Production And Operation " Techniques Of Controlling"
Published on: Mar 4, 2016
Transcripts - Production And Operation " Techniques Of Controlling"
Techniques of Control
Controlling is an essential function
Of management in every organization.
The management process is incomplete
and sometime useless without the control
Importance of Controlling
Coping with uncertainty.
Handling complex situations
Process of Control
Techniques of Control
Control techniques provide managers
with the type and amount of
information they need to measure and
A budget is a planning and controlling device.
Budgetary control is a technique of managerial
control through budgets. It is the essence of
financial control. Budgetary control is done for
all aspects of a business such as income,
expenditure, production, capital and revenue.
Budgetary control is done by the budget
Types of Budget
Selling & distribution Budget
Production Cost Budget
Capital Expenditure Budget
Financial Ratio Analysis
It examines the relationship between specific figures on the
financial statements and helps explain the significance of those
• Liquidity ratios: It measure an organization's ability to
• Profitability ratios: It measure an organization's ability to
• Debt ratios: It measure an organization's ability to pay its
• Activity ratios: It measure an organization's efficiency in
operations and use of assets.
Audit can be of two types
• Carried out by the members of the
• Its objective is to provide reasonable assurance
that the assets are properly safeguarded and its
financial records reliably kept.
• Largely a verification process which involves
independent appraisal of organization’s
financial accounts and statements
• Conducted by accounting personnel employed
by an outside CPA firm or by chartered
A major part of control
consists of preparing
reports to provide
information to the
purpose of control and
Types of reports
The following are the certain type of reports
• Top Management:
a) profit and loss account
b) Balance sheet
c) position of work
d) cash flow statement
e) position of working capital
• Sales management:
Actual sales compared with budgeted sale to
• Production management:
To Works manager
Direct Supervision and
1.'Direct Supervision and Observation' is the oldest and
the most traditional technique of controlling.
2. The supervisor himself observes the employees and
their work. This brings him in direct contact with the
3. The supervisor gets first hand information, and he has
better understanding with the workers.
4.This technique is most suitable for a smallsized business.
Break Even Analysis
• It deals with the study of the relationship
between costs, volume, & profit.
• It determines the probable profit and losses at
different levels of activity.
• The sales volume at which there is no profit,
no loss is known as breakeven point.
• It can be calculated as ,
• Breakeven point=fixed cost/selling price per
unit – variable cost per unit.
The Program (or Project) Evaluation and
Review Technique, commonly abbreviated
PERT, is a statistical tool, used in project
management, that is designed to analyze and
represent the tasks involved in completing a
Diagram of PERT
Optimistic time (O)
Pessimistic time (P)
Expected time (TE)
The critical path method (CPM) is an
algorithm for scheduling a set of project
activities. It is an important tool for effective
The essential technique for using CPM is to construct a
model of the project that includes the following:
A list of all activities required to complete the project,
The time (duration) that each activity will take to
The dependencies between the activities.
• Using these values, CPM calculates the longest path of
• This process determines which activities are "critical
and which have "total float" .
• Determines the shortest time possible to complete the
Diagram of CPM