9.3 Operations Strategy – Operations Planning & CPA
Why Plan Operations? 📈
Planning operations is like creating a roadmap for a road trip. It tells you where you need to go, when you need to arrive, and how you’ll get there without running out of fuel or getting lost.
- Ensures resources (people, machines, materials) are available when needed.
- Reduces waste and costs by avoiding over‑production or stockouts.
- Improves customer satisfaction by meeting delivery times and quality standards.
- Helps managers make informed decisions about capacity, inventory, and scheduling.
Key Components of Operations Planning 🛠️
- Demand Forecasting – Predicting future sales using historical data, trends, and market research.
- Capacity Planning (CPA) – Determining the production capacity needed to meet forecasted demand.
- Inventory Management – Balancing stock levels to avoid shortages or excess.
- Scheduling – Allocating tasks to resources over time.
- Quality Control – Ensuring products meet standards at every stage.
Capacity Planning (CPA) 📊
CPA answers the question: “How many units can we produce in a given period?” The basic formula is:
\$Capacity = \frac{Available\ Time \times Utilisation\ Factor}{Cycle\ Time}\$
Where:
- Available Time – Total working hours in the period.
- Utilisation Factor – % of time the line is actually running (e.g., 90%).
- Cycle Time – Time to produce one unit.
Example: If a machine runs 8 hours/day, 90% utilisation, and takes 2 minutes per unit, the daily capacity is:
\$Capacity = \frac{8 \times 60 \times 0.9}{2} = 216\$ units/day.
Illustrative Table: CPA for Two Products
| Product | Cycle Time (min) | Daily Capacity (units) |
|---|
| A | 2 | 216 |
| B | 4 | 108 |
Exam Tip Box 🎯
When answering questions on operations planning:
- Start by defining the objective (e.g., meet demand, reduce cost).
- Explain the key components you would consider.
- Use simple formulas where relevant and show calculations.
- Include an example to demonstrate understanding.
- Finish with a brief conclusion linking back to the objective.
Analogy Box 🔍
Think of operations planning like planning a school event. You need to decide how many chairs (capacity), when to start (schedule), what food to serve (inventory), and how to keep everyone happy (quality). Just as a well‑planned event runs smoothly, a well‑planned operation runs efficiently.