Page 165 - DMGT310_ENTREPRENEURSHIP_AND_SMALL_BUSINESS_MANAGEMENT

Entrepreneurship and Small Business Management

Notes The various key decisions that are to be taken in an operational/production plan include:
1. Which location would have optimum strategic advantage in terms of vicinity to the raw
material and market, availability of labour and power, subsidies and tax holidays (Plant
Location)?
2. What would be the size operation?
3. What would be the layout?

4. What would be the machines and equipment required for running the production/operation
unit?
5. What should be the optimum plant capacity?

6. What should be the production/operation schedules?
7. How would the supply chain be managed?
8. What would be the optimum inventory level?
9. What would be the storage, distribution and sales needs?

10. What would be the requirements for administration like housekeeping, rent insurance,
etc.?
11. How would the health and safety measures be met?

12. How would the quality standards be maintained?
13. Whether and how the company would utilize TQM and Kaizen?
14. How would ISO standards be met and certificates obtained?
15. What kind of raw-materials, work-in-progress and finished goods stocks would be
maintained?
16. How would the operational plan be executed?

11.1.1 Capacity Planning

Capacity planning is the productive capability of a facility. The operations manager has to plan
the capacity in such a manner that the production/operation has some degree of flexibility of
expansion or reduction, depending on the market demand.
Capacity planning should be done keeping following things in mind:

Flexibility of production/operation
Cost of maintaining capacity

Organization’s vision and objectives
Assessment of existing capacity
Forecasting capacity needs based on organizational objectives
A hospital’s capacity is determined by the number of services it can offer and number of patients
it can serve, number of wards it can have, number of emergency cases it can handle at a time etc.
An educational institution’s capacity is determined by the number of students who can study in
classrooms, the number of specialization’s that can be offered, the type and size of laboratory
required, size of library, number of computers, number of teachers it can have, etc.

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