PPM UNIT 2.pptx it will help in operations management

MBA

1. Planning UNIT 2

2. Definitions of Planning Planning is deciding in advance what to do, how to do, where to do it and who will do it(Koontz and o’ Donnel) The plan of actions helps in attaining results envisaged, line of action to be followed, the stages to go through and methods to use by Henry Fayal It is concerned with both means(what) and ends(how) to attain a specific goal.

3. Importance of Planning Provides future direction Reduce the risk of uncertainty Avoid overlapping and wasteful activities Promotes innovative ideas, as planning is a intellectual process. Facilitates decision making Establishes standards of controlling

4. Aspects of Planning Mission : The basic purpose of organization Goals : Desired outcomes and target Strategies : Determination of long term objectives of organization Policies : General statements that guide decision making process Procedures : Method to handle future activities

5. Continued… Rules : Guidelines for action Programs : Goals, policies, procedure, rules and task to carry out an action. Budgets : Statements of expected results expressed in numerical terms Plans : Documents that outline how goals are to be met

6. Types of Plans Breadth : Strategic, operational or tactical(shorter period plan)like cost minimization. Time frame : Long term, short term(less than 1 year) Specificity : Directional ,specific Frequency of use: Single use, standing plan

7. Directional plan and specific plan Directional plan : Flexible plan that set out general guidelines. Provide focused but does not bind managers into specific goals and actions Specific Plans : Clearly defined and leave no scope for interpretation They have clearly defined objectives. There is no ambiguity and misunderstanding

8. Single use plan and Standing plans Single use plan : One time plan specifically designed to meet the needs of unique situation.(EX Polices of recruitment). Standing Plans : Ongoing plans that provide guidelines for activities performed repetitively It include policies, rules and procedures.

9. Planning Process

10. What type of objective organisation wants to achieve These must be specific and measurable in terms of units

11. Set the objectives SAMSUNG MOBILE set the objective to sell 2 lack phone in a year Objectives is the end result what management wants to achieve for the company Objectives are set by the organization as a whole and then department set its own objectives within the framework of organizational objectives.

12. Developing planning premises EX : The company also take care of the policy of the government A planning premise is a set of assumptions that are derived from forecasting the future. It is a logical and systematic estimate of the future factors that can affect planning. Internal and External premises. Tangible and Intangible premises. Controllable and non-controllable premises.

13. Identifying alternatives courses of action Once objectives are set, assumptions are made. Then the next step is to be act upon them. There are many ways to act and achieve objectives. All the alternative courses of action should be identified. Ex: SAMSUNG may have various alternatives reducing price, increase advertising and promotion expenses, increase sales services.

14. Evaluating alternative course of action In this step positive and negative aspects of each alternative need to be evaluated in the light of objectives to be achieved. Every alternative is evaluated in terms of lower cost, lower risk and high return Ex: SAMSUNG will evaluates and check its pros and cons

15. Selecting one best alternative The best plan which is most profitable plan with minimum negative effect is adopted and implemented. In such case manager judgment and experience plays a best role in selecting the best alternative. Ex :SAMSUNG selects more TV advertisements and online marketing.

16. Implemented the plan This step is concerned doing what is required In this step managers communicate the final plan to their employees EX: SAMSUNG hires salesmen on a large scale, start online marketing activities, create TV Advertisements

17. Follow up action Monitoring the plan and taking feedback at regular intervals is called follow-up Monitoring plan is very important to ensure that the plans are being implemented according to the schedule Regular checks and comparison of results with set standard are done to ensure that objectives are achieved.

18. Factors affecting planning PESTEL Political Economic Social Technological Legal Ecological

19. Decision making All of us know that 6 blind men went to see Elephant and each one of them cited his opinion based on personal observation. The blind men, each of them perceived the reality in different way. Somebody say it is just like a top, somebody touches the ears of elephant say look like a fan and somebody said it appears to be like a wall and it’s a rope look like a snake. So each of them was partially correct, but when you see what they are not correct

20. Continued… So each have cited their opinion based on observation So meaning of organisation is based on opinion, observation and experience. So here Elephant is very analogous to or similar to the organisation Like elephant is perceived by differently by different people like organisation is also perceived by differently by different people

21. Perception A process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment. Peoples behavior is based on perception of what reality is, not an reality itself

22. Decision making Decision making is the core of planning. Planning is incomplete unless a decision is made about commitment of resources. Decision making is defined as the act of choosing one alternative from among a set of alternatives ( Knootz ) Decision making is a process and not just a simple act of choosing among alternatives

23. Steps in Decision making

24. Identification of the problem Problem of new product development Product Improvisation Providing better service to the customers Taking decisions about promotions of employees Staffing and compensation Discrepancy between an existing and a desired condition

25. Analyzing problems After completing the first step another step of the decision making process is analyzing the identified problems. For this, a decision-maker has to accumulate all the facts, data, and information related to problems.

26. Development of alternatives Decision maker list viable alternatives that can help to solve the problem Limiting the search for alternatives is a primary cause of decision failure in organizations For a programmed decision, feasible alternative are easy to identify and already available within organizations rules and regulations

27. Continued.. Non-Programmed decision require developing new course of action Ex: Alternatives of laptop purchase are DELL,HP,ACER,LENOVO

28. Evaluation of alternatives In this every alternative is evaluated and studied in terms of the decision-making process. All alternatives should be studied by considering the efforts involved and the outcome expected. In this each alternatives must be evaluated in terms of feasibility, satisfactory,consequences

29. Selection of best alternative Here the best feasible alternative is being selected. For the best alternative manager should consider short-term as well as long-term impacts on organizational performance. Best fits the overall goals and values of the organization Manager can use 3 basic Experience, Experimentation, research and

30. Implementation of alternative Reassess the environment for any change Consider people resistance to change due to insecurity, inconvenience and fear of unknown Require discussion with people affected by the decision by communication, motivation and leadership skills.

31. Evaluation of decision effectiveness Decision maker collects information to know how well the decision was implemented and whether it was effective in achieving its goals. Feedback provides decision makers with this information. Feedback assess whether new decision needs to be made. If implemented alternatives is not working, managers can implement alternative in a different way or adopt another identified alternative.

32. Types of Decision making Adaptive decisions: Choices are made in response to a combination of moderately unusual problems and alternative solutions. It is typically involve modifying and improving on the routine decisions and practices of past. Innovative decisions: Choices are based on discovery, Identification and diagnosis of unusual and ambiguous problems and development of or creative alternative solutions.

33. Programmed and Non-Programmed decisions Programmed decisions  are those, which are in accordance with some rules, or procedures. Every organization has its own policies that simplify decision making. For example, we would not worry about deciding the salary of a new employee, the organization generally has established a salary scale for all positions.

34. Non-Programmed decisions Non-programmed  decisions are those that deal with unusual problems. If the problem such as it did not come up often enough cover by policy or it is so important that needs special treatment, it is taken care of by non-programmed decision. Ex Why the sales of the product is declining

35. Routine and Strategic decisions Routine decisions  are slightly similar to programmed decision making. Routine decisions are repetitive in nature, do not need any analysis and evaluation, are in the context of day to day operations of the enterprise, and can be made by middle management level. Ex: Routine maintenance and supplier selection

36. Strategic decisions A strategic decision  is related to the policy of the organization, are taken by high levels of management, it involves a large expenditure of fund. A slight mistake in decision making is injurious to the enterprise. EX; decision related to pricing, capital expenditure decsion

37. Individual vs Group decision Individual decisions  are taken by a single individual in the context of routine decisions according to the guideline of the organization. Group decisions  are taken by conducting committee meetings for any specific purpose. Such decisions are very important for the organization. Ex: Selecting new marketing strategy

38. Long term, departmental and economic decision Long term decisions  are taken for a longer time period and the risk involves is high. Departmental decisions  are taken by the departmental head, related to a particular department .EX A marketing manager take the decision of making marketing polices The  non-economic decision  is related to factors such as technical values, moral behavior, etc .Ex Environmental conservation decision.

39. Decisions models Decision models in management are tools and frameworks used to analyze and solve complex problems and make informed decisions. Various techniques are available to create and apply decision models. Here are some commonly used techniques in management decision modeling:

40. It is a predictive modelling approach used in machine learning It is used for classification and regression tasks. It is constructed via a algorithm approach that identifies way to split a data set based on different conditions.

41. Decision Tree A decision is a graphical model of a decision process. We can introduce probability into the analysis of complex decisions involving many alternatives and future conditions that are not known but that can be specified in terms of discrete probabilities or a continuous probability distribution. It is a useful tool in making decisions concerning investments, project management, new product strategies.

42. Decision Tree It is a tree shaped diagram that shows probability of a possible decision or occurrence and how one choice leads to the next. Some decisions involve a series of interdependent steps, the second step depending on the outcome of the first, the third depending on the outcome of the second, and so on. Decision tree is the technique o solving such a problem

43. Construction of Decision Tree In first stage different option is available For example if an organization wants to introduce a new product in the market it has two alternative available either it can go for creating permanent tooling or it can go for temporary tooling for producing product. Each alternative will require different investment so the success of or failure of the new product can’t be predicted certainty, the decision cannot be made purely on the basis of investment criterion

44. Second step in decision tree It requires estimation of probability for various events. The estimation of probabilities will be based on manager’s own experience, consultation with others,and information available in this respect. There may be 3 alternatives events so far as the success or failure of the products is concerned: it may be high success or moderate success or it may fail. The probability of each event will be different.

45. Third step in decision tree In this step calculation of payoff from each alternative in various events. Payoff is calculated by multiplying the probability of the event with the expected payoff of that alternative

46. Decision Problem Decision Trees: Decision trees are graphical representations of decisions and their potential consequences. They are particularly useful for decision-making under uncertainty. Decision tree analysis helps managers consider various options, assign probabilities to outcomes, and calculate expected values to determine the best course of action.

47. Decision tree analysis It is a technique managers, use to structure and display alternatives and decision processes Structures the decision process, guiding managers to approach decision making in an orderly, sequential fashion. Requires the decision maker to examine all possible outcomes. Desirable and undesirable.

48. Communicate to decision making process to others, illustrating each assumption about the future. Allow a group to discuss alternatives by focusing figure,probablity value and assumptions.

49. Define the problem in structured terms Model the decesion process Apply the appropriate probability values and financial data. Solve the decesion tree Perform sensitivity analysis List the underlying assumptions

50. Linear Programming Linear Programming: Linear programming is a mathematical technique used to optimize resource allocation in situations with linear relationships between variables. It's commonly used for production planning, resource allocation, and supply chain optimization.

51. Linear programming continued.. The answer is to use linear programming. Linear programming is a mathematical technique that determines the best way to use available resources. Managers use the process to help make decisions about the most efficient use of limited resources – like money, time, materials, and machinery.

52. Integer Programming Integer Programming: Similar to linear programming, integer programming deals with optimization problems, but it restricts some or all variables to integer values. This technique is valuable for solving problems where the variables represent whole numbers, such as selecting the optimal number of items to produce.

53. Integer programming continued. Integer programming is a branch of operations research that deals with optimization problems where some or all of the decision variables are required to be integers. Integers are discrete numbers, such as 0, 1, 2, or -3, that represent binary choices, counts, or allocations. For example, you may want to decide whether to open or close a facility, how many units of a product to produce or buy, or how to assign tasks to workers. Integer programming can also handle problems with mixed-integer variables, where some variables are integers and some are continuous, such as fractions or decimals.

54. Simulation Simulation: Simulation involves creating a model of a system or process to mimic its behavior over time. Managers can use simulation to assess the impact of different decisions and scenarios in a risk-free environment. It's often applied in operations management and complex project management.

55. Decision making conditions Decision making under Certainty Decision making under Uncertainty Decision making under Risk

56. Decisions making Under Certainty In this situation, people are reasonably sure about what will happen when they make a decision. The information is available and is concerned to be reliable and the cause and effect relationship are known. It exists when the outcome of each alternative are certain.

57. Under Certainty Ex: When purchase manager of an X COMPANY wants to purchase raw material of a specific quality and there are many vendors in the area. In such case, the manager may collect price list from different vendors. Based on the price, he can select, a particular vendor. The objective of the decision is to buy raw material at the lower price, the manager can choose the vendor whose price is lowest. Hence in this case outcomes of each alternative are certain in terms of price quoted by vendors.

58. Decision making under Uncertainty It exists the condition when there are various decision alternatives but no information is available about outcomes of the alternative. Ex: An organization decides to expand its operation to an unfamiliar country may not known country’s culture,laws,economic environment etc.The political situation may be volatile that even experts cannot predict a possible change in govt.

59. Decision making under Risk In a situation factual information or outcomes of various decision alternatives cannot be predicted with certainty but some information may be available on the basis of which probability of outcomes may be predicted. Ex Probability of head or tail,