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Chapt03

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Chapt03

  1. 1. Managing Engineering and Technology Third Edition Babcock and Morse <ul><li>Planning and Forecasting </li></ul><ul><li>Chapter 3 </li></ul>
  2. 2. Advanced Organizer
  3. 3. Chapter Objectives <ul><li>Explain the needs for planning and analyze a planning model </li></ul><ul><li>Be able to solve forecasting problems </li></ul>
  4. 4. Planning <ul><li>Provides method for identifying objectives </li></ul><ul><li>Design sequence of programs and activities to achieve objectives </li></ul><ul><li>Plan to plan </li></ul><ul><li>People implementing plan should be involved in preparing plan </li></ul>
  5. 5. Planning (Amos and Sarchet) <ul><li>What must be done? </li></ul><ul><li>Who will do it? </li></ul><ul><li>How will it be done? </li></ul><ul><li>When must it be done? </li></ul><ul><li>How much will it cost? </li></ul><ul><li>What do we need to do it? </li></ul>
  6. 6. Planning Process/Decision making process/ Scientific Method <ul><li>(above: names differ depending on application) </li></ul><ul><li>Define the problem </li></ul><ul><li>Collect data </li></ul><ul><li>Develop hypotheses </li></ul><ul><li>Test hypotheses </li></ul><ul><li>Analyze results </li></ul><ul><li>Draw conclusion </li></ul>
  7. 7. Planning Process Decision Making Process <ul><li>(this occurs as a diagram in the book & is iterative) </li></ul><ul><li>Define the decision problem </li></ul><ul><li>Search for data and information </li></ul><ul><li>Generate alternative courses of action </li></ul><ul><li>Analyze feasible alternatives </li></ul><ul><li>Select best course of action </li></ul><ul><li>Implement decision and evaluate results </li></ul>
  8. 8. Planning <ul><li>What is the Problem/Purpose? </li></ul><ul><li>Establish Goal/Objectives </li></ul><ul><li>What Client Need Is Being Satisfied by the Project? </li></ul><ul><li>Identify Success Criteria </li></ul>
  9. 9. The Foundation for Planning <ul><li>Vision : what the firm wants to be in the future (when no vision: Vietnam war ex.) </li></ul><ul><li>Mission : bold goal with clear finish line and specific time frame, what do we want to do </li></ul><ul><li>Purpose : fundamental reason for firm’s existence </li></ul><ul><li>Goal/Aim : What? Why? For whom? How? Is it consistent with organization? (official and operative) </li></ul><ul><li>Objectives : Clarifies goals, how do we go about it? </li></ul><ul><li>Must be reviewed often to see whether they are still valid </li></ul>
  10. 10. Planning Develop Objectives <ul><li>S pecific </li></ul><ul><li>M easurable </li></ul><ul><li>A ttainable </li></ul><ul><li>R ealistic </li></ul><ul><li>T ime-limited </li></ul><ul><li>Outcome - what is to be accomplished </li></ul><ul><li>Time Frame - expected completion date </li></ul><ul><li>Measure - metrics for success </li></ul><ul><li>Action - how the objective will be met </li></ul>
  11. 11. Strategic Planning Business a company is in Business a company wants to be in Business Portfolio Matrix Cash cows (milk profits) Stars (invest more) Large Small Dogs (eliminate) Slow-growth ??? (increase market) Fast-growth Market share MARKET
  12. 12. Strategic Mgmt. of Tech. (Jan/Feb’06 Q1a) <ul><li>Base tech.: firm must master these to be effective competitors, invest in R&D to maintain competence </li></ul><ul><li>Key tech. : provides competitive advantage, can embed features to get better efficiency in production process </li></ul><ul><li>Pacing tech. : could become tomorrow’s key tech. </li></ul><ul><li>Issue is to maintain balance between key and pacing techs. </li></ul>
  13. 13. Goals and Objectives (G&O) again ( May/Jun’ 06 Q1a ) <ul><li>Drucker’s Objectives for Organizational Survival </li></ul><ul><ul><li>Market Share : company $sales/total $sales of everyone in market </li></ul></ul><ul><ul><li>Innovation : want more sales in new products </li></ul></ul><ul><ul><li>Productivity : more goods+services per input </li></ul></ul><ul><ul><li>Physical and Financial Resources : goals for resources </li></ul></ul><ul><ul><li>Manager Performance and Development : availability of managers in required quality and quantity </li></ul></ul><ul><ul><li>Worker Performance and Attitude : respect for individual employee </li></ul></ul><ul><ul><li>Profitability : so as to measure enterprise success </li></ul></ul><ul><ul><li>Social Responsibility : effect on the environment </li></ul></ul>
  14. 14. Management by Objectives (MBO) <ul><li>Sup. and sub. understand G&O of organization </li></ul><ul><li>Sup. and sub. meet to estb. G&O of sub’s focus in next 6 months </li></ul><ul><li>Sub. then carries out the job wrt objectives for next 6 months </li></ul><ul><li>Sup. and sub. meet to evaluate sub’s success </li></ul><ul><li>Advs: >commitment/satisfaction for sub. Involving. Rational method of performance evaluation </li></ul><ul><li>Disadvs: >paperwork, misuse, focusing on only few objectives </li></ul>Should need effort to attain, quantifiable/verifiable, resources needed by sub. must be made available by sup., shouldn’t be for sole benefit of sup. Shouldn’t be to place blame on sub. Can estb. new objectives.
  15. 15. Some planning concepts <ul><li>Responsibility for planning: rests with top and middle level mgrs. Must estb. enterprise objectives, overall strategy, planning guidelines, review and redirect planning effort </li></ul><ul><li>Planning premises: the anticipated env. in which plans are expected to operate. Future economic conditions, govt. decisions, competition and markets. Develop contingency plans if premises go wrong </li></ul><ul><li>Planning horizon: how far one should plan. Depends on nature of business and plan. Ex. Nuclear power plant </li></ul><ul><li>System of plans: yearly forecasts </li></ul><ul><li>Policies and procedures: policies -> clear, flexible, communicated, procedures -> SOP </li></ul>
  16. 16. Forecasting <ul><li>Forecast sales </li></ul><ul><li>Essential preliminary to effective planning </li></ul><ul><li>Engineering manager must be concerned with both future markets and future technology </li></ul>
  17. 17. Why Forecasting? <ul><li>New facility planning </li></ul><ul><li>Production planning </li></ul><ul><li>Work force scheduling </li></ul>
  18. 18. Long Range Forecasts <ul><li>Design new products </li></ul><ul><li>Determine capacity for new product </li></ul><ul><li>Long range supply of materials </li></ul>
  19. 19. Short Range Forecasts <ul><li>Amount of inventory for next month </li></ul><ul><li>Amount of product to produce next week </li></ul><ul><li>How much raw material delivered next week </li></ul><ul><li>Workers schedule next week </li></ul>
  20. 20. Forecasting Methods <ul><li>Quantitative Methods Expert/executive Opinion, Delphi Historical (sales force composite): regional managers ask their salesmen </li></ul><ul><li>User expectation: ask customers, good if few customers </li></ul><ul><li>Choice of method: many methods can be combined </li></ul><ul><li>Qualitative Methods Simple moving average </li></ul><ul><li>Weighted moving average </li></ul><ul><li>Exponential smoothing </li></ul><ul><li>Regression models (simple/multiple regressions) </li></ul>Jan/Feb’06 Q1b and Pg82 textbook, 3-12, 3-13. 3-14 May/Jun’ 06 Q1b
  21. 21. Delphi Method <ul><li>Eliminates effects of interactions between members </li></ul><ul><li>Experts do not need to know who other experts are </li></ul><ul><li>Delphi coordinator asks for opinions, forecasts on subject </li></ul>
  22. 22. Delphi Method, cont <ul><li>Develop objective of forecast </li></ul><ul><li>Determine number of participants </li></ul><ul><li>Select and contact participants </li></ul><ul><li>Develop first questionnaire and submit </li></ul><ul><li>Coordinator analyzes responses </li></ul>
  23. 23. Delphi Method, cont <ul><li>Develop second questionnaire based on results of first </li></ul><ul><li>Analyze responses </li></ul><ul><li>Rounds continue until consensus reached or experts’ opinions cease to change </li></ul>
  24. 24. Technological Forecasting Normative forecasting : desired future goal is set and process is worked back Exploratory forecasting : begins with current state of technology and extrapolates into the future. Ex.: Delphi method Good model for forecasting : S-curve method. Performance from new technology starts slowly, grows exponentially and eventually levels out

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