Unit Six Planning Managing

1. Unit SixPlanning Managing

2. How does this picture relate to planning managing?

3. Unit 6 Vocabulary • Ethic • Ethical Behavior • Financing Cost • Flextime • Gantt Chart • Human Resources • Human Resource Management • Invoice • Job Descriptions • Job Specifications • Labor Union • Lead Time • Benefits • Bribes • Business Ethics • Capacity • Capital • Cash Discount • Character • Code of Ethics • Commission • Conflict of Interest • Credit • Environmental Protection Agency (EPA)

4. Unit 6 Vocabulary • Project Organizations • Prototype • Purchasing • Policy • Quantity Discount • Recruit • Résumé • Return Policy • Rework Policy • Rule • Safety Stock • Salary • Secured Funds • Line Organization • Line-and-staff Organization • Manager • Model Inventory • Obsolescence Cost • Opportunity Cost • Outsourcing • PERT Diagram • Piece Rate • Philanthropy • Pregnancy Discrimination Act • Product Development

5. Unit 6 Vocabulary • Shrinkage Cost • Social Responsibility • Staff • Storage Cost • Trade Discount • Usage Rate • Vendors • Wages • Warehousing

6. Unit 6 Essential Question 1 • How are the day to day operations of production, purchasing, inventory, distribution, operations, and personnel conducted?

7. Essential Question 1A • Why is planning purchasing important?

8. Purchasing Usage Rate Lead Time Warehousing Purchasing and Inventory Inventory Invoice Vendors Purchase Order

9. Planning Purchases • Planning purchasing means buying at a low price and then selling for a profit. • Purchasing: Buying all the materials needed by an organization.

10. Planning Purchases • Model Inventory: Target inventory of what you think you will need to keep in stock. • Vendors: Businesses that sell inventory.

11. Managing Purchases • Selecting the Right Quality • Buying the Right Quantity • Timing Your Purchases • Choosing the Right Vendors • Reliability • Distance • Service • Number of Vendors

12. Managing Purchases • Get the Right Price • Discounts • Terms • Payment Methods • Receiving and Following Up on Purchases • Check the invoice: Itemized statement of money owed, with the purchase order and received shipment.

13. Essential Question 1B • What considerations must be taken in to account regarding inventory?

14. Inventory Management • The purpose of inventory management is to find and maintain inventory levels that are neither too small nor too large.

15. Inventory Considerations • Financing Costs: The interest you pay to borrow money to purchase inventory. • Opportunity Cost: Loss of the use of money tied up in inventory. • Storage Costs: The amount of money spent on renting or buying the space needed to store the inventory.

16. Inventory Considerations • Insurance Costs: The amount spent to insure the inventory on hand against loss. • Shrinkage Costs: Money lost when inventory items are broken, damaged, spoiled, or stolen. • Obsolescence Costs: Money lost when products or materials become obsolete while in inventory.

17. Planning Inventory • Calculating Supply: The number of months of inventory to keep on hand.

18. Planning Inventory • Calculating Cost: Estimating the cost of the inventory on hand. Cost of Goods Sold —————————— = Inventory Cost Inventory Turnover Rate

19. Planning Inventory • Inventory Average: Use the industry averages to help gauge your inventory management.

20. Essential Question 1C • How is inventory maintained?

21. Keeping Track of Inventory • Keeping tabs on how much inventory you have is the first step in controlling inventory levels.

22. Keeping Track of Inventory • Visual Inventory Systems: Look at how much inventory is on hand and compare it to what you want on hand. • Perpetual Inventory Systems: As inventory is sold, it is subtracted from the inventory list. As new inventory arrives, it is added.

23. Keeping Track of Inventory • Partial Inventory Systems: A combination of systems. A perpetual system is used only for those items that account for a large share of sales. • Just-in-time (JIT) Inventory Systems: The responsibility of inventory is shifted to the vendor and is delivered just before it is used.

24. Keeping Track of Inventory • Regardless of the inventory system used, a physical count will help evaluate your system as well as determine lost, stolen or bad items.

25. Reordering • To maintain proper inventory levels, you will have to decide when and how much to reorder. • Periodic Reordering: Goods or products that are used often and reordered every: day, week, other week, month, etc.

26. Reordering • Non-periodic Reordering: Inventory that is reordered on an as needed basis. • Lead Time: The gap in time between placing the order and receiving the order. • Usage Rate: How quickly the inventory will be used in a period of time. • Safety Stock: The cushion of products or materials that keeps you from running out of inventory.

27. Essential Question 1D • What other day to day operating policies need to be considered?

28. Definitions • Policies: General statements of intent about how to run your business. • Rules: Tell employees exactly what they should or should not do.

29. Operating Policies • Return / Rework Policies: A fair policy regarding replacements, refunds, or repairs will help maintain customer goodwill. • Delivery Policies: If you have a delivery policy, will there be charge? Will the area of delivery be limited? What does your competition do?

30. Operating Policies • Handling Complaints: Most businesses use the policy, “The customer is always right.” • Servicing What You Sell: If something you sell stops working, within a certain time limit, you fix it. • Courtesy to Customers: Asking departing customers, “Did you find everything you were looking for?”

31. Operating Policies • Shopping Climate: Maintaining certain lighting, air conditioning, or housekeeping standards. • Provision of Restrooms: Will your restrooms be open to the public or locked and usable by customers only?

32. Operating Policies • Response Time: How long is an acceptable amount of time required to fill a customer’s order? • Warranties: Manufacturers usually guarantee the materials and workmanship that go into their products.

33. Operating Policies • Hours of Operation: Hours of operation should be set to suit the customers.

34. Operating Policies • Credit Policies: • Credit: An arrangement in which a business or individual can obtain products in exchange for a promise to pay later. • Three Cs of Credit: • Character: Demonstrated responsibility in paying bills. • Capacity: The ability to pay based on the customer’s income and expenses. • Capital: Determination of the customer’s physical and financial assets.

35. Operating Policies • Credit Policies: • Credit Plans: • Bank Credit Cards: Businesses accept bank credit cards. Requires a merchant account. • Charge Accounts: The business gets it own credit card. • Installment Plans: Businesses offer payment over time such as layaway. • Financing: Businesses provide on site financing for major purchases.

36. Unit 6 Essential Question 2 • What are the ethical, social, and environmental responsibilities of businesses?

37. Essential Question 2A • What are social obligations of a business?

38. Social Responsibility • Social responsibility: A business's contract with society to make safe products, treat customers and employees fairly, and conduct business honestly • A company has a duty to protect its customers from unsafe products and misinformation • The Environmental Protection Agency (EPA), the media, and the public all promote environmentalism among businesses

39. Social Responsibility • Entrepreneurs can contribute to the community by: • Donating products or services • Encouraging employees to participate in community service • Joining other companies to work on community projects

40. Essential Question 2B • What is the ethical issues facing business and the ethical behavior needed to face them?

41. Ethics • Ethics: The moral code by which people live and conduct business • Ethical Behavior: Conduct that adheres to this moral code • An entrepreneur should develop a written code of ethics to reduce the chance of unethical behavior occurring in his or her business • Employees should be involved in developing the code of ethics

42. Ethics • Businesses often face ethical problems when: • There are conflicts of interest: Clash between a person’s private interests and his or her responsibilities in a position of trust • When their economic survival is threatened • When doing business abroad (where ethical practices may differ)

43. Essential Question 2C • What are the environmental concerns and issues that relate to the operation of a business?

44. Environment Concerns • Environmental Protection Agency: An independent federal agency established to coordinate programs and enforce regulations aimed at reducing pollution and protecting the environment • Toxic and hazardous waste disposal • Emissions and other pollutants • Consumer concerns about the environment

45. Essential Question 2D • What are the safety procedures and health procedures business operations need to be aware of?

46. Safety and Health Policies • Employee and Customer Safety: The financial costs of an on-site accident can ruin a small business • Train your employees in safety practices and procedures • Post warning signs to inform customers and keep them away from delicate or potentially damaging equipment

47. Safety and Health Policies • Make sure you are following regulatory practices from: • OSHA • EPA • Health Department • Fire Department • Check and test safety and security equipment regularly • Test company products under the most extreme conditions in which they will be used

48. Unit 6 Essential Question 3 • What are the concepts, systems, and strategies needed to acquire and develop human resource needs for an entrepreneurial entity?

49. Essential Question 3A • What are your business’ personnel procedures?

50. Organization Structure • Each position on the organization chart requires a job description: A statement describing the objectives of the job and its duties and responsibilities.