
throughput time from start to finish / how long the operation takes to
CHAPTER 10
10.1 - What is planning and control?
-> concerned with the activities that attempt to reconcile the demands of
the market and the ability of the operation’s resources to deliver
-> provides the systems, procedures and decisions that bring different
aspects of supply and demand together
Planning = a formalisation of what is intended to happen at some time in the
future
– Doesn’t mean it will happen but it is a statement of intention
– e.g. customers change their minds about what they want / suppliers
don’t deliver on time etc
Control = the process of coping with these types of change
– Control activities make the adjustments that allow the operation to
achieve the objectives that the plan has set, even when the assumptions
on which the plan was based do not hold true
● Long-term planning and control:
○ Operations managers make plans concerning what they intend to do,
what resources they need and what objectives they hope to achieve
○ More emphasis on planning
○ Operations managers will focus mainly on volume and financial
targets
● Medium-term planning and control:
○ Looks ahead to assess the overall demand, which the operation must
meet in a partially disaggregated manner
○ Contingencies will be put into play to allow slight deviation from
plans -> act as “reserve” resources and make planning and control
easier in the short term
● Short-term planning and control:
○ Many resources will have been set and it will be difficult to make
large changes
○ Demand will have been assessed on a disaggregated basis, with all
, ○
types of activities treated individually
○ In making short-term interventions and changes to the plan,
operations managers will try to balance the quality, speed,
dependability, flexibility and costs of their operation dynamically
Volume-variety effect on planning and control
● For a more high variety, low volume operation -> planning occurs on a
relatively short-term basis
○ The details and requirements of each job will emerge only as each
individual client demands something
○ The individual decisions taken in the planning process will concern
the timing of activities and events
○ Control decisions will be at a relatively detailed level
○ High robustness -> can get on with a different part of the job if one
part fails
● For a high volume, low variety operation -> the planning horizon can be
long and decisions are made years in advance
○ Individual planning decisions are concerned with the volume of the
, ○
output (demand can be affected by e.g. customers, weather etc)
○ Control decisions will concern aggregated measures of output,
because the product is more or less homogenous
○ Low robustness -> if one part of the operation fails, the whole job
fails
10.2 - How do supply and demand affect planning and control?
Uncertainty in supply and demand
– Supply can be unpredictable e.g. uncertain supply of inputs, planned
activities may take more than expected
– Demand can be unpredictable e.g. uncertain number of customers
– The combination of supply and demand uncertainty make planning and
control more difficult
Dependent and independent demand
● Dependent demand = when demand can be predicted with relative
certainty, because it is dependent upon some other known factors
○ Planning and control in dependent-demand situations is concerned
with how the operation should respond when demand has occurred
● Independent demand = when demand cant be predicted -> operations
need to supply future demand without knowing exactly what the demand
will be
○ Independent demand planning and control attempt to make “guesses”
for the future, put resources in place to satisfy demand and respond
quickly if actual demand does not match the forecast
Responding to demand
-> The way an operation plans and controls its processes depends on how it
responds to customer demand, which is influenced by the type of product or
service offered
● Design, resource, create and deliver to order: Customised services (e.g.
advertising agencies) start planning after a contract is secured - every
step is tailored to client needs.
● Design, create and deliver to order: Operations (e.g. website design) have
resources ready but begin work only after understanding the customer’s
specific requirements.
, ● Create and deliver to order (Make to order): Standard products (e.g.
house building) are only created once a firm order is placed, though
suppliers and materials are prearranged.
● Partially create and deliver to order (Assemble to order): Components are
produced in advance, but final assembly (e.g. Dell Computers) happens
after the customer order.
● Create to stock (Make to stock): Standardised products are produced
ahead of time, based on expected demand, and stored until ordered.
● Collect/choose from stock: Customers select and collect pre-made items
themselves (e.g. IKEA, retail stores).
P:D ratio
-> contrasts the total length of time customers have to wait between asking
for the service or product and receiving it (demand time, D) and the total
throughput time from start to finish / how long the operation takes to
