AAOM Handbook

PS.09 Have Confidence Levels Been Met?

Context

The objective of a Production Strategy for a process is to deliver the required process output at the lowest practical cost.

The task assignments completed to up to this point in the process of setting the Production Strategy have identified the performance gap to be addressed, the feasible Production Strategy options for closing the performance gap, and the estimated effects of those strategy choices on output and costs. If the modelled performance for the proposed strategies produce a match to the confidence level set for the performance targets then the strategies will be effective and can be further developed for implementation. If the modelled performance for the proposed strategies produce a confidence level that exceeds that set for the target then the responsible manager may wish to reset the performance targets. If the modelled performance for the proposed strategies produce a confidence level below that set for the target then a new package of strategies will need to be proposed, or new targets set, or the lower confidence level accepted by the responsible manager.

Purpose

To determine if the performance forecast for the proposed Production Strategies meets the confidence level set for the performance targets.

Quantity

• One decision whether the performance target confidence level for the selected Production Strategies meets the confidence level target set for the process.

Quality

If the estimated confidence levels on performance targets is between +0 and +5% of the target set for the process the confidence levels shall be considered to meet the target and the selected Production Strategies shall be implemented. If the estimated confidence levels fall outside of this range then the process of Setting Performance Targets must be revisited to decide whether to; • try a new package of strategies, or • set new targets, or • lower the confidence level that will be accepted.

Time

The Production Strategy shall be specified during establishment of a process.

© McAlear Management Consultants 2006

Operational Planning: Set Production Strategy

Updated: August 2018

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