Topik : Kemahiran Mengurus Projek Perniagaan

Production/ Operation Plan

Production/ Operation Plan

Session Objectives
At the end of the session, students should be able to: Understand the transformation process in a production system Design the process flowcharts for a particular production system Prepare the production/operation plan for their proposed business/project

Definition of Production/Operational Plan Transformation Process Material/Inventory Requirement Planning Acquisition of plant, machinery & equipment Operational Manpower Planning Operational Layout Plan Selection of Location Operational/Production Budget

Definition
Production/Operational plan involves the production of a product or service according to the quantity, quality, specification and time specified by the customer at the lowest cost possible An operational activity include: Business inputs Transformation process Output

The Transformation Process

Business Inputs Labor Raw material Machinery Technology Capital

Transformation Process

Output Product Service

Controlling

JIT JUST IN TIME PRODUCTION SYSTEM

RESTAURANT TABLE LAYOUT PLAN

Transformation Process: A Biscuit Factory

Materials (flour, sugar, yeast, water etc) Machinery & equipment (weigh, mixer, blenders, oven, racks etc.) Technology (mixing, blending, baking, packaging etc.) Labor (machine operator, general worker, supervisor etc)

Transformation Process: A Restaurant

Materials (fish, meat, onion, vegetables etc) Machinery (knives, stove, utensils, table and chairs etc) Technology (cooking, frying, cutting etc) Labor (chef, service-man, cashier etc)

Efficiency of the Transformation Process

The productivity index (P.I) is used to measure the effectiveness of the transformation process Formula: P.I = Output/Input cost Example:
Sales = RM2,000/day Operational cost = RM1,200/day P.I = RM2,000/RM1,200 = 1.67

P.I index of more than 1 indicates the efficiency of the transformation process

Process Flowchart
It is schematic representation of the production/operation process from the start until the product or service is sold or delivered

It must show:
The sequence (step by step) Description of each process/activity Time (days,hours or minutes)

Conventional Symbols
Symbol Activity
Operation

Description
Materials are being processed or information being processed or the process of planning and calculating. Movement of materials from one place to another. Inspection on the quantity or quality of the product.

Transporting Inspection

Conventional Symbols
Symbol Activity
Delay

Description
Process is delayed or materials waiting for further process. Materials are stored in the storage area or warehouse.

Storage

Material Requirement Planning

List out all materials needed to produce the product of service Estimate in terms of quantity needed based upon your sales forecast Determine your safety stocks Additional inventory planned to buffer against the variability in supply and demand plans, that could otherwise result in inventory shortages

Material Requirement Planning

Estimate the cost of materials (monthly & annually)

Acquisition of Machinery and Equipment

List out all machinery and equipment needed to produce the product or service Determine the number of machinery and equipment based upon its capacity and production period Identify the supplier that can offer competitive price

Acquisition of Machinery and Equipment

Factors Considered Before Buying The Machinery

Price Quality in terms of durability Easiness of acquiring spareparts Maintenance Technology & simple operation Reputation of the supplier After sales service

Operational Manpower Planning

Determine the rate of production Determine the standard time in producing a unit of product Man / labour productive hours Determine number of workers and the source Calculate the cost of direct and indirect labor

CONTINUE
Indirect labour - Labour not directly involved in producing the product - It is important in the manufacturing process, do not directly affect production process. - Supervisors, personnel officers, security guards, accountants, marketing personnel.

Direct labour - Labour associated with the production of specific units or finished goods. - Production workers

Operational Layout Plan

Factors to be considered:
Arrange the machinery and equipment so that materials can move freely from one place to another Avoid any delay whereby work-in-process have to wait for further process Plan so that different types of output are not mixed

Operational Layout Plan

Avoid shifting of materials too frequently Utilize floor space efficiently Establish effective supervision Establish pleasant working environment Avoid too much movement of workers Avoid machinery and workers idling Establish a flexible layout plan

Types of Layout Plan

Layout based on product Layout based on process

Layout based on marketing

PROCESS LAYOUT
Is also called functional layout All machines performing similar type of operations are grouped at one location in the process layout Produce customized, low-volume products that may require different processing requirements and sequences of operations. Process goods or provide services that involve a variety of processing requirements

PROCESS LAYOUT

PROCESS LAYOUT
Garment factory producing half sleeve shirts, full sleeve shirts, pants and suits. Producing cements of various grades such as Ordinary Portland Cement (OPC), Slag Cement, Colored Cement and Puzzolona Cement. Different cements would need different raw materials to produce the cement and therefore need a different layout, where operations cannot be standardized. Office buildings, schools, universities, hospitals, library, book store or amusement centers are planned on this basis.

PRODUCT LAYOUT
Is also called line layout Workstations or departments are arranged in a linear path The machines are arranged in the sequence as required by the particular product. In this layout, one product goes through all the machines lined up, in the order required by its manufacture. The best known example of this type of layout is seen in motor car production. Is useful when the production process is organised in a continuous or repetitive way.

Selecting a Location
Factors to be considered:
Distance from source of materials Supply of labor Transportation Distance from target market Price of the property

Other factors:
Basic infrastructure & facilities Schools, housing, banks etc.

Operation Budget
Cost of machinery and equipment Direct materials Direct labor Prime cost Factory/operational overheads

Financial Plan

Objectives
To enable students to prepare relevant statements for the financial plan. To enable students to develop the skills of preparing a financial plan. To help students in evaluating the financial viability of the proposed business/project.

1.4 Kewangan dalam Perniagaan

1. 2. 3. 4. 5. Rancangan kewangan Belanjawan kewangan Membentuk Proforma Penyata Kewangan Membentuk proforma lembaran imbangan Analisis pulang modal

Rujuk KPTM (2007) 88-89

i. Rancangan Kewangan
Menyediakan gambaran menyeluruh tentang jumlah dan pemasaran dana yang diperoleh, kegunaan dana, jumlah tunai yang ada dan anggaran kedudukan kewangan sesuatu perniagaan. Menyediakan asas bagi pemantauan perbelanjaan jangka pendek dan membantu menghalang berlakunya masalah kekurangan tunai.

ii. Belanjawan Kewangan Alat penting dalam merancang operasi kewangan seperti: - Belanjawan operasi - Belanjawan tunai - Belanjawan modal

iv. Proforma Lembaran Imbangan Disediakan untuk menunjukkan kedudukan kewangan peniagaan pada akhir tahun dan ia mengandungi ringkasan aset, liabiliti dan ekuiti para pemilik. Proforma ini akan menggunakan maklumat daripada proforma penyata pendapatan dan belanjawan aliran tunai.

iii. Proforma Penyata Kewangan Pemilik boleh memilih samada :

Menyediakan ramalan jualan dan melengkapkan penyata, atau Menentukan sasaran untung dan melengkapkan penyata. (Biasanya pemilik membuat pilihan kedua)

v. Analisis Pulang Modal Ialah teknik yang berguna dalam menentukan kuantiti jualan atau tahap volum jualan yang mesti dicapai untuk pulang modal. TPM = Kos Tetap Harga Jualan Kos Berubah

Rancangan kewangan
Rancangan kewangan menyediakan gambaran menyeluruh tentang jumlah dan pemasaran dana yang diperoleh, kegunaan dana, jumlah tunai yang ada dan anggaran dana, dan anggaran kedudukan kewangan sesuatu perniagaan.
Rancangan kewangan menyediakan asas bagi pemantauan perbelanjaan jangka pendek dan membantu menghalang berlakunya salah satu masalah biasa dihadapi oleh perniagaan baharu, iaitu masalah kekurangan tunai.

What is a Financial Plan?

A financial plan is a plan that shows the short and long-term financial requirements in order to start a new business or project.

It also shows how the requirements are going to be financed (using internal and external resources).

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A financial plan should also include the projections of the financial statements such as the cash flow, profit & loss and balance sheet. A financial plan should include some financial analysis in order to determine the viability of the proposed business/project.

The Importance of A Financial Plan

To determine the amount of money to be invested the project cost. To identify and propose the relevant sources of fund. To ensure that the initial capital is sufficient. To appraise the viability before actual investment is committed. As a guideline for implementation.

Sources of Financial Information

Financial information is gathered through budgets. Operational budget Administrative budget Marketing budget Production budget Financial budget Project implementation cost Sources of fund Projected cash flow statements Projected profit & loss statements Projected balance sheet statements

Steps in Preparing a Financial Plan

Step 1: Prepare the project implementation cost schedule. Prepare table of depreciation for each fixed asset owned or purchased by the company. Step 2: Prepare the sources of fund to finance the project cost. Prepare a loan amortization schedule for term loan. Prepare a hire-purchase repayment schedule if hire-purchase financing is used.

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Step 3:
Prepare the projected cash-flow statements (for 3 years). For year 1 monthly. For year 2 and 3 annually.

Step 4:
Prepare projected trading, profit & loss statements (for 3 years). For manufacturing companies, include manufacturing accounts.

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Step 5:
Prepare projected balance sheet statements (for 3 years).

Step 6:
Perform relevant financial analysis based on the projected financial statements.

Project Implementation Cost

Project implementation cost refers to the total costs (short & long-term costs) needed to implement the proposed business/project.
Long-term costs refer to capital expenditure required to buy fixed assets (ex. land, building, machinery, equipment, furniture and vehicle). Short-term costs refer to expenditure to finance day-today operation of the business (ex. raw materials/inventory, wages & salaries, utilities and other overheads.

Elements in Project Cost Schedule

Capital Expenditure
Land Building Renovation Machinery & Equipment Furniture & Fixtures Vehicle

Working Capital ( _xx month)

Administrative Marketing Operation

Elements in Project Cost Schedule

Pre-operational costs
Business registration & licenses Legal fees Road tax & insurance Stamp duties etc.

Deposits
Rental Utilities

Provision for contingencies

(2 to 5 percent)

Example: Project Implementation Cost Schedule

RM Capital Expenditure Building Machinery & Equipment Furniture & Fixtures Van Renovation Working Capital (1 month) Administrative Marketing Operation Pre-operational costs Deposits Allowance for contingencies (10%) Total cost 45,000 23,000 7,000 25,000 4,000 104,000 RM

8,000 1,500 8,000

17,500 2,700 800 12,500 137,500

Example: Table of Depreciation

Type of asset Cost of asset Economic life Method Year 0 1 2 3 4 5 : Van : RM25,000 : 5 years : Straight line Accumulated Depreciation 5,000 10,000 15,000 20,000 25,000 Book Value 25,000 20,000 15,000 10,000 5,000 0

Annual Depreciation 5,000 5,000 5,000 5,000 5,000

Sources of Fund
Sources of fund refer to the source where the fund to finance the project cost is secured. It can be internally or externally generated.

Equity Contribution
Cash Assets

Term Loan Hire-Purchase Scheme Others

Example: Sources of Finance

Source Equity Contribution Cash Asset Term Loan Hire-purchase Finance Total RM

27,500 45,000 45,000 20,000 137,500

Example: Loan Amortization Schedule

Loan amount Loan period Interest rate Method : RM45,000 : 5 years : 10% : Reducing balance (annually)

Year 0 1 2 3 4 5

Interest 0 4,500 3,600 2,700 1,800 900

Principal 0 9,000 9,000 9,000 9,000 9,000

Payment 0 13,500 12,600 11,700 10,800 9,900

Balance 45,000 36,000 27,000 18,000 9,000 0

Example: Hire-purchase Repayment Schedule

Cost of asset : RM25,000 Down payment : RM 5,000 Loan amount : RM20,000 Loan period : 5 years Interest rate : 8% Method : Flat (annually)

Year 0 1 2 3 4 5

Interest 0 1,600 1,600 1,600 1,600 1,600

Principal 0 4,000 4,000 4,000 4,000 4,000

Payment 0 5,600 5,600 5,600 5,600 5,600

Balance 20,000 16,000 12,000 8,000 4,000 0

Cash-flow Projected Statements

It is projected statements of cash inflows and outflows throughout the planned period. It shows the following:
Cash inflows Cash outflows Deficit or surplus Cash position (beginning & ending balances)

Elements in Cash-flow Statement

Cash Inflows
Equity cash only Term-loan Cash sales Collection of receivables Sales of asset

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Cash Outflows
Operational expenditure Marketing expenditure Administrative expenditure Loan repayment Hire-purchase repayment Purchase of fixed assets Pre-operational expenses Miscellaneous expenses

Continue Cash Surplus or Deficit

Inflows > Outflows = Surplus
Inflows < Outflows = Deficit

Cash Position
Beginning cash + Surplus/ (- Deficit) = Ending cash Note: The ending cash balance for a particular month becomes the beginning balance for the next consecutive month

Example: Cash-flow Pro-forma Statement

A Month CASH INFLOWS Beginning cash balance Equity - Cash Term-loan Cash sales Total Cash Inflows CASH OUTFLOWS Operational Expenditure: Raw materials Direct labor Operational overheads Marketing Expenditure: Sales commission Entertainment allowance Adminstrative Expenditure: Salaries & Wages EPF & SOCSO Adminstrative overheads Loan Repayment: Principal Interest Hire-purchase repayment: Down payment Principal Interest Capital Expenditure: Machinery & Equipment Furniture & Fixtures Renovation Pre-operational Expenditure Deposits Total Cash Outflows Cash Surplus/(Deficit) Ending cash balance Pre-Operation 0 27,500 45,000 72,500 Jan 30,000 Feb 30,909 Mac 31,818 Apr 32,727 May 33,636 June 34,545 July 35,454 Aug 36,363 Sept. 37,272 Oct. 38,181 Nov. 39,090 Dis. 39,999 Year 1 0 27,500 45,000 240,000 312,500

B C

20,000 50,000

20,000 50,909

20,000 51,818

20,000 52,727

20,000 53,636

20,000 54,545

20,000 55,454

20,000 56,363

20,000 57,272

20,000 58,181

20,000 59,090

20,000 59,999

3,000 3,000 2,000 1,000 500 5,000 1,000 2,000 750 375 5,000 333 133 23,000 7,000 4,000 2,700 800 42,500 30,000 30,000

3,000 3,000 2,000 1,000 500 5,000 1,000 2,000 750 375

3,000 3,000 2,000 1,000 500 5,000 1,000 2,000 750 375

3,000 3,000 2,000 1,000 500 5,000 1,000 2,000 750 375

3,000 3,000 2,000 1,000 500 5,000 1,000 2,000 750 375

3,000 3,000 2,000 1,000 500 5,000 1,000 2,000 750 375

3,000 3,000 2,000 1,000 500 5,000 1,000 2,000 750 375

3,000 3,000 2,000 1,000 500 5,000 1,000 2,000 750 375

3,000 3,000 2,000 1,000 500 5,000 1,000 2,000 750 375

3,000 3,000 2,000 1,000 500 5,000 1,000 2,000 750 375

3,000 3,000 2,000 1,000 500 5,000 1,000 2,000 750 375

3,000 3,000 2,000 1,000 500 5,000 1,000 2,000 750 375

36,000 36,000 24,000 12,000 6,000 60,000 12,000 24,000 9,000 4,500 5,000 4,000 1,600 23,000 7,000 4,000 2,700 800 271,600 40,900 40,900

333 133

333 133

333 133

333 133

333 133

333 133

333 133

333 133

333 133

333 133

337 137

D E F

19,091 30,909 30,909

19,091 31,818 31,818

19,091 32,727 32,727

19,091 33,636 33,636

19,091 34,545 34,545

19,091 35,454 35,454

19,091 36,363 36,363

19,091 37,272 37,272

19,091 38,181 38,181

19,091 39,090 39,090

19,091 39,999 39,999

19,099 40,900 40,900

Example: Cash-flow Pro-forma Statement

A Year CASH INFLOWS Beginning cash balance Equity - Cash Term-loan Cash sales Total Cash Inflow s CASH OUTFLOWS Operational Expenditure: Raw materials Direct labor Operational overheads Marketing Expenditure: Sales commission Entertainment allowance Adminstrative Expenditure: Salaries & Wages EPF & SOCSO Adminstrative overheads Loan Repayment: Principal Interest Hire-purchase repayment: Down payment Principal Interest Capital Expenditure: Machinery & Equipment Furniture & Fixtures Renovation Pre-operational Expenditure Deposits Total Cash Outflow s Cash Surplus/(Deficit) Ending cash balance Year 1 0 27,500 45,000 240,000 312,500 Year 2 40,900 0 0 276,000 316,900 Year 3 77,000 0 0 317,400 394,400

B C

36,000 36,000 24,000 12,000 6,000 60,000 12,000 24,000 9,000 4,500 5,000 4,000 1,600 23,000 7,000 4,000 2,700 800 271,600 40,900 40,900

37,800 37,800 25,200 12,600 6,000 63,000 12,600 25,200 9,000 3,600 0 4,000 1,600 0 0 0 1,500 0 239,900 77,000 77,000

39,690 39,690 26,460 13,230 6,000 66,150 13,230 26,460 9,000 2,700 0 4,000 1,600 0 0 0 1,500 0 249,710 144,690 144,690

D E F

Manufacturing, Trading, Profit & Loss Pro-forma Statements It is a projected statement which shows the expected profit or loss throughout the planned period (3 consecutive years). For manufacturing companies, they should first prepare the manufacturing account. For trading companies, they should first prepare the trading account. For service companies, they can just prepare the profit and loss account.

Elements in the Manufacturing Account

Raw Materials Used Opening stock (beginning of year) Add: Purchase of raw materials (for the year) Minus: Closing stock (end of year) Direct Labor Operational Overheads Indirect materials Indirect labor Depreciation on plant, machinery & equipment Maintenance Utilities Prime Cost Add: Beginning work-in-process Minus: Ending work-in-process Cost of Goods Manufactured

Example: Manufacturing Account

Raw Materials Opening stock 1/1 Add: Purchases of raw materials Raw materials available Minus: Closing stock 31/12 Raw Materials Used Direct Labor Operational Overheads Prime Costs Add: Work-in-process 1/1 Minus: Work-in-process 31/12 Work-in-Process Cost of Goods Manufactured RM 0 36,000 36,000 3,000 RM

33,000 36,000 24,000 93,000 0 0 0 93,000

Elements in Trading Account

(Manufacturing Company) Sales (as forecasted) Cost of Goods Sold (Trading Company) Sales (as forecasted) Cost of Goods Sold

Opening stock for finished goods Add: Cost of goods manufactured Stocks available for sale Minus: Closing stock for finished goods
Gross Profit

Opening stock for finished goods Add: Purchases for the year Available stocks for sale Minus: Closing stock for finished goods
Gross Profit

Example: Trading Account for A Manufacturing Company

Sales Less: Cost of Goods Sold Opening stock for finished goods Add: Cost of goods manufactured Goods available for sale Minus: Closing stock for finished goods Gross Profit 240,000

0 93,000 93,000 3,000 90,000 150,000

Example: Trading Account for Trading Companies

Sales Less: Cost of Goods Sold Opening stock for finished goods Add: Purchase for the year Goods available for sale Minus: Closing stock for finished goods 240,000 0 93,000 93,000 3,000 90,000 150,000

Gross Profit

Elements in A Profit & Loss Account

(Manufacturing & Trading Companies) Sales Less: Cost of Goods Sold Gross Profit Less: Expenses Administrative Marketing Financial Depreciation charges Other expenses Net Profit Before Tax
(Service Companies) Sales Less: Expenses Administrative Marketing Operational Financial Depreciation charges Other expenses Net Profit Before Tax

Example: Profit & Loss Account For Manufacturing & Trading Companies
Sales Less: Cost of Goods Sold Gross Profit Less: Expenses Administrative 96,000 Marketing 18,000 Financial: Interest on term loan 4,500 Interest on hire-purchase 1,600 Depreciation charges 11,800 Pre-operational expenditure 2,700 Total Expenditure Net Profit Before Tax 240,000 90,000 150,000

134,600 15,400

Example: Profit & Loss Account For Service Companies

Sales 240,000

Less: Expenses Administrative Marketing Operational Financial: Interest on term loan Interest on hire-purchase Depreciation charges Pre-operational expenditure Total Expenditure Net Profit

96,000 18,000 96,000 4,500 1,600 11,800 2,700 230,600 9,400

Balance Sheet Pro-forma Statements

It is a projected statement which shows the financial position of the company at a specific point in time in terms of assets owned and how those assets are financed. Projected statements are prepared for the period of three (3) years.

Elements in A Balance Sheet

Fixed Assets
List all fixed assets at its book value (Cost Accumulated depreciation)

Current Assets
List all current assets (e.g. cash, stocks, account receivables, deposits etc.)

Equity
Equity contribution (cash + assets) plus net profit (accumulated)

Long-term Liabilities
Term-loan (year end balance) Hire-purchase (year end balance)

Example: Balance Sheet for Manufacturing & Trading Companies

Fixed Assets Machinery & Equipment Furniture and Fixtures Renovation Van Current Assets Cash Closing stock for raw materials Closing stock for finished goods Deposits Total Assets Equity Capital Net profit Long-term Liabilities Term-loan Hire-purchase Total Equity & Liabilities

18,400 5,600 3,200 20,000 40,900 3,000 3,000 800

47,200

47,700 94,900

27,500 15,400 36,000 16,000

42,900

52,000 94,900

Example: Balance Sheet for Service Companies

Fixed Assets Machinery & Equipment Furniture and Fixtures Renovation Van Current Assets Cash Deposits Total Assets Equity Capital Net profit Long-term Liabilities Term-loan Hire-purchase Total Equity & Liabilities 27,500 9,400 36,000 16,000 36,900 18,400 5,600 3,200 20,000 40,900 800

47,200

41,700 88,900

52,000 88,900

Sekian. Jumpa lagi.