PRODUCTION PLANNING

Introduction:-Production Planning & Control:

When a product is to be manufactured, the product must be carefully planned to ensure that proper methods are used and every work centre is assigned the amount of work according to its capacity. While the product is being manufactured, the production must be controlled to ensure that the planned output is constantly maintained. Thus production planning and control (PPC) consists of two different and distinct functions
The principle of PPC lies in the statement first

plan your work

PRODUCTION PLANNING + PRODUCTION CONTROL Production planning involves management decisions relating to how much to produce, what materials parts and tools will be needed, what steps should be followed in the production process, within what time limit the production is to be completed and how much work to be done by each work station. Reduction control involves implementation of production plans or schedules by coordinating different activities. It seeks to ensure that production operations and actual performance occur according to planned operations and performance.

Definations: Production/Operations Planning and Control:

Planning, direction and co-ordination of the firms facilities to achieve the predetermined production objectives in the most economical manner. Establishing the exact route of each individual item, part or assembly, setting staring and finishing dates for each important item or assembly and the finished products, and releasing the necessary orders as well as initiating the required follow-up to effectuate the smooth functioning of the enterprise.

Characteristics: Production Planning is a universal Production Activity.

Production planning includes routing of production

activities & layout of production facilities such as buildings, machines, equipments etc. Production planning is related to planning, directing & controlling of production methods for the manufacturing of products. Production planning is the basis & pre-requisite of production control.

Objectives of PPC:
To establish production targets and requirements. To ensure smooth production by removing problems and bottlenecks in the production process. To coordinate machine and labor for optimum utilization of resources. To guide purchase and supply of materials to suit production rate. To minimize cost of production and to maintain quality of output. To ensure that jobs are completed in time and the delivery schedule is maintained.

Level of Production Planning: Strategic Planning (long range planning) i.e

operating capacities, inventory policies, manufacturing cost, technology forecasting, mostly done by top management. Tactical Planning ( medium range planning ) i.e employment plans, machinery & utility plans, material supply plans, modification plans & expansion plans, generally done at departmental level. Operational Planning (short range planning) i.e it involves proper use of key resources such as raw materials, machine capacity, energy etc., done by junior level management.

Factors affecting PPC:

Type of product Complex and seasonal products require much greater care and problems in production, planning and control for these are much intricate compared to simple and regular products. Type of manufacturing Continuous manufacturing system involves the problem of line balancing so that no shutdown occurs. In intermittent system, on the other hand, problems of effective use of facilities are important. Market forecast Market forecast determines the volume and rate of production. Customer order These serve as a basis of production scheduling.

The functions of planning are:

Investigation about the complete details and requirements of the product to be manufactured. Pre-determination of future achievements. Planning the design of product going to be manufactured. Planning about the quantity of materials which are to be consumed. Planning about the standard of quality of products to be manufactured. Planning about the sequence of operations. Planning about the capacity of equipments. Planning about internal transportation.

Requirements of the Planning Department:

Detailed drawing of components and their assembly. Complete up-to-date information about the stores and delivery times. Complete information about the equipments, their

capacities and specifications etc. Complete information regarding standard time allowed to workers for the jobs being manufactured. Complete knowledge of market conditions. Type of workers employed and their salaries.

Production Planning Techniques

Estimating

Routing
Scheduling Loading

Routing
Routing may be defined as the selection of

path which each part of the product will follow and which is being transformed from raw material to finished products. Path of the product will also give sequence of operations to be adopted while being manufactured. Routing is the selection of path or route over which each piece is to travel in being transformed from raw material to finished products

Objectives of Routing
Determining the most feasible sequence of operations & ensuring that the sequence must be followed. Utilizing the human resources, materials and machines employed in the production to the best.

Exercising the influence upon the design of the factory infrastructure and the machines.

Routing in Industries
Routing in Industries depends upon the nature and type of industry, as explained below:
Continuous Industry As such industries are almost automatic, therefore, the problem of routing in them is very simple. The plan of industry is laid during its erection time for a particular sequence of operations. Therefore, raw material once enters the plant, it will automatically move through different processes till it gets final shape. Once the route is decided in the beginning, generally, no further control over the route is needed.

Assembly Industry Such industries require various components to be assembled at a particular time. Therefore, it is necessary that no component should fail to reach at the proper time and proper place in required quantity, otherwise whole of the production line will be held up, resulting in wastage of time and production delay.
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The examples of such industries are cycle, scooter, car, radio, and watch etc. These industries require much attention for routing. In these industries , a work flow sheet for every component is prepared. This gives full particulars about the progresses, machines and the sequence in which parts will reach at a particular place and time. As this type of routing required good technical knowledge, that staff of the production control department must be qualified and experienced once.

Activities in Routing
Determination of what to make and what to buy. Determination of material requirements. Determination of manufacturing operations & their

sequence. Determination of Lot sizes. Determination of scrap factors. Determination of cost Determination of production control.

Routing Decision
Analyze the Product

Make and Buy Decision

Material Form, Shape & Quantity Planning the Operations

Routing or Operation Layout

Planning of an Assembly

Scheduling
Scheduling determines the program for the operation. In scheduling, order of sequence of

each operation and their starting and finishing time is decided so the required materials, machine etc., may be kept ready as per schedule. Thus, scheduling may be defined, as the fixation of time and date for each operation as well as it determine the sequence of operation to be followed.

Routing and scheduling can be easily

understood by the example of railways:

A railway map shows the routes for passengers, which the trains follow and the stations on that route. This is what is known as Routing .

Similarly, railway time table gives the exact timing at which all the trains start and the time they take to reach at various stations and how long they halt there. It is known as Scheduling.

Objectives
Scheduling achieve the rate of output with the

minimum delay & disruption in process. Minimizes the production cost Minimum material storage cost No over loading of men and machine Good control of production Goodwill of the company improved Job satisfaction for the employees Eliminate ideal time in process.

Factors Affecting Scheduling

Customers Demand Customers Delivery Dates Stock already lying with dealers & retailers Availability of machines Availability of manpower Availability of materials Manufacturing facilities

Principles of Scheduling
Principle of Optimum Task Size

Principle of the Optimum production plan

Principle of the Optimum Operation

Sequence

Types of Schedules
Master schedule: This shows the date on which important production items are to be completed. It is a weekly or monthly break-up of the production requirements for each product. Whenever any order is received, it is accommodated first in the master schedule considering the availability of the machines and labour. Thus, it helps production manager for advance planning and to have a check over the production rates and efficiency.

 Shop Or Manufacturing Schedule: After

preparing master, shop schedules are prepared. It assigns a definite period of time to a particular shop for manufacturing products in the required quantity. It shows how much products are to be prepared and on what day or week etc.

Line of Balance
Line of balance is arranging a production lines so that

there is an positive flow of production from one work station to the next, so that there are no delays between the work stations. Balancing may be achieved by rearrangement of the work stations or by adding machines and workers at some work stations so that all operations take about the same amount of time. The prime objective of balancing is to reduce the idle time.

Objectives
To study the progress of jobs at the regular

intervals . To compare the actual progress. To identify those operations in which progress is unsatisfactory. To reduce the cost of production.

Master Production Scheduling

The Master Production Schedule sets the quantity of each end item(finished product) to be completed in each time period of the short range planning horizon. Objectives of Master Production Scheduling
1. To schedule end items to be completed

promptly and when promised to customers. 2. To avoid overloading or under loading the production facility so that production capacity is efficiently utilized and low production costs result

Functions of MPS
Translating aggregate plans Evaluating alternative master schedules Generating material and capacity requirements Facilitating information processing Maintaining priorities Utilizing the capacity effectively.

Guidelines for Master Scheduling

1. Work from an aggregate production plan 2. Schedule common modules when

possible 3. Load facilities realistically 4. Release orders on a timely basis 5. Monitor inventory levels closely 6. Reschedule as required

The elements of the MPS that are affected by the type of production system are: a. Demand management b. Lot-sizing c. Number of products to be scheduled (product-mix).

Application of MPS
In Big Firms, for loading the entire

plant. In research and development organizations. For the overall planning in units.

Inventory Management
Inventory : Stock of items held to meet future demand Determine the amount of inventory to keep in stock Inventory management answers two questions: How much to order:
Order Quantity or Economic Order Quantity (EOQ) When to order: Reorder point (R)

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Physical Types of Inventory

Reasons to Hold Inventory

Raw materials Purchased parts and

supplies Labor In-process (partially completed) products Component parts Tools, machinery, and equipment

Meet unexpected demand Smooth seasonal or cyclical

demand

Meet variations in customer

demand

Take advantage of
price discounts

Quantity discounts
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Inventory includes following things:1.Raw material 2.Consumable 3.Work-in-progress 4.Finished goods 5.Stores and spares Inventory Costs 1. Purchase cost 2.Ordering/set-up cost 3.Carrying cost 4. Stock out cost

Inventory Management
Inventory Management is a proper planning of purchasing,handling,storing and accounting of

inventory. An efficient system of inventory management will determine what to produce , how much to produce, from where to purchase and where to store, etc.The purpose of inventory management is to keep the stocks in such a way that there is neither over-stocking nor understocking.

Objectives
Objectives are under two heads1. Operating Objectives

Availability of materials
Minimizing the wastage Enhance manufacturing efficiency Better services to customers Control on production level Optimum level of inventories

2. Financial Objectives

o Economy in purchasing o Reasonable Price

o Minimizing costs
o Optimum Investment & Efficient use of capital

Factors affecting Inventory Management

Nature of production system Production capacity & storage facility Degree of Specialization & Differentiation of the product at various stages. Quality requirements Change in size and frequency of order Fluctuations in sales Breakdown Amount of capital available for stock

Wars or some other natural calamities.

Inflation

Process of Inventory Management

Step 1. Determination of optimum inventory levels and procedures of their review and adjustment. Step 2. Determination of the degree of control that is required for the best results. Step 3. Planning and design of the inventory control system. Step 4. Planning of the inventory control organization.

Inventory Control
Inventory control is the technique of

maintaining stock keeping items at the desired level, whether they are raw materials, goods in progress or finished products. Inventory control is the planning and scheduling of materials used in the manufacturing process.

Functions of Inventory Control

Provides protection against the uncertainties of

demand and supply. Better use of financial resources. Ensure timely availability of material. Protecting the inventory from losses. Facilitate accurate material reports. Minimize wastages

Inventory Control Techniques

Always better control (ABC) Vital, essential and desirable (VED) Scarce, easy and difficult to obtain (SED) Economic order quantity (EOQ) Fast moving, slow moving & non-moving (FSN)

ABC Analysis
In ABC Analysis inventory are classified into A,B,C classes for better management control. Controls exercised selectively contribute to better management, in most cases avoiding wastages of time and confusion.
Figure shows, class A items typically represent

only about 10 percent of the items but account for 80 percent of the rupee usage. Class B items account for another 30 percent of the items but only 15 percent of the rupee usage. Finally, 60 percent of the items fall in class C, representing a mere 5 percent of the rupee usage.

ABC Analysis
100 90 80 Class A Class B Class C

value of items (%)

70
60 50 40 30 20 10

0
10 20 30 40 50 60 70 80 90 100
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Number of items (%)

Application of ABC Analysis

Stock records
Priority treatment to different items Determination of Buffer stock items

Stores layout
Value analysis Re-ordering strategy

Information of item which require high degree of control.

VED ANALYSIS
VED analysis means. Vital, essential and

desirable analysis. It is the analysis for monitoring and control of spares and stores inventory by classifying items in to three categories vital essential and desirable. The mechanics of VED analysis is similar to those of ABC analysis.

 If a part is vital, its given V classification,

for v items large stock of inventory is generally maintained. If a part is essential it is given E classification, for E items moderate stock is maintained. The D items are desirable items which are required but do not immediately cause a loss of production.

SDE ANALYSIS
S-Scarce Material i.e. hardly available
D-Difficult material i.e. difficult in

sourcing. E-Easy materials i.e. materials available easily.

 SDE analysis is done based on purchasing

problems associated with items on day-today basis. S Class Materials These materials are always in shortage and difficult in procurement. These materials sometimes require government approvals, procurement through government agencies. Normally one has to make the payment in advance for sourcing these materials. Purchase policies are very liberal for such materials

 D Class Materials:

These materials though not easy to procure but are available at a longer lead times and source of supply may be very far from the consumption. Procurement of these materials requires planning and scheduling in advance.
E Class Materials These materials are normally standard items and easily available in the local market and can be purchased anytime.

Economic Order Quantity (EOQ)

EOQ: the lot size or order size that minimizes

total annual inventory holding and ordering cost Total inventory cost = Holding cost (HC) + ordering cost (OC) Assumptions for Basic EOQ Model Constant demand with no uncertainty No shortages Constant order lead time Receive order quantity all at once No other constraint

Basic EOQ Model

Order quantity, Q Inventory Level

Demand rate

Reorder point, R

Lead time Order Order placed receipt

Lead time Order Order placed receipt

Time

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Graphs of Annual Holding, Ordering, and Total Costs

Total cost = HC + OC Annual cost (dollars)

Holding cost (HC) Ordering cost (OC)

Figure 15.4

Lot Size (Q)

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 Q = order size (units) D = annual demand (units/year)

S = ordering cost per order ($/order)

H = annual per unit carrying cost ($/unit)

2 DS EOQ H

FSN Analysis
Based on consumption pattern of the items. F= Fast moving items

S= Slow moving items

N= Non-moving items The non moving items (usually not consumed

over a period of two years)are of great importance to determine their creative use or has to be disposed off.

 HML Analysis :- The cost per item (per piece) is considered for this analysis.

High Cost Item (H) Medium Cost Item (M) Low Cost Item (L) HML help in bringing control over consumption at the departmental level. SOS Analysis:- In this analysis, the

classification of existing inventory is based on nature of supply of items. They are classified as seasonal and off- seasonal items.

 GOLF Analysis:- In this analysis, the classification of existing inventory is based on source of the items. They are classified as Government supply, ordinary available , local availability and foreign source of items.