1. TECHNIQUES FOR ALLOCATING RESOURCES.
are the assets of the organization and include
financial, physical, human, intangible, and
is a numerical plan for allocating resources
to specific activities. Budgets are popular
because they’re applicable to a wide variety of organizations and units
within an organization.
1. There are four different types of budgets.
a. A revenue budget
is a budget that projects future sales.
b. An expense budget
is a budget that lists the primary activities
undertaken by a unit and allocates a
dollar amount to each.
c. A profit budget
is a budget used by separate units of an organization
that combines revenue and
expense budgets to determine the unit’s profit contribution.
d. A cash budget
is a budget that forecasts how much cash an
organization will have on hand and
how much it will need to meet expenses.
2. These budgets are based on the assumption of a single specified
However, volume can’t be predicted exactly. Therefore, a
is a budget that takes into
account the costs that vary with volume.
involves a list of necessary activities, their
order of completion, which is to do each,
and time needed to complete them. Some useful scheduling tools include
, named after Henry Gantt, is a scheduling
chart that visually shows actual and
planned output over a period of time.
is a specialized bar chart that shows the
current progress on each major project activity
relative to necessary completion dates.
1. A project is broken down into separate main activities listed on the
left side of the
2. The time frame is listed at the top or the bottom of the chart.
3. The duration and scheduling of activities is shown by a bar.
4. Gantt charts do not show interrelationships among activities.
5. Software packages for creating and using Gantt charts (and many other
tools) on computer are becoming widely available.
PERT, or Program Evaluation and Review Technique
PERT is a network planning method for managing
and controlling large one-time projects. It is a
technique for scheduling complicated projects comprising many
activities, some of which are
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.
1. All of the major activities in the project are specified.
2. The sequences of these activities are determined
a graphic depiction of the interrelationships
is a work component to be accomplished, and is
by an arrow on the network diagram.
event (or node)
represents a single point in time that is the
or the ending of an activity.
4. Three time estimates for each activity are determined and an expected
calculated for each activity.
is the path of activities and events in the
network that will take
the longest time to complete
a. Delays on any activities on the critical path mean that the project
is the degree of latitude about when various
activities can be started
without endangering the completion date of the entire project.
6. After the project has begun, actual times for completion of each
collected and recorded on the PERT network so that any rescheduling and
adjustments can be made as quickly as possible.
Please remember in PERT charts the followings:
are end points that represent the completion
of major activities in a PERT network.
which are the time or resources required to
progress from one event to another in a
is the amount of time an individual activity
can be delayed without delaying the whole
is the longest or most time-consuming sequence
of events or activities in a PERT
1.3 Breakeven Analysis
is a technique for identifying the point at
which total revenue is just sufficient
to cover total costs.
1.4 Linear Programming
is a mathematical technique that can be used
to solve resource allocation
Linear programming (LP)
is a quantitative tool for planning how to
allocate limited or scarce
resources so that a single criterion or goal (often profits) is
1. It is the most widely used quantitative planning tools in business.
2. There are optimal conditions for using linear programming.
a. A single objective must be achieved.
b. Attainable constraints exist.
c. Variables are linearly related to the objective, i.e., and increase
decrease) in the variable leads to a proportional increase (or decrease)
2. CONTEMPORARY PLANNING TECHNIQUES.
Two planning techniques that are appropriate
for planning in an environment that’s both dynamic and
complex are project management and scenario planning.
2.1 Project Management
is a one-time-only set of activities that has
a definite beginning and ending point in time.
is the task of getting a project’s activities
done on time, within budget, and according
Project Management Process.
There are seven steps in the project planning process.
a. Define objectives.
b. Identify activities and resources.
c. Establish sequences.
d. Estimate time for activities.
e. Determine project completion date.
f. Compare with objectives.
g. Determine additional human resource requirements.
The role of the project manager
a. The only real influence project managers have is their communication
skills and their power of
b. Team members seldom work on just one project; they’re usually
assigned to two or three at any
2.2 Scenario planning
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
3. Other Planning Techniques:
3.1 Queuing or waiting-line models
are mathematical models that describe the
characteristics of queuing situations.
1. Queuing situations can be any combination of single-server or
a. Single-server queues involved service provided at a single point.
b. Multiple-server queues occur when a number of stations draw from a
2. Queuing models allow managers to vary the parameters of a situation
the probable effects.
3.2 Simulation Models
Simulation is a mathematical imitation of
reality. It is used when the situation is too complex for
linear programming or queuing theory.
3.3 Decision Trees
Trees are graphic models displaying structures
of a sequence of alternative course of action and
usually showing payoffs associated with various paths and probabilities
associated with potential