Question

What are the three most likely situations which arise before any firm while preparing the production plan?

Answer 1

The three situations are:

1. No manufacturing involved: If the new venture does not include any manufacturing function, say it’s a trading firm or a service provider, then this section will stand eliminated from the plan.
2. Partial manufacturing: If some or all the manufacturing process is to be subcontracted or outsourced, then the production plan should describe:
   
   1.  Name and location of subcontractor(s)
   2. Reasons for their selection
   3. Cost and time involved
   4. Any contracts that have been completed etc.In such cases, a clear mention of what entrepreneur intends to do himself and what he plans to get it done from outside is required.
3. Complete Manufacturing: If the manufacturing is to be carried out in whole by the entrepreneur, he/she will need to describe:
   1. the physical plant layout,
   2. the machinery and equipment required to perform the manufacturing operations,
   3. raw materials and suppliers names, addresses, terms and conditions,
   4. cost of manufacturing
   5. any future capital equipment required etc.