PPC 201

 Who is he/ she

 Mohamad Maaroff Bahurdin
 Where does he/ she come from
 How to contact
 Write & send to
▪ dfarouq@yahoo.com
 Ring me up
▪ 019 470 8987

2
 Who Are You
 What is Your Background

3
 Basic of Manufacturing

“If an organization can produce the best quality product / service

with the lowest cost and on time delivery, without forgetting the
environment and safety regulations, surely can survive in the
present day business climate.” Ridzuan 2004
5
Topic 1
 After
studying this lesson, you should
be able to:
 Describe the production function and
its component
 Define production management

7
• Production system function is to convert a set of inputs into a
set of desired outputs

Conversion
Inputs Outputs
process

Control

8
 Is a strategic decision
 Consists of form and function
 Should be dictated by the market
demand

9
•Factors to consider: -

a) Standardization g) Quality commensuration

b) Reliability with cost
c) Maintainability h) Product value
d) Servicing i) Consumer quality
e) Sustainability j) Reproducibility
f) Product simplification k) Needs and tastes of
consumers

• Above of all, the product design should be dictate by

the market demand
10
 Is the framework within which the production
activities of an enterprise take place
 To ensures the coordination of various
production operations
 No single pattern of production system which is
universally applicable to all types of production
system

11
1. Continuous production
o standardized products with a standard set of
process - mass flow or assembly line production
1. Job or unit production
o production as per customer's specification -
varied products
1. Intermittent production
o the goods are produced partly for inventory and
partly for customer's orders - Automobile
plants, printing presses, electrical goods plant

12
 Differenttypes of production system
are distinct and require different
conditions of manufacturing process
 Selection of manufacturing process
is also a strategic decision as
changes are costly.

13
 Jobbing production
 one or few units of the products are produced as per the
requirement and specification of the customer
 Batch production
 limited quantities of each of the different types of products
are manufactured on same set of machines
 Mass or flow production
 production run is conducted on a set of machines arranged
according to the sequence of operations
 Process Production
 the production run is conducted for an indefinite period.

14
 Effect of volume/variety
 volume is low and variety is high, intermittent process
 increase in volume and reduction in variety continuous
process
 Capacity of the plant
 Projected sales volume is the key factor to make a choice
between batch and line process.
 Lead time
 continuous process normally yields faster deliveries as
compared to batch process
 Flexibility and Efficiency
 to adapt contemplated changes and volume of production

15
 Process
Degree of
repetitiveness Line
Batching
Jobbing

One Many

16
 Is
essentially required for efficient and
economical production
 Involve
generally the organization and
planning of manufacturing process
 Ultimateobjective is to organize the
supply, movement of materials, labor,
machines utilization and related activities

17
 Productionplanning without
production control is like a bank
without a bank manager
 Planning initiates action while control
is an adjusting process, providing
corrective measures for planned
development

18
 Production Planning
& Control

Production Planning Production Control

Planning Dispatching

Routing Follow up

Scheduling Inspection

Loading Corrective
19
the technique of foreseeing every step in a long series of
separate operations

to determine the best and cheapest sequence of

operations

time that should be required to perform each operation.

Production, Master, Manufacturing schedule

execution of the schedule plan as per the route chalked

out it includes the assignment of the work to the
operators at their machines or work places
important step as it translates production plans into
production.

helps to reveal detects in routing and scheduling,

misunderstanding of orders and instruction, under loading
or overloading of work etc.

to ensure the quality of goods

adjusting the route, rescheduling of work changing the

workloads, repairs and maintenance of machinery or
equipment, control over inventories
 an important method of minimizing work-
in-process inventory
 a pull system means you only do what
your customer wants just in time
 the system pace is determined by the
slowest workstation in the system

Pull !
Don’t Push !

22
1. Explain the meaning of following
key words in your own words
(a) Production planning
(b) Production control
(c) Routing
(d) Scheduling

1. What do you understand by

production planning and control?
Discuss its elements in brief.
23
Topic 2
 By the end of this topic, you should be
able to:
 Define forecast;
 Identify types of forecasts;
 Explain forecasting approaches;
 Solve typical problems using above
approaches;
 Describe the measures of forecast accuracy;
and
 Discuss ways of evaluating and controlling
forecasts.
25
A forecast is a prediction of what will
occur in the future.

A forecast of product demand is the

basis for most important planning
decisions.

26
 Good forecasts are important
 Affect the decisions relating to future
operating plans
 The impact of product forecast:
 Human resources
 Capacity
 Supply-Chain Management

27
28
29
 Analysis
of subjective inputs
obtained from various sources, such
as:
 consumer surveys
 the sales staff
 managers and executives
 panels of experts

30
 Thefuture values of series can be
estimated from the past values.

 Thedata may be measurements of

demand, earnings, profits,
shipments, accidents, output,
productivity and so on.

31
 This
model uses equations that
consist of one or more explanatory
variables that can be used to
predict future events

 Incorporatethe variables or factors

that might influence the quantity
being forecasted into the forecasting
model
32
 Time Horizon
Application
Short Term (0–3 Medium Term (3 Long Term (more than 2
months) months–2 years) years)
Forecast quantity •Individual products or •Total sales •Total sales
services •Groups or families of
products or services

Decision area •Inventory management •Staff planning •Facility location

•Final assembly •Production planning •Capacity planning
Scheduling •Master production •Process management
•Workforce scheduling scheduling
•Master production •Purchasing
scheduling •Distribution

Forecasting technique •Time series •Causal •Causal

•Causal •Judgment •Judgment
•Judgment

33
34
 uses a single previous value of a time series as the basis of a forecast:
 For a stable series; the demand in the next period = the demand in the most
recent period.
▪ For example:
Sales in a store for last week were 60 units.
Therefore, the sale for this week is forecasted to be 60 units also.

 For data with trend, the forecast = to the last value of the series plus or
minus the difference between the last two values of the series.
▪ For example:
Productions in a company for last two months are as follows:

Month Actual change from Previous Month Forecast

April 40
May 43 +3
June 43+3=46
35
 A moving average forecast uses a number of
the most recent actual data values in
generating a forecast.
 Can be computed using the following
equation: n

∑A t −1
Ft = MAn = i =1
n
Where
i = An index that corresponds to time periods
n = Number of periods (data points) in the moving average
At = Actual value in period t-i
MA = Moving average
F = Forecast for time period t

36
1. Simple Moving Average Model
2. Weighted Moving Averages Model

37
 450 —

430 —

410 —
Patient arrivals

390 —

370 —

Actual patient
arrivals

| | | | | |
0 5 10 15 20 25 30
Week
 450 —

430 —

410 —
Patient arrivals

390 —

370 —

Actual patient
arrivals

| | | | | |
0 5 10 15 20 25 30
Week
 450 — Patient
Week Arrivals
430 —
1 400
410 — 2 380
Patient arrivals

3 411
390 —

370 —

Actual patient
arrivals

| | | | | |
0 5 10 15 20 25 30
Week
 450 — Patient
Week Arrivals
430 —
1 400
410 — 2 380
Patient arrivals

3 411
390 —

370 —

Actual patient
arrivals

| | | | | |
0 5 10 15 20 25 30
Week
 450 — Patient
Week Arrivals
430 —
1 400
410 — 2 380
Patient arrivals

3 411
390 —

370 —
F4 = 397.0
Actual patient
arrivals

| | | | | |
0 5 10 15 20 25 30
Week
 450 — Patient
Week Arrivals
430 —
1 400
410 — 2 380
Patient arrivals

3 411
390 —

370 —
F4 = 397.0
Actual patient
arrivals

| | | | | |
0 5 10 15 20 25 30
Week
 450 — Patient
Week Arrivals
430 —
2 380
410 — 3 411
Patient arrivals

4 415
390 —

370 — 415 + 411 + 380

F5 =
3
Actual patient
arrivals

| | | | | |
0 5 10 15 20 25 30
Week
 450 — Patient
Week Arrivals
430 —
2 380
410 — 3 411
Patient arrivals

4 415
390 —

370 —
F5 = 402.0
Actual patient
arrivals

| | | | | |
0 5 10 15 20 25 30
Week
 450 — 3-week MA 6-week MA
forecast forecast
430 —

410 —
Patient arrivals

390 —

370 —

Actual patient
arrivals

| | | | | |
0 5 10 15 20 25 30
Week
 Compute three-month moving average
forecast, given the production for the last
5 periods as follows:
Period Demand

1 42

2 40

3 43

4 40

5 41 F6 = ??

47
 If actual demand in period 6 turns out to
be 38, the moving average forecast for
period 7 would be:
Period Demand

1 42

2 40

3 43

4 40

5 41
F7 = ??
6 38
48
A weighted moving average is
calculated by assigning more weight
to the most recent values in a time
series.

49
 Given the following data;
Compute a weighted average forecast using a
weight of 0.40 for the most recent period, 0.30
for the next most recent, 0.20 for the next and
0.10 for the next.

Period Demand
1 42
2 40
3 43
4 40
F6 = ??
5 41
50
 Period Demand
1 42
2 40
3 43
4 40
5 41

 Solution:
P6 = (0.10) (40) + (0.20) (43) + (0.30)
(40) + 0.40 (41) = 41.0

51
 If the actual demand for period 6 is 39,
forecast demand for period weights as in
previous part.

Period Demand
1 42
2 40
3 43
4 40
5 41
6 39
F7 = ??

52
 Period Demand
1 42
2 40
3 43
4 40
5 41
6 39
 Solution:
F7= 0.10 (43) + (0.20) (40) + 0.30 (41)
+ (0.40) (39) = 40.2

 Note that the weighted moving average is

more reflective of the most recent
occurrences. 53
 The following gives the number of pints of type A
blood used in a hospital in the past 6 weeks:

Week of Pints used

July31 360
August 7 389
August14 410
August21 381
August28 368
September 5 374

Use a 3-week weighted moving average, with weights of 0.1, 0.3 and
0.6, using 0.6 for the most recent week. Forecast demand for the week
of September 12.
54
 is a sophisticated weighted moving-
average forecasting method that is
fairly easy to use.
 The basic exponential smoothing
formula is:

55
 The formula is:
Ft =Ft-1 + α (Dt-1 – Ft-1)

Where,
Ft = Forecast for period t
Ft-1 = Forecast for the previous period
α = Smoothing constant
Dt-1 = Actual demand or sales for the previous period
Each new forecast is equal to the previous forecast plus a
percentage of the previous error.

56
 Forexample, previous forecast was
24 units, actual demand was 20 and
α = 0.1.
The new forecast is,
Ft =24 + 0.1 (20-24) = 23.6

Then, if the actual demand turns out

to be 25, the next forecast would be
Ft = 23.6 + 0.1(25-23.6) = 23.74
57
Period (t) Actual α = .10 α = .40
demand Forecast Error Forecast Error

1 42

2 40 42 -2 42 -2
3 43 41.8 1.2 41.2 1.8
4 40 41.92 -1.92 41.92 -1.92
5 41 41.73 -0.73 41.15 -0.15
6 39 41.66 -2.66 41.09 -2.09
7 46 41.39 4.61 40.25 5.75
8 44 41.85 2.15 42.55 1.45
9 45 42.07 2.93 43.13 1.87
10 38 42.35 -4.35 43.88 -5.88
11 40 41.92 -1.92 41.53 -1.53
12 41.73 40.92
58
 60
ACTUAL α = 0.4
50
40
30
DEMAND

20
α = 0.1
10
0
1 2 3 4 5 6 7 8 9 10 11 12

59
 The following gives the number of pints of type A
blood used in a hospital in the past 6 weeks:

Week of Pints used

July31 360
August 7 389
August14 410
August21 381
August28 368
September 5 374

Calculate the forecast for the week of September 12 using exponential

smoothing with a forecast for July31 of 360 and α = 0.2.

60
 Previously, we have discussed simple exponential
smoothing. Here we will discuss how the
exponential smoothing must be modified when a
trend is present.
 The basic formula is as follows:

61
 With trend-adjusted exponential smoothing, estimates for both the
average and the trend are smoothed. This procedure requires two
smoothing constants, α for the average and β for the trend. We
then calculate the average and trend each period:

Ft = α (Actual demand last period) + (1- α) (Forecast last period +

Trend estimate last period)

Ft = α ( At −1 ) + (1 − α )( Ft −1 + Tt −1 )

Tt = β (Forecast this period – Forecast last period) + (1- β) (Trend

estimate last period)

Tt = β ( Ft − Ft −1 ) + (1 − β )Tt −1
62
 Ft = α ( At −1 ) + (1 − α )( Ft −1 + Tt −1 )

Tt = β ( Ft − Ft −1 ) + (1 − β )Tt −1
 where
Ft = exponentially smoothed forecast of the data series in period t.
Tt = exponentially smoothed trend in period t.
At = actual demand in period t.
α = smoothing constant for the average (0 ≤ α ≤ 1)
β = smoothing constant for the trend (0 ≤ β ≤ 1)

63
 Sothe three steps to compute a
trend-adjusted forecast are:

 Step 1: Compute Ft the exponentially

smoothed forecast for period t.
 Step 2: Compute the smoothed trend,
Tt.
 Step 3: Calculate the forecast including
trend, FITt.

64
  Example
 An Import Agency in Pasir Gudang uses exponential smoothing
to forecast demand for the industrial cleaning machine. It
appears that an increasing trend is present.

Month (t) Actual Demand Month (t) Actual Demand

(At)
1 12
2 17
3 20
4 19
5 24
(At)
6 21
7 31
8 28
9 36
10 ?

Smoothing constants are assigned the values of α = 0.2 and β =0.4. Assume the
initial forecast for month 1 (F1) was 11 units and the trend over that period (T1)
was 2 units.
65
 Step 1: Forecast for month 2:
 F2 = α At + (1 - α) (F1 + T1)
 F2 = (0.2) (12) + (1 - 0.2)(11 + 2) = 12.8 units

 Step 2: Compute the trend in period 2:

 T2 = β (F2 – F1) + (1- β)(T1)
 T2 = (0.4)(12.8 - 11) +(1 - 0.4)(2) = 1.92

 Step 3: Calculate the forecast including trend (FITt)

 FIT2 =F2 +T2 =12.8 + 1.92 = 14.72 units

66
 We will also do the same calculations for the third month.

 Step 1:
F3 = α A2 + (1 - α) (F2 + T2 = (0.2) (17) + (1 - 0.2) (12.8
+ 1.92) = 15.18

 Step 2:
T3 = β (F3 – F2) + (1 – β) (T2) = (0.4)(15.18 – 12.8) + (1-
0.4)(1.92)=2.10

 Step3:
FIT3 =F3 +T3 =15.18 + 2.10=17.28

67
 The next table completes the forecasts for the 10-month period
Month Actual Demand Smoothed Smoothed trend Forecast
Forecast (Ft) (Tt) Including Trend
(FITt)
1 12 11 2 13.00
2 17 12.80 1.92 14.72
3 20 15.18 2.10 17.28
4 19 17.82 2.32 20.14
5 24 19.91 2.23 22.14
6 21 22.51 2.38 24.89
7 31 24.11 2.07 26.18
8 28 27.14 2.45 29.59
9 36 29.28 2.32 31.60
10 - 32.48 2.68 35.16

Forecast with α = 0.2 and β = 0.4 68

40

35

30

25

20

15

10

1 2 3 4 5 6 7 8 9

69
 How do we identify the seasonal
variations in a data?
 We should understand that seasonal
variations in a time series are related
to recurring events such as weather
or holidays. Seasonality may be
applied to hourly, daily, monthly or
other recurring patterns.

70
 The monthly sales at a computer centre in Bandar Tun Dr Ismail for 2003 to 2005 is shown in the
table below. Compute the seasonal indices of every month in a year.

Month Demand Average Average Seasonal Indexb

2003-2005 monthly
2003 2004 2005
demand demanda

Jan. 80 85 105 90 94 0.957 (= 90/94)

Feb. 70 85 85 80 94 0.851 (= 80/94)
Mar. 80 93 82 85 94 0.904 (= 85/94)
Apr. 90 95 115 100 94 1.064 (= 100/94)
May 113 125 131 123 94 1.309 (= 123/94)
June 110 115 120 115 94 1.223 (= 115/94)
July 100 102 113 105 94 1.117 (= 105/94)
Aug. 88 102 110 100 94 1.064 (= 100/94)
Sept. 85 90 95 90 94 0.957 (= 90/94)
Oct. 77 78 85 80 94 0.851 (= 80/94)
Nov. 75 82 83 80 94 0.851 (= 80/94)
Dec. 82 78 80 80 94 0.851 (= 80/94)
Total average demand = 1 128 71
 A) Average monthly demand = 1 128 = 94
12 months

 B) Seasonal index = Average 2003 – 2005 monthly demand

Average monthly demand

 If we expected the 2006 annual demand for computers to

be 1200 units, we would use these seasonal indices to
forecast the monthly demand as follows:

72
Month Demand Month Demand
Jan. 1 200 x 0.957 = 96 July 1 200 x 1.117 = 112
12 12
Feb. 1 200 x 0.851 = 85 Aug. 1 200 x 1.064 = 106
12 12
Mar. 1 200 x 0.904 = 90 Sept. 1 200 x 0.957 = 96
12 12
Apr. 1 200 x 1.064 = 106 Oct. 1 200 x 0.851 = 85
12 12
May 1 200 x 1.309 = 131 Nov. 1 200 x 0.851 = 85
12 12
June 1 200 x 1.223 = 122 Dec. 1 200 x 0.851 = 85
12 12

73
Quarter Year 1 Year 2 Year 3 Year 4
1 45 70 100 100
2 335 370 585 725
3 520 590 830 1160
4 100 170 285 215
Total 1000 1200 1800 2200

Expected Year 5 annual demand to be 2600 units

Year 5 quarterly demand?

 Forecast error is the difference
between the value that occurs and
the value that was predicted for a
given time period.
 Forecast error = Actual demand -
Forecast value

Et = Dt – Ft

75
 Threecommonly used measures to
calculate the overall forecast errors
are:
 Mean Absolute Deviation (MAD)
 Mean Squared Error (MSE)
 Mean Absolute Percent Error (MAPE)

76
 Measures of Forecast Error
Et = Dt – Ft

CFE = Σ Et
Σ (Et – E )2
σ = Σ E2
t n–1
MSE =
n
Σ |E t | Σ [ |Et | (100) ] / Dt
MAD = MAPE = n
n
 Absolute
Error Absolute Percent
Month, Demand, Forecast, Error, Squared, Error, Error,
t Dt Ft Et Et 2
|Et| (|Et|/Dt)(100)
1 200 225 -25 625 25 12.5%
2 240 220 20 400 20 8.3
3 300 285 15 225 15 5.0
4 270 290 –20 400 20 7.4
5 230 250 –20 400 20 8.7
6 260 240 20 400 20 7.7
7 210 250 –40 1600 40 19.0
8 275 240 35 1225 35 12.7
Total –15 5275 195 81.3%
Measures of Error
Absolute
Error Absolute Percent
Month, Demand, Forecast, Error, Squared, Error, Error,
t Dt Ft Et Et 2
|Et| (|Et|/Dt)(100)
1 200 225 –25 625 25 12.5%
2 240 220 20 400 20 8.3
3 300 285 15 225 15 5.0
4 270 290 –20 400 20 7.4
5 230 250 –20 400 20 8.7
6 260 240 20 400 20 7.7
7 210 250 –40 1600 40 19.0
8 275 240 35 1225 35 12.7
Total –15 5275 195 81.3%
Measures of Error
Absolute
CFE = – 15 Error Absolute Percent
Month, Demand, Forecast, Error, Squared, Error, Error,
t Dt Ft Et Et 2
|Et| (|Et|/Dt)(100)
1 200 225 –25 625 25 12.5%
2 240 220 20 400 20 8.3
3 300 285 15 225 15 5.0
4 270 290 –20 400 20 7.4
5 230 250 –20 400 20 8.7
6 260 240 20 400 20 7.7
7 210 250 –40 1600 40 19.0
8 275 240 35 1225 35 12.7
Total –15 5275 195 81.3%
Measures of Error
Absolute
CFE = – 15 Error Absolute Percent
Month, Demand, Forecast, Error, Squared, Error, Error,
– 15 D
E =t = –t 1.875 Ft Et Et 2
|Et| (|Et|/Dt)(100)
8
1 200 225 –25 625 25 12.5%
2 240 220 20 400 20 8.3
3 300 285 15 225 15 5.0
4 270 290 –20 400 20 7.4
5 230 250 –20 400 20 8.7
6 260 240 20 400 20 7.7
7 210 250 –40 1600 40 19.0
8 275 240 35 1225 35 12.7
Total –15 5275 195 81.3%
 Measures of Error
Absolute
CFE = – 15 Error Absolute Percent
Month, Demand, Forecast, Error, Squared, Error, Error,
– 15 D
E =t = –t 1.875 Ft Et Et 2
|Et| (|Et|/Dt)(100)
8
1 200 225 –25 625 25 12.5%
2 240
5275 220 20 400 20 8.3
MSE 3= 300 = 659.4
285 15 225 15 5.0
4 8 270 290 –20 400 20 7.4
5 230 250 –20 400 20 8.7
6 260 240 20 400 20 7.7
7 210 250 –40 1600 40 19.0
8 275 240 35 1225 35 12.7
Total –15 5275 195 81.3%
 Measures of Error
Absolute
CFE = – 15 Error Absolute Percent
Month, Demand, Forecast, Error, Squared, Error, Error,
– 15 D
E =t = –t 1.875 Ft Et Et 2
|Et| (|Et|/Dt)(100)
8
1 200 225 –25 625 25 12.5%
2 5275240 220 20 400 20 8.3
MSE 3= 300 = 659.4
285 15 225 15 5.0
4 8 270 290 –20 400 20 7.4
5 230 250 –20 400 20 8.7
6 σ = 27.4
260 240 20 400 20 7.7
7 210 250 –40 1600 40 19.0
8 275 240 35 1225 35 12.7
Total –15 5275 195 81.3%
 Measures of Error
Absolute
CFE = – 15 Error Absolute Percent
Month, Demand, Forecast, Error, Squared, Error, Error,
– 15 D
E =t = –t 1.875 Ft Et Et 2
|Et| (|Et|/Dt)(100)
8
1 200 225 –25 625 25 12.5%
2 5275240 220 20 400 20 8.3
MSE 3= 300 = 659.4
285 15 225 15 5.0
4 8 270 290 –20 400 20 7.4
5 230 250 –20 400 20 8.7
6 σ = 27.4
260 240 20 400 20 7.7
7 210 250 –40 1600 40 19.0
MAD8 = 195 275= 24.4 240 35 1225 35 12.7
8 Total –15 5275 195 81.3%
 Measures of Error
Absolute
CFE = – 15 Error Absolute Percent
Month, Demand, Forecast, Error, Squared, Error, Error,
– 15 D
E =t = –t 1.875 Ft Et Et 2
|Et| (|Et|/Dt)(100)
8
1 200 225 –25 625 25 12.5%
2 5275240 220 20 400 20 8.3
MSE 3= 300 = 659.4
285 15 225 15 5.0
4 8 270 290 –20 400 20 7.4
5 230 250 –20 400 20 8.7
6 σ = 27.4
260 240 20 400 20 7.7
7 210 250 –40 1600 40 19.0
MAD8 = 195 275= 24.4 240 35 1225 35 12.7
8 Total –15 5275 195 81.3%

81.3%
MAPE = = 10.2%
8
 Measures of Error
Absolute
CFE = – 15 Error Absolute Percent
Month, Demand, Forecast, Error, Squared, Error, Error,
– 15 D
E =t = –t 1.875 Ft Et Et 2
|Et| (|Et|/Dt)(100)
8
1 200 225 –25 625 25 12.5%
2 5275240 220 20 400 20 8.3
MSE 3= 300 = 659.4
285 15 225 15 5.0
4 8 270 290 –20 400 20 7.4
5 230 250 –20 400 20 8.7
6 σ = 27.4
260 240 20 400 20 7.7
7 210 250 –40 1600 40 19.0
MAD8 = 195 275= 24.4 240 35 1225 35 12.7
8 Total –15 5275 195 81.3%

81.3%
MAPE = = 10.2%
8