OPERATIONAL FRAMEWORK

EXTERNAL INTERNAL

Market demand Manpower, Equipment, Current Capacity

PROCESS

Forecasting and production planning

OUTPUT

Proposed production plan

STATEMENT OF THE PROBLEM

1. What is the p[resent status of _____ in terms of:

Capacity, production distribution, product demand, and workforce
2. What is the future demand of ___________ for the year 20----
3. What is the proposed production plan for __ to meet the future demand?
RRL

The capacity of the production system defines the firm’s competitive boundaries. Specifically, it sets the
firm’s response rate to market, its costs, structure, its workforce composition, its level of technology. Its
management and staff support requirements and its general inventory level. If the capacity is
inadequate, a company may lose customers through slow service or by allowing competitors to enter
the market. Moreover, if capacity is excessive, a company may have reduce its prices to stimulate
demand, underutilized its workers, carry excess inventory or seek additional, less profitable products to
stay in business (Chase et.al 2004)

Industrial engineers are the glue that holds the manufacturing process together. Responsibilities can
include everything from managing productivity and inventory to quality control to designing the layout
of the factory floor. Industrial engineers need a thorough knowledge of product design, assembly
methods, and economical operation in a manufacturing unit of an organization, it is essential to
integrate the production planning and control system. Production planning and subsequent production
control follow adaption of product design and finalization of a production process. Production planning
and control address a fundamental problem of low productivity, inventory management and resource
utilization. Production planning is required for scheduling, dispatch, inspection, quality management,
inventory management, supply management and equipment management
(http://www.slideshare.net/badebhau/industrial-engineering-unit-4-notes-by-badebhau)

By effectively planning the production, they can be sure that capacity and product demand meet their
company’s profitability. When they predict how many products they will sell, plan for adequate capacity
and develop production schedules that run without delays, they eliminate unnecessary costs. The key is
to identify information sources yielding reliable data that allows them to predict accurately the levels of
production and the scheduling that they need (http://smallbusiness.chron.com/production-capacity-
planning-65984.html).

Forecasts are key inputs used to answer the question how much capacity is needed and when is it
needed. In some instances, capacity choices are made very infrequently; in others, they are made
regularly, as part of ongoing process.

Planning and scheduling are forms of decision making that are used on a regular basis in many
manufacturing and service industries. Decision making process plays an important role in procurement
and production, in transportation and distribution, and in information processing and communication.
The planning and scheduling functions in a company rely on a mathematical technique and heuristics
methods that allocate limited resources to the activities to be done. The allocation of resources has to
be done in such a way that the company optimizes its objectives and achieves its goals.

Production is the function of a manufacturing enterprise responsible for the efficient planning,
scheduling, and coordination of all production activities (encyclopedia2.thefreedictionary.com)

The same web also mentioned that production planning is a complex process that covers a wide range
of activities that ensures that material, capacity and human resources are available when needed, which
is also stressed by the businessdictionary.com, that production planning is the volume of products that e
generated by a production plant or enterprise in a given period by using current resources.
RRS

According to the research study conducted by de ramos, marasigan and nagar (2009) entitled
“proposed production schedule of cabbage in brgy mamala, sariaya, quezon for the year 2010-2012” the
existing production and demand was used to develop a proposal which concentrated on making a
production schedule; when to produce and the amount of resource requirements needed for the said
production. In their study, the independent variable was workforce and market demand. On the other
hand, the dependent variable was production schedule that that would maximize the profit. This was
found out through the use of forecasting method. Their study also revealed that the most reliable
method in projecting the consumption of cabbage was the one with the smallest standard deviation
among the entire forecasting model used. To determine the accuracy of their method, the relied to
mean squared error, since it obtained the least error.

According to the research study conducted by peeyush Mehta (2004) entitled “production planning and
scheduling in multi-stage batch production environment” they investigated the potential of production
planning and scheduling in reducing the operational costs of manufacturing firms with complex
production environment. They discussed that manufacturing firms are facing complexities in form of
increasing product variety, shrinking product volumes, demand variability , and increase in customer
response. As a result, firms are paying high attention to the operating costs. They discussed that
production planning and scheduling can contribute significantly in reducing the operating costs of firms.

*note labor requirements