• Inherent safety – This is the prerequisite for any layout in any type of operation. All processes that might constitute any physical or other danger to either staff or customers should not be accessible to the unauthorized. Fire exits should be clearly marked with uninhibited access. Pathways should be clearly defined and not cluttered. All signage should be clear and unambiguous.
• Security – Similar to safety in some ways, facilities and layouts should ensure that anyone with malicious intent cannot gain access to staff, customers or property.
• Length of flow – The flow of materials, information or customers should be channelled by the layout so as to be appropriate for the objectives of the operation. In many operations this means minimizing the distance travelled by transformed resources. However, this is not always the case. In supermarkets, for example, layout objectives can include encouraging customers to ‘flow’ in particular ways that maximize sales.
• Minimize delays – Delays can, of course, be caused by over-long routes through the layout, as described above, but inconvenient placing of facilities, or insufficient capacity allocated to parts of the layout (that is, a bottleneck, see previous chapter), may also cause them.
• Reduce work-in-progress – Excessive work-in-progress can be caused by bottlenecks, but the layout of a process may be used deliberately to limit the ability of items to accumulate.
• Clarity of flow – All flow of materials and customers should be well signposted, clear and evident to staff and customers alike. For example, hospital processes often rely on signposted routes with different coloured lines painted on the floor to indicate the routes to various departments.
• Staff conditions – Layouts should be arranged so that staff are located away from noisy or unpleasant parts of the operation. The layout should provide for a well-ventilated, well-lit and, where possible, pleasant working environment.
• Communication – Communication between staff can be particularly important for some types of operation, such as those in creative industries. The layouts of some operations are deliberately designed to promote the kind of chance meetings between staff that can lead to the formulation of creative ideas.
• Management co-ordination – Supervision and communication should be assisted by the relative location of staff, the use of communication devices and information points.
• Accessibility – All machines, plant or equipment should be accessible to a degree that is sufficient for proper inspection, cleaning and maintenance.
• Use of space – All layouts should achieve an appropriate use of the total space available in the operation (including height as well as floor space). This usually means minimizing the space used for a particular purpose, but sometimes can mean achieving an impression of spacious luxury, as in the entrance lobby of a high-class hotel.
• Use of capital – Capital investment should be minimized (consistent with other objectives) when finalizing layout.
• Long-term flexibility – Layouts need to be changed periodically as the needs of the operation change. A good layout will have been devised with the possible future needs of the operation in mind.
• Image – The layout of an operation can help to shape the image of an organization, both in its customer markets and in the labour market from which it recruits. The appearance of a layout can be used as a deliberate attempt to establish a company’s brand.
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In a fixed-position layout, the product stays in a fixed position. Its component parts are produced in remote workstations and brought to the production area for final assembly. Increasingly, self-managed teams are using fixed-position layouts. Different teams assemble each component part and then send the parts to the final assembly team, which makes the final product. A fixed-position layout is commonly used for products such as jet airliners, mainframe computers, and gas turbines—products that are complex and difficult to assemble or so large that moving them from one workstation to another would be difficult. Even companies that specialize in office architecture have rethought their workspaces.
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For example:

• Motorway construction– the product is too large to move.
• Open-heart surgery – patients are too delicate to move.
• High-class service restaurant – customers would object to being moved to where food is prepared.
• Shipbuilding – the product is too large to move.
• Mainframe computer maintenance – the product is too big and probably also too delicate to move, and the customer might object to bringing it in for repair.
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In Process layout, similar resources or processes are located together. This may be because it is convenient to group them together, or that the utilization of transforming resources is improved. It means that when products, information or customers flow through the operation, they will take a route from activity to activity according to their needs. Different products or customers will have different needs and therefore take different routes. Usually this makes the flow pattern in the operation very complex.                                                                                                                                                                            (2 marks)

Examples of functional layouts include:

• Hospital – some processes (for example, X-ray machines and laboratories) are required by several types of patient; some processes (for example, general wards) can achieve high staff and bed utilization.
• Machining the parts which go into aircraft engines – some processes (for example, heat treatment) need specialist support (heat and fume extraction); some processes (for example, machining centres) require the same technical support from specialist setter–operators; some processes (for example, grinding machines) get high machine utilization as all parts which need grinding pass through a single grinding section.
• Supermarket – some products, such as tinned goods, are convenient to restock if grouped together. Some areas, such as those holding frozen vegetables, need the common technology of freezer cabinets. Others, such as the areas holding fresh vegetables, might be together because, that way, they can be made to look attractive to customers (see the opening ‘Operations in practice’ case).
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• Line layout involves locating the transforming resources entirely for the convenience of the transformed resources. Each product, piece of information or customer follows a prearranged route in which the sequence of activities that are required matches the sequence in which the processes have been located. The transformed resources ‘flow’ along a ‘line’ of processes according to their ‘product’ needs. This is why this type of layout is sometimes called flow or product layout. Flow is clear, predictable and therefore relatively easy to control. Usually, it is the standardized requirements of the product or service that lead to operations choosing line layouts.
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  Examples of line layout include:
• Automobile assembly – almost all variants of the same model require the same sequence of processes.
• Mass-immunization programme – all customers require the same sequence of clerical, medical and counselling activities.
• Self-service cafeteria – generally the sequence of customer requirements (starter, main course, dessert and drink) is common to all customers, but layout also helps control customer flow.
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• Economic growth rate – the growth rate of an economy is measured by Gross Domestic Product (GDP) and it is the basic indicator of the general health of the economy. The increase in the GDP rate from year to year means that economic activities are expanding, and more money is being spent in an economy. This presents an opportunity for organisations to expand their business and make more profit. The reverse holds where economic growth is in decline the goods and services produced in an economy reduces largely due to reduced spending by various units including government, private sector and consumption by households. This situation is usually referred to as recession.
• Inflation – this refers to the general increase in the prices of goods and services. Some level of inflation is required in an economy to generate necessary demand for goods and services. Inflation becomes a threat where the rate becomes to high. What is high is relative but here in Ghana, Bank of Ghana charged with price stability has set the right inflation range at 8%+/-2% (i.e. 6% – 10%). This means inflation beyond 10% will be considered a threat to businesses since it negatively affects the purchasing power.
• Interest rate – this is the price or cost paid for borrowed funds/monies and it is part of cost of doing business. When interest rates are generally high the interest cost paid on debt capital becomes high and since the interest cost is fixed companies with low profits will significantly be affected negatively.
• Fiscal policy – this refers to the use by government of taxation and expenditure to regulate economic growth. Generally, when taxes are increased, and government expenditure reduced at the same time to balance the budget businesses get reduced cash flow for further business and goods and services of the organisation demand drops since government is one of the buyers in the economy. However, when taxes are reduced, and government increase expenditure this free up the cash flow and increase demand for goods and services of the business respectively and that is a good opportunity.
• Budget deficit – when government expenditure exceeds revenue it results in budget deficit which must be financed. Budget deficit is financed through borrowing from capital market (both domestic and foreign) and from central bank where money is printed for government. Borrowing from domestic capital market increases interest rates and thereby crowds out the private sector and central bank financing may fuel inflation since increase in money supply is not backed by real productivity.
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• Executive Support Systems (ESS) – An Executive Support System (ESS) pools data from internal and external sources and makes information available to senior managers in an easy-to-use form. ESS help senior managers make strategic, unstructured decisions. An ESS also provide senior managers with easy access to key internal and external information. It is a flexible system which summarises and tracks strategically critical information, possibly drawn from internal MIS and DSS, but also including data from external sources eg competitors, legislation, and external databases such as Reuters.
• Management Information Systems (MIS) – Management Information Systems (MIS) convert data from mainly internal sources into information (eg summary reports, exception reports). This information enables managers to make timely and effective decisions for planning, directing and controlling the activities for which they are responsible. An MIS provides regular reports and (usually) on-line access to the organisation’s current and historical performance.
• Decision-Support Systems (DSS) – combine data and analytical models or data analysis tools to support semi-structured and unstructured decision making. The DSS has analytical capabilities, is user-friendly and flexible and supports the decision maker. An example of a DSS is the spreadsheet.
• Expert systems – An expert system is a computer program that captures human expertise in a limited domain of knowledge. An expert system can make decisions and is used in specific applications such as medical diagnosis and credit approval in banking. It has a database of facts and rules and an inferencing engine to process the rules and establish which ones apply. It can then suggest a decision.
• Knowledge Work Systems (KWS) – Knowledge Work Systems (KWS) are information systems that facilitate the creation and integration of new knowledge into an organisation. Knowledge Workers are people whose jobs consist of primarily creating new information and knowledge. They are often members of a profession such as doctors, engineers, lawyers and scientists.
• Office Automation Systems (OAS) – Office Automation Systems (OAS) are computer systems designed to increase the productivity of data and information workers. OAS support the major activities performed in a typical office such as document management, facilitating communication and managing data. Examples include:
   Word processing, desktop publishing, and digital filing systems
   E-mail, voice mail, videoconferencing, groupware, intranets, schedulers
   Spreadsheets, desktop databases.
• Transaction Processing Systems (TPS) – A Transaction Processing System (TPS) performs and records routine transactions. Transaction processing systems are used at operational level for routine processing of data items and transactions. They provide the raw material for management information systems. Examples include inventory systems and order processing systems.
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Reconcile the opening balance in the bank account with the opening balance on the bank statements.

• Policy formulation: The Marketing department is responsible for developing a policy framework that would direct the company’s marketing activities. The successful implementation of a marketing policy would facilitate the enhancement of the company’s competitive position.
• Consumer demand anticipation: The department would anticipate consumer demands and develop the services that will meet those demands. The successful provision of consumer demands would result to high customer retention and widening of the of the company’s market shares.
• Research: The department would conduct research to be able to know the company’s position in terms of its market share and also identify the buying trends of the target market.
• Budgeting: The Marketing department in collaboration with the finance department would prepare the budget for the department in terms of sales and other activities. Such a function is to ensure financial discipline in the disbursement of funds.
• New services development: It would be the responsibility of the Marketing department in collaboration with Production and Research departments to develop new services that would be acceptable to target markets. Such a move would ensure attraction and retention of buyers and to facilitate the expansion of the company’s customer base.
• Setting prices: The Marketing department in collaboration with the finance department would perform the function of setting prices for the company’s services.
• Distribution channels: It would be the function of the new Marketing department to establish channels of distribution. Such channels would facilitate the delivery of the company’s services to clients.
• Risk assessment. The new Marketing department would conduct risk assessment of the company’s offer to be able to identify the extent to which such offer is threatened externally. Such initiative would strategically cushion the company against unforeseen contingencies.
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• Formulation of plans: A mission statement would facilitate the formulation of the company’s plans. A mission statement would serve as guideposts that would direct how the company’s plans should be formulated in order to achieve its objectives.
• Evaluation and screening: A mission statement would act as a benchmark by which the company’s plans are judged. The company would use the mission statement to assess whether its activities are in line with its ethical values, beliefs and general performance.
• Strategy implementation: The mission statement would affect the implementation of the planned strategies of Hard Leather Ltd. This is because the mission statement will determine how the company conducts its business.
• Unanimity of purpose: A mission statement would ensure unanimity of purpose within the company. The development of a mission statement will direct all employees towards the achievement of a single established purpose.
• Translation of objectives: A mission statement would facilitate the translation of objectives into work structure. This is because it is the mission statement that would determine the assignment of work responsibilities to individuals within the company.
• Allocation of resources: A mission statement would provide the basis and a standard for disbursing the company’s resources.

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• Omission – a transaction is not recorded at all.
• Error of commission – an item is entered to the correct side of the wrong account (there is a debit and a credit here, so the records balance)
• Error of principle – an item is posted to the correct side of the wrong type of account, as when cash paid for plant repairs (expense) is debited to plant account (asset). Errors of principle are really a special case of errors of commission, and once again there is a debit and a credit.
• Error of original entry – an incorrect figure is entered in the records and then posted to the correct account. Example: Cash GH¢1,000 for plant repairs is entered as GH¢100; plant repairs account is debited with GH¢100.
• Reversal of entries – the amount is correct, the accounts used are correct, but the account that should have been debited is credited and vice versa.

Example: Factory employees are used for plant maintenance:

Correct entry: Debit: Plant maintenance; Credit: Factory wages                                                                                           (Any 3)

The mission of Hard Leather Ltd is to offer customers the best quality shoes they can find anywhere. We provide all customers both at the high and low end markets with the highest level of satisfaction through the offering of high quality shoes at affordable prices.
OR
Hard Leather Ltd offers a line of contemporary shoes for all classes of customers who want to remain differentiated in their sphere of life. Our shoes are offered to the urban, metropolitan and distinguished people who want to remain a step ahead.
OR
Hard Leather Ltd provides high quality shoes at affordable prices to people in the middle and upper classes who appreciate well-crafted and differentiated dress shoes.