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Chapter 8 
Planning Tools and Techniques 
with Duane Weaver 
Chapter 8, Stephen P. Robbins, Mary Coulter, and 
Nancy Langton, Management, Eighth Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 1
OUTLINE 
• Environment Assessment Techniques 
– Environmental Scanning 
– Forecasting 
– Benchmarking 
– Budgeting 
– Scheduling 
– Breakeven Analysis 
– Linear Programming 
• Contemporary Planning 
– Project Management 
– Scenario Planning 
Chapter 8, Stephen P. Robbins, Mary Coulter, and 
Nancy Langton, Management, Eighth Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 2
Assessing the Environment 
• Environmental Scanning 
– The screening of large amounts of information to 
anticipate and interpret changes in the environment 
– Competitor Intelligence 
• The process of gathering information about competitors—who 
they are, what they are doing, and how their actions will affect 
the organization 
– Is not spying but rather careful attention to readily accessible 
information from employees, customers, suppliers, the Internet, 
and competitors themselves 
• May involve reverse engineering of competing products to 
discover technical innovations 
Chapter 8, Stephen P. Robbins, Mary Coulter, and 
Nancy Langton, Management, Eighth Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 3
Assessing the Environment 
(cont’d) 
• Environmental Scanning 
(cont’d) 
– Global Scanning 
• Screening a broad scope of 
information on global forces that 
might affect the organization 
• Has value to firms with significant 
global interests 
• Draws information from sources that 
provide global perspectives on 
worldwide issues and opportunities 
Chapter 8, Stephen P. Robbins, Mary Coulter, and 
Nancy Langton, Management, Eighth Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 4
Assessing the Environment 
(cont’d) 
• Forecasting 
– The part of organizational planning that involves creating 
predictions of outcomes based on information gathered by 
environmental scanning 
• Facilitates managerial decision making 
• Is most accurate in stable environments 
– Quantitative forecasting 
• Applying a set of mathematical rules to a series of hard data to predict 
outcomes (e.g., units to be produced) 
– Qualitative forecasting 
• Using expert judgments and opinions to 
predict less than precise outcomes 
(e.g., direction of the economy) 
Chapter 8, Stephen P. Robbins, Mary Coulter, and 
Nancy Langton, Management, Eighth Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 5
Making Forecasting More 
Effective 
• Use simple forecasting methods 
• Compare each forecast with its corresponding “no 
change” forecast 
• Don’t rely on a single forecasting method 
• Don’t assume that the turning points in a trend can be 
accurately identified 
• Shorten the time period covered by a forecast 
• Remember that forecasting is a developed managerial 
skill that supports decision making 
Chapter 8, Stephen P. Robbins, Mary Coulter, and 
Nancy Langton, Management, Eighth Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 6
Benchmarking 
• The search for the best practices among competitors 
and noncompetitors that lead to their superior 
performance 
• By analyzing and copying these practices, firms can 
improve their performance 
Chapter 8, Stephen P. Robbins, Mary Coulter, and 
Nancy Langton, Management, Eighth Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 7
Exhibit 8.2 Steps in Benchmarking 
Form a benchmarking 
planning team. 
Chapter 8, Stephen P. Robbins, Mary Coulter, and 
Nancy Langton, Management, Eighth Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 8 
Source: Based on Y.K. Shetty, “Aiming High: Competitive 
Benchmarking for Superior Performance,” Long Range Planning. 
February 1993, p. 42. 
BEST 
PRACTICES 
Analyze data to identify 
performance gaps. 
Gather internal and 
external data. 
Prepare and implement 
action plan.
Allocating Resources 
• Types of Resources 
– The assets of the organization 
• Financial 
• Physical 
• Human 
• Intangible 
• Structural/cultural 
Chapter 8, Stephen P. Robbins, Mary Coulter, and 
Nancy Langton, Management, Eighth Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 9
Exhibit 8.3 Techniques for Allocating 
Resources 
Scheduling 
Detailing what's to 
be done, in what 
order, by whom, 
and when 
Breakeven Analysis 
Determining the 
point where revenue 
and costs of a 
project will match 
Chapter 8, Stephen P. Robbins, Mary Coulter, and 
Nancy Langton, Management, Eighth Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 10 
Linear Programming 
Using a 
mathematical 
technique to solve 
resource allocation 
Budgeting 
Creating a numerical 
plan for allocating 
resources to 
specific activities 
Revenue Expense Profit Cash Gantt Load PERT
Exhibit 8.4 Types of Budgets 
Variable Budget 
Takes into account 
the costs that vary 
with volume 
Chapter 8, Stephen P. Robbins, Mary Coulter, and 
Nancy Langton, Management, Eighth Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 11 
Source: Based on R.S. Russell and B.W. Taylor III. Production and Operations 
Management (Upper Saddle River, NJ: Prentice Hall, 1995), p. 287. 
Fixed Budget 
Assumes fixed 
level of sales 
or production 
Cash Budget 
Forecasts cash on hand 
and how much will 
be needed 
Revenue Budget 
Projects future sales 
Profit Budget 
Combines revenue and expense 
budgets of various units to determine 
each unit’’s profit contribution 
Expense Budget 
Lists primary activities 
and allocates dollar 
amount to each 
OR
Tips for Managers: Improving 
Budgeting 
• Be flexible. 
• Understand that goals should drive budgets— 
budgets should not determine goals. 
• Coordinate budgeting throughout the organization. 
• Use budgeting/planning software when 
appropriate. 
• Remember that budgets are tools. 
• Remember that profits result from smart 
management, not because you budgeted for them. 
Chapter 8, Stephen P. Robbins, Mary Coulter, and 
Nancy Langton, Management, Eighth Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 12
Exhibit 8.5 A Gantt Chart 
Activity 
Copy-edit manuscript 
Design sample pages 
Draw artwork 
Print first pages 
Print final pages 
Design cover 
1 2 
Month 
3 4 
Reporting Date 
Actual progress 
Goals 
Chapter 8, Stephen P. Robbins, Mary Coulter, and 
Nancy Langton, Management, Eighth Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 13
Exhibit 8.6 A Load Chart 
Editors Month 
Ling 
Antonio 
Kim 
Maurice 
Dave 
Rashid 
1 2 
3 4 5 6 
Work scheduled 
Chapter 8, Stephen P. Robbins, Mary Coulter, and 
Nancy Langton, Management, Eighth Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 14
Allocating Resources: Analysis 
• Program Evaluation and Review Technique (PERT) 
– A flow chart diagram that depicts the sequence of 
activities needed to complete a project and the time or 
costs associated with each activity 
• Events: endpoints for completion 
• Activities: time required for each activity 
• Slack time: the time that a completed activity waits for another 
activity to finish so that the next activity, which depends on 
the completion of both activities, can start 
• Critical path: the path (ordering) of activities that allows all 
tasks to be completed with the least slack time 
Chapter 8, Stephen P. Robbins, Mary Coulter, and 
Nancy Langton, Management, Eighth Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 15
Let’s Make Lemonade 
•Inputs? 
•Outputs? 
•Resources? 
•Gantt Chart 
•How to find Gaps? 
Chapter 8, Stephen P. Robbins, Mary Coulter, and 
Nancy Langton, Management, Eighth Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 16
Allocating Resources: Analysis 
(cont’d) 
• Break-even Analysis 
– Is used to determine the point at which all fixed costs 
have been recovered and profitability begins 
• Fixed costs (FC) 
• Variable costs (VC) 
• Total Fixed Costs (TFC) 
• Price (P) 
• The Break-even Formula: 
Break-even: Total Fixed Costs 
Unit Price -Unit Variable Costs 
Chapter 8, Stephen P. Robbins, Mary Coulter, and 
Nancy Langton, Management, Eighth Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 17
Exhibit 8.10 Break-even Analysis 
70 000 
60 000 
50 000 
40 000 
30 000 
20 000 
10 000 
Breakeven 
Point 
Profit 
Area 
Chapter 8, Stephen P. 100 Robbins, 200 300 
Mary 400 Coulter, 500 600 
and 
Nancy Langton, Management, Output (Eighth in thousands) 
Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 18 
Variable Costs 
Fixed Costs 
Total 
Revenue 
Loss 
Area 
Total 
Costs 
Revenue/Cost ($)
Contemporary Planning Techniques 
• Project 
– A one-time-only set of activities that has a 
definite beginning and ending point time 
• Project Management 
– The task of getting a project’s activities done on 
time, within budget, and according to 
specifications 
• Define project goals 
• Identify all required activities, materials, and labour 
• Determine the sequence of completion 
Chapter 8, Stephen P. Robbins, Mary Coulter, and 
Nancy Langton, Management, Eighth Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 19
Exhibit 8.13 Project Planning 
Process 
Define 
objectives 
Identify 
activities 
and 
resources 
Establish 
sequences 
Estimate 
time for 
activities 
Chapter 8, Stephen P. Robbins, Mary Coulter, and 
Nancy Langton, Management, Eighth Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 20 
Source: Based on R.S. Russell and B.W. Taylor III, Production and Operations 
Management (Upper Saddle River, NJ: Prentice Hall, 1995), p. 287. 
Determine 
project 
completion 
date 
Compare 
with 
objectives 
Determine 
additional 
resource 
requirements
Linear Programming 
A method of solving limited resource 
allocation between two variables where the 
goal is optimization such that the change in 
one variable is accompanied by an exactly 
proportional change in the other. 
Chapter 8, Stephen P. Robbins, Mary Coulter, and 
Nancy Langton, Management, Eighth Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 21
Contemporary Planning Techniques 
(cont’d) 
• Scenario 
– A consistent view of what the future is likely to be 
• Scenario Planning 
– An attempt not to try to predict the future but to reduce 
uncertainty by playing out potential situations under 
different specified conditions 
• Contingency Planning 
– Developing scenarios that allow managers to determine in 
advance what their actions should be should a considered 
event actually occur 
Chapter 8, Stephen P. Robbins, Mary Coulter, and 
Nancy Langton, Management, Eighth Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 22
Tips for Managers: Preparing for 
Unexpected Events 
• Identify potential unexpected events. 
• Determine if any of these events would have 
early indicators. 
• Set up an information gathering system to 
identify early indicators. 
• Have appropriate responses (plans) in place if 
these unexpected events occur. 
Chapter 8, Stephen P. Robbins, Mary Coulter, and 
Nancy Langton, Management, Eighth Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 23
Break Time 
Chapter 8, Stephen P. Robbins, Mary Coulter, and 
Nancy Langton, Management, Eighth Canadian 
Edition. 
Copyright © 2005 Pearson Education Canada Inc. 24

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Planning tools and techniques management

  • 1. Chapter 8 Planning Tools and Techniques with Duane Weaver Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 1
  • 2. OUTLINE • Environment Assessment Techniques – Environmental Scanning – Forecasting – Benchmarking – Budgeting – Scheduling – Breakeven Analysis – Linear Programming • Contemporary Planning – Project Management – Scenario Planning Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 2
  • 3. Assessing the Environment • Environmental Scanning – The screening of large amounts of information to anticipate and interpret changes in the environment – Competitor Intelligence • The process of gathering information about competitors—who they are, what they are doing, and how their actions will affect the organization – Is not spying but rather careful attention to readily accessible information from employees, customers, suppliers, the Internet, and competitors themselves • May involve reverse engineering of competing products to discover technical innovations Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 3
  • 4. Assessing the Environment (cont’d) • Environmental Scanning (cont’d) – Global Scanning • Screening a broad scope of information on global forces that might affect the organization • Has value to firms with significant global interests • Draws information from sources that provide global perspectives on worldwide issues and opportunities Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 4
  • 5. Assessing the Environment (cont’d) • Forecasting – The part of organizational planning that involves creating predictions of outcomes based on information gathered by environmental scanning • Facilitates managerial decision making • Is most accurate in stable environments – Quantitative forecasting • Applying a set of mathematical rules to a series of hard data to predict outcomes (e.g., units to be produced) – Qualitative forecasting • Using expert judgments and opinions to predict less than precise outcomes (e.g., direction of the economy) Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 5
  • 6. Making Forecasting More Effective • Use simple forecasting methods • Compare each forecast with its corresponding “no change” forecast • Don’t rely on a single forecasting method • Don’t assume that the turning points in a trend can be accurately identified • Shorten the time period covered by a forecast • Remember that forecasting is a developed managerial skill that supports decision making Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 6
  • 7. Benchmarking • The search for the best practices among competitors and noncompetitors that lead to their superior performance • By analyzing and copying these practices, firms can improve their performance Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 7
  • 8. Exhibit 8.2 Steps in Benchmarking Form a benchmarking planning team. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 8 Source: Based on Y.K. Shetty, “Aiming High: Competitive Benchmarking for Superior Performance,” Long Range Planning. February 1993, p. 42. BEST PRACTICES Analyze data to identify performance gaps. Gather internal and external data. Prepare and implement action plan.
  • 9. Allocating Resources • Types of Resources – The assets of the organization • Financial • Physical • Human • Intangible • Structural/cultural Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 9
  • 10. Exhibit 8.3 Techniques for Allocating Resources Scheduling Detailing what's to be done, in what order, by whom, and when Breakeven Analysis Determining the point where revenue and costs of a project will match Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 10 Linear Programming Using a mathematical technique to solve resource allocation Budgeting Creating a numerical plan for allocating resources to specific activities Revenue Expense Profit Cash Gantt Load PERT
  • 11. Exhibit 8.4 Types of Budgets Variable Budget Takes into account the costs that vary with volume Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 11 Source: Based on R.S. Russell and B.W. Taylor III. Production and Operations Management (Upper Saddle River, NJ: Prentice Hall, 1995), p. 287. Fixed Budget Assumes fixed level of sales or production Cash Budget Forecasts cash on hand and how much will be needed Revenue Budget Projects future sales Profit Budget Combines revenue and expense budgets of various units to determine each unit’’s profit contribution Expense Budget Lists primary activities and allocates dollar amount to each OR
  • 12. Tips for Managers: Improving Budgeting • Be flexible. • Understand that goals should drive budgets— budgets should not determine goals. • Coordinate budgeting throughout the organization. • Use budgeting/planning software when appropriate. • Remember that budgets are tools. • Remember that profits result from smart management, not because you budgeted for them. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 12
  • 13. Exhibit 8.5 A Gantt Chart Activity Copy-edit manuscript Design sample pages Draw artwork Print first pages Print final pages Design cover 1 2 Month 3 4 Reporting Date Actual progress Goals Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 13
  • 14. Exhibit 8.6 A Load Chart Editors Month Ling Antonio Kim Maurice Dave Rashid 1 2 3 4 5 6 Work scheduled Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 14
  • 15. Allocating Resources: Analysis • Program Evaluation and Review Technique (PERT) – A flow chart diagram that depicts the sequence of activities needed to complete a project and the time or costs associated with each activity • Events: endpoints for completion • Activities: time required for each activity • Slack time: the time that a completed activity waits for another activity to finish so that the next activity, which depends on the completion of both activities, can start • Critical path: the path (ordering) of activities that allows all tasks to be completed with the least slack time Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 15
  • 16. Let’s Make Lemonade •Inputs? •Outputs? •Resources? •Gantt Chart •How to find Gaps? Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 16
  • 17. Allocating Resources: Analysis (cont’d) • Break-even Analysis – Is used to determine the point at which all fixed costs have been recovered and profitability begins • Fixed costs (FC) • Variable costs (VC) • Total Fixed Costs (TFC) • Price (P) • The Break-even Formula: Break-even: Total Fixed Costs Unit Price -Unit Variable Costs Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 17
  • 18. Exhibit 8.10 Break-even Analysis 70 000 60 000 50 000 40 000 30 000 20 000 10 000 Breakeven Point Profit Area Chapter 8, Stephen P. 100 Robbins, 200 300 Mary 400 Coulter, 500 600 and Nancy Langton, Management, Output (Eighth in thousands) Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 18 Variable Costs Fixed Costs Total Revenue Loss Area Total Costs Revenue/Cost ($)
  • 19. Contemporary Planning Techniques • Project – A one-time-only set of activities that has a definite beginning and ending point time • Project Management – The task of getting a project’s activities done on time, within budget, and according to specifications • Define project goals • Identify all required activities, materials, and labour • Determine the sequence of completion Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 19
  • 20. Exhibit 8.13 Project Planning Process Define objectives Identify activities and resources Establish sequences Estimate time for activities Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 20 Source: Based on R.S. Russell and B.W. Taylor III, Production and Operations Management (Upper Saddle River, NJ: Prentice Hall, 1995), p. 287. Determine project completion date Compare with objectives Determine additional resource requirements
  • 21. Linear Programming A method of solving limited resource allocation between two variables where the goal is optimization such that the change in one variable is accompanied by an exactly proportional change in the other. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 21
  • 22. Contemporary Planning Techniques (cont’d) • Scenario – A consistent view of what the future is likely to be • Scenario Planning – An attempt not to try to predict the future but to reduce uncertainty by playing out potential situations under different specified conditions • Contingency Planning – Developing scenarios that allow managers to determine in advance what their actions should be should a considered event actually occur Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 22
  • 23. Tips for Managers: Preparing for Unexpected Events • Identify potential unexpected events. • Determine if any of these events would have early indicators. • Set up an information gathering system to identify early indicators. • Have appropriate responses (plans) in place if these unexpected events occur. Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 23
  • 24. Break Time Chapter 8, Stephen P. Robbins, Mary Coulter, and Nancy Langton, Management, Eighth Canadian Edition. Copyright © 2005 Pearson Education Canada Inc. 24

Editor's Notes

  • #4: Environmental scanning is the screening of large amounts of information to anticipate and interpret changes in the environment. It’s used by both large and small organizations, and research has shown that companies with advanced environmental scanning systems increased their profits and revenue growth. Competitor intelligence: fastest growing environmental scanning activity that seeks to identify who competitors are, what they are doing, and how their actions will affect the organization.
  • #5: Another type of environmental scanning is global scanning in which managers assess the changes and trends in the global environment through the gathering of vital global information.
  • #6: Environmental scanning provides the foundation for developing forecasts, which are predictions of outcomes.
  • #7: Forecasting effectiveness. a. Forecasting techniques are most accurate when the environment is not rapidly changing. b. Some suggestions for improving forecasting effectiveness are as follows: 1) Use simple forecasting techniques. 2) Compare every forecast with “no change.” 3) Don’t rely on a single forecasting method. 4) Don’t assume that you can accurately identify turning points in a trend. 5) Shorten the length of the forecasts. Forecasting is a managerial skill and can be practised and improved.
  • #8: Benchmarking is the search for the best practices among competitors or noncompetitors that lead to their superior performance.
  • #9: The benchmarking process typically follows four steps (see Exhibit 8.2). a. A benchmarking planning team is formed. The team’s initial task is to identify what is to be benchmarked, identify comparative organizations, and determine data collection methods. b. The team collects internal and external data. c. The data are analyzed to identify performance gaps and to determine the cause of the difference. d. An action plan is prepared and implemented.
  • #10: Managers need to figure out ways to allocate the resources listed on this slide.
  • #11: How are resources allocated effectively and efficiently so that organizational goals are met? Managers can choose from a number of techniques for allocating resources (many of which are covered in courses on accounting, finance, human resources, and operations management). Exhibit 8.3 summarizes the differences among four techniques covered in the text: budgeting, scheduling, breakeven analysis, and linear programming.
  • #12: Exhibit 8.4 describes the different types of budgets that managers might use.
  • #14: Exhibit 8.5 depicts a simplified Gantt chart for book production developed by a manager in a publishing company. Time is expressed in months across the top of the chart. The major work activities are listed down the left side. Where a box sits within a time frame reflects its planned sequence. The shading represents actual progress. The chart also serves as a control tool because the manager can see deviations from the plan. In this example, both the design of the cover and the printing of first pages are running behind schedule. Cover design is about three weeks behind, and printing first pages is about two weeks behind schedule. Given this information, the manager might need to take some action to either make up for the two lost weeks or to ensure that no further delays will occur. At this point, the manager can expect that the book will be published at least two weeks later than planned if no action is taken.
  • #15: Exhibit 8.6 shows a load chart for six production editors at the same publishing company. Each editor supervises the production and design of several books. By reviewing a load chart, the executive editor, who supervises the six production editors, can see who is free to take on a new book. If everyone is fully scheduled, the executive editor might decide not to accept any new projects, to accept new projects and delay others, to have the editors work overtime, or to employ more production editors. In this exhibit, only Antonio and Maurice are completely scheduled for the next six months. The other editors have some unassigned time and might be able to accept new projects or be available to help other editors who get behind.
  • #16: 3. PERT (program evaluation and review technique) network analysis is a technique for scheduling complicated projects comprising many activities, some of which are interdependent. a. A PERT network is a flowchart-like diagram that depicts the sequence of activities needed to complete a project and the time or costs associated with each activity.
  • #17: Most PERT projects are complicated and include numerous activities. Such complicated computations can be done with specialized PERT software. However, let’s work through a simple example. Assume that you’re the superintendent at a construction company and have been assigned to oversee the construction of an office building. Because time really is money in your business, you must determine how long it will take to get the building completed. You’ve determined the specific activities and events. Exhibit 8.8 outlines the major events in the construction project and your estimate of the expected time to complete each.
  • #18: Break-even analysis is a technique for identifying the point at which total revenue is just sufficient to cover total costs. A visual representation of break-even is shown in Exhibit 8.10.
  • #19: Assume that Pierre’s Photocopying Service charges $0.10 per photocopy. If fixed costs are $27 000 a year and variable costs are $0.04 per copy, Pierre can compute his break-even point as follows: $27 000 ÷ ($0.10 – $0.04) = 450 000 copies, or when annual revenues are $45 000 (450 000 copies x $0.10). This relationship is shown graphically in Exhibit 8.10.
  • #20: Two planning techniques that are appropriate for planning in an environment that’s both dynamic and complex are project management and scenario planning. Project Management. A project is a one-time-only set of activities that has a definite beginning and ending point in time. Project management is the task of getting a project’s activities done on time, within budget, and according to specifications.
  • #21: 1. Project management process. In a typical project, work is done by a project team whose members are assigned from their respective work areas to the project and who report to a project manager. 2. The role of the project manager. a. The only real influence project managers have is their communication skills and their power of persuasion. b. Team members seldom work on just one project; they’re usually assigned to two or three at any given time.
  • #23: A scenario is a consistent view of what the future is likely to be. 1. Developing scenarios also can be described as contingency planning. 2. The intent of scenario planning is not to try to predict the future but to reduce uncertainty by playing out potential situations under different specified conditions. 3. Scenario planning is difficult to use when forecasting random events. 4. The Tips for Managers on page 228 lists some suggestions for preparing for unexpected events.