Production Planning & Control

It is an organized activity of converting raw materials into useful products. But before
starting the actual production, production planning is done to anticipate possible
difficulties and to decide in advance as to how the production process should be
carried out in a best and economical way to satisfy customers. Since only planning of
production is not sufficient, hence management takes all possible steps to see that
plans chalked out by planning department are properly adhered to and the standard
set are attained. In order to achieve it, control over production is exercised. The
ultimate aim of production planning and control (PPC) is to produce the products of
right quality in right quantity at the right time by using the best and least expensive
methods.

Production planning and control can thus be defined as:

The process of planning the production in advance.
Setting the exact route of each item.
Fixing the starting and finishing date for each item.
To give production orders to different shops.
To see the progress of products according to order.
16-1
Objectives of PPC
 To determine the sequence of operations to continue production.
 To issue co-ordinated work schedule of production to the supervisor/foreman of
various shops.
 To plan out the plant capacity to provide sufficient facilities for future production
program.
 To maintain sufficient raw materials for continuous production.
 To follow up production schedule to ensure delivery promises.
 To evaluate the performance of various shops and individuals.
 To give authority to right person to do right job.

PPC and related functions

16-2
16-3
 Master Production Planning
(MPS)
 A timetable that specifies what is to be
made (usually finished goods) and when.

Copyright 2009, John Wiley & Sons, Inc. 16-4

16-5
 Material Requirements Planning (MRP)

Introduction
Material Requirements Planning (MRP) is a computer-based production planning and
inventory control system. MRP is concerned with both production scheduling and
inventory control. It is a material control system that attempts to keep adequate inventory
levels to assure that required materials are available when needed.

In dependent demand situation, if the demand for an item is known, the demand for other
related items can be estimated. For example, if the demand of an automobile is known,
the demand of its sub-assemblies and sub components can easily be estimated. For
dependent demand situations, normal reactive inventory control systems (i.e. EOQ etc.)
are not suitable because they result in high inventory costs and unreliable delivery
schedules. More recently, managers have realized that inventory planning systems (such
as materials requirements planning) are better suited for dependent demand items. MRP
is a simple system of calculating arithmetically the requirements of the input materials at
different points of time based on actual production plan. OR
RIGHT MATERIAL ON RIGHT PLACE AT RIGHT TIME

MRP can also be defined as a planning and scheduling system to meet time-phased
materials requirements for production operations. MRP always tries to meet the delivery
schedule of end products as specified in the master production schedule.
16-6
 Material Requirements Planning (MRP)

MRP Objectives
“To determine when material for production is required.”

MRP has several objectives, such as:

1. Reduction in Inventory Cost: By providing the right quantity of material at
right time to meet master production schedule, MRP tries to avoid the cost of
excessive inventory

2. Meeting Delivery Schedule: By minimizing the delays in materials

procurement, production decision making, MRP helps avoid delays in
production thereby meeting delivery schedules more consistently.

3. Improved Performance: By stream lining the production operations and

minimizing the unplanned interruptions, MRP focuses on having all components
available at right place in right quantity at right time.

16-7
 Material Requirements Planning (MRP)

MRP System
A simple sketch of an MRP system is shown in figure below. It can be seen from
the figure that an MRP system has three major input components:

16-8
 Material Requirements Planning (MRP)

Master Production Schedule (MPS): MPS is designed to meet the market

demand (both the firm orders and forecasted demand) in future in the taken
planning horizon. MPS mainly depicts the detailed delivery schedule of the end
products. However, orders for replacement components can also be included in
it to make it more comprehensive.

Bill of Materials (BOM) File: BOM represents the product structure. It

encompasses information about all sub components needed, their quantity, and
their sequence of buildup in the end product. Information about the work centers
performing buildup operations is also included in it.

Inventory Status File: Inventory status file keeps an up-to-date record of each
item in the inventory. Information such as, item identification number, quantity on
hand, safety stock level, quantity already allocated and the procurement lead
time of each item is recorded in this file.

16-9
 Material Requirements Planning (MRP)

After getting input from these sources, MRP logic processes the available
information and gives information about the following:

1. Planned Orders Receipts: This is the order quantity of an item that is

planned to be ordered so that it is received at the beginning of the period
under consideration to meet the net requirements of that period. This order
has not yet been placed and will be placed in future.

2. Planned Order Release: This is the order quantity of an item that is planned
to be ordered in the planned time period for this order that will ensure that
the item is received when needed. Planned order release is determined by
offsetting the planned order receipt by procurement lead time of that item.

3. Order Rescheduling: This highlight the need of any expediting, de-

expediting, and cancellation of open orders etc. in case of unexpected
situations.

16-10
 Capacity Balancing

Capacity balance is a mechanism to attempt to match

production needs to the available time and resources to
achieve the production. In other words, it is the process
of striking a balance between workload and resource
capacity.

The workload, or production, can be defined as the job

volume times the necessary time needed to process it.
Capacity, or resources, is the available time to process
jobs times the number of similar resources.

16-11
 What is Scheduling?

 Scheduling - specifies when labor, equipment,

facilities are needed to produce a product or
provide a service
 Last stage of planning before production
occurs
 Loading – assignment of jobs to process
centers
 Sequencing – determining the order in which
jobs will be processed

16-12
 Objectives in Scheduling

 Meet customer due  Minimize overtime

dates  Maximize machine or
 Minimize job lateness labor utilization
 Minimize response time  Minimize idle time
 Minimize completion  Minimize work-in-
time process inventory
 Minimize time in the
system

16-13
 Loading

 Process of assigning work to limited

resources
 Perform work on most efficient resources
 Use assignment method of linear
programming to determine allocation

16-14
 Assignment Method

To convert a maximizing problem to an equivalent minimization

problem, we create a minimizing table by subtracting every number in
the original payoff table from the largest single number in that table.
We then proceed to step 1 of the four-step assignment method 16-15
 Sequencing

 Prioritize jobs assigned to a resource

 If no order specified use first-come
first-served (FCFS)
 Many other sequencing rules exist
 Each attempts to achieve to an
objective

16-16
 Sequencing Rules

 FCFS - first-come, first-served

 DDATE - earliest due date
 SLACK - smallest slack
 CR - critical ratio
 SPT - shortest processing time

16-17
 Critical Ratio Rule

CR considers both time and work remaining

time remaining due date - today’s date
CR = work remaining = remaining processing time

If CR > 1, job ahead of schedule

If CR < 1, job behind schedule
If CR = 1, job on schedule

16-18
 Sequencing Jobs Through One
Process

 Flowtime (completion time)

 Time for a job to flow through the system
 Makespan
 Time for a group of jobs to be completed
 Tardiness
 Difference between a late job’s due date
and its completion time

16-19
Simple Sequencing Rules

PROCESSING DUE
JOB TIME DATE
A 5 10
B 10 15
C 2 5
D 8 12
E 6 8

16-20
 Simple Sequencing
Rules: FCFS

FCFS START PROCESSING COMPLETION DUE

SEQUENCE TIME TIME TIME DATE TARDINESS
A 0 5 5 10 0
B 5 10 15 15 0
C 15 2 17 5 12
D 17 8 25 12 13
E 25 6 31 8 23

16-21
 Simple Sequencing
Rules: DDATE

DDATE START PROCESSING COMPLETION DUE

SEQUENCE TIME TIME TIME DATE TARDINESS
C 0 2 2 5 0
E 2 6 8 8 0
A 8 5 13 10 3
D 13 8 21 12 9
B 21 10 31 15 16

16-22
 Simple Sequencing A(10-0) – 5 = 5
B(15-0) - 10 = 5
Rules: SLACK C(5-0) – 2 = 3
D(12-0) – 8 = 4
E(8-0) – 6 = 2

SLACK START PROCESSING COMPLETION DUE

SEQUENCE TIME TIME TIME DATE TARDINESS
E 0 6 6 8 0
C 6 2 8 5 3
D 8 8 16 12 4
A 16 5 21 10 11
B 21 10 31 15 16

Slack= due date - today’s date - remaining processing time

16-23
 A(10)/5 = 2.00
Simple Sequencing B(15)/10 = 1.50
Rules: CR C (5)/2 = 2.50
D(12)/8 = 1.50
E (8)/6 = 1.33
CR START PROCESSING COMPLETION DUE
SEQUENCE TIME TIME TIME DATE TARDINESS
E 0 6 6 8 0
D 6 8 14 12 2
B 14 10 24 15 9
A 24 5 29 10 19
C 29 2 31 5 26

16-24
 Simple Sequencing
Rules: SPT

SPT START PROCESSING COMPLETION DUE

SEQUENCE TIME TIME TIME DATE TARDINESS
C 0 2 2 5 0
A 2 5 7 10 0
E 7 6 13 8 5
D 13 8 21 12 9
B 21 10 31 15 16

16-25
 Simple Sequencing
Rules: Summary

AVERAGE AVERAGE NO. OF MAXIMUM

RULE COMPLETION TIME TARDINESS JOBS TARDY TARDINESS

FCFS 18.60 9.6 3 23

DDATE 15.00 5.6 3 16
SLACK 16.40 6.8 4 16
CR 20.80 11.2 4 26
SPT 14.80 6.0 3 16

16-26
 Sequencing Jobs Through
Two Serial Process
Johnson’s Rule
1. List time required to process each job at each machine.
Set up a one-dimensional matrix to represent desired
sequence with # of slots equal to # of jobs.
2. Select smallest processing time at either machine. If
that time is on machine 1, put the job as near to
beginning of sequence as possible.
3. If smallest time occurs on machine 2, put the job as
near to the end of the sequence as possible.
4. Remove job from list.
5. Repeat steps 2-4 until all slots in matrix are filled and all
jobs are sequenced.

16-27
 Johnson’s Rule

JOB PROCESS 1 PROCESS 2

A 6 8
B 11 6
C 7 3
D 9 7
E 5 10

E A D B C

16-28
 Johnson’s Rule (cont.)

E A D B C

E A D B C Process 1
(sanding)
5 11 20 31 38
Idle time

E A D B C Process 2
(painting)
5 15 23 30 37 41

Completion time = 41
Idle time = 5+1+1+3=10

16-29
 Guidelines for Selecting a
Sequencing Rule

1. SPT most useful when shop is highly congested

2. Use SLACK for periods of normal activity
3. Use DDATE when only small tardiness values can
be tolerated
4. Use FCFS when operating at low-capacity levels
5. Do not use SPT to sequence jobs that have to be
assembled with other jobs at a later date

16-30