The need for Production Planning

Demand Forecasting

Aggregate Production Planning

Strategies of Aggregate Planning

Scheduling

Workforce Planning

Materials Requirement Planning

Capacity Planning

Production Control using JIT

Shop-Floor Control

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Addresses decisions on

Acquisition

Utilization

Allocation

of limited production resources

Resources include the production facilities, labor

and materials.

Constraints include the availability of resources,

delivery times for the products and management

policies.

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Main objective is to take appropriate decisions.

Typical decisions

Work force level

Production lot sizes

Assignment of overtime

Sequencing of production runs

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Process Planning

Scheduling

Loading

Combining Functions

Dispatching

Follow – up

Corrective Action

Re-planning

Functions of PPC

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Objective

To predict demand for planning purposes

Laws of Forecasting

Forecasts are always wrong

Forecasts always change

The further into the future, the less reliable the

forecast will be

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Qualitative Demand Forecasting

Prediction Market

Delphi Technique

Game Theory

Intentions and Expectations Surveys

Conjoint Analysis

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Quantitative Demand Forecasting

Discrete Event Simulation

Quantitative Analogies

Neural Networks

Data Mining

Causal Models

Segmentation

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Objective

To generate a medium-term production plan

To establish rough product mix

To anticipates bottlenecks

To align capacity and workforce plans.

It is usually done for next 2 to12 months.

Demand changes over a period of time at a faster

rate than the resources. Aggregate planning offers

strategies to absorb these fluctuations.

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Guidelines for Aggregate Planning

Determine demand for each period

Consider company policies that may have impact

Determine capacities for each period

Regular time, overtime, subcontracting, etc.

Identify backorder or inventory amount

Determine costs of operation

Continue through time horizon to calculate total cost

Develop alternate plans and compute cost for each

Select the plan that meets objectives

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Assumptions in Aggregate Planning

The regular output capacity is the same in all

periods.

Cost is a linear function composed of unit cost

and number of units.

Plans are feasible : sufficient inventory capacity

exists to accommodate a plan, subcontractors with

appropriate quality and capacity are standing by,

and changes in output can be made as needed.

Contd…Apr-15

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Assumptions in Aggregate Planning

All costs associated with a decision option can be

represented by a lump sum or by unit cost that are

independent of the quantity involved

Cost figures can be reasonably estimated and are

constant for the planning horizon

Inventories are built up and drawn down at a

uniform rate and output occurs at a uniform rate

throughout each period

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Output of Aggregate Planning

Production quantity from regular time, overtime

and subcontracted time

Inventory held for determination of how much

warehouse space and working capital is needed

Backlog or stock-out quantity for determining the

customer service levels

Level plans

Use a constant workforce & produce similar

quantities each time period

Use inventories and backorders to absorb

demand peaks & valleys

Chase plans

Minimize finished good inventories by trying to keep

pace with demand fluctuations

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Production

Demand

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Units

Time

Level plans

Units

Time

Series1

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Production

Demand

Chase plans

Series1

Hybrid or Mixed Strategies

Build-up inventory ahead of rising demand and

use backorders to level extreme peaks

Layoff or furlough workers during lulls

Subcontract production or hire temporary

workers to cover short-term peaks

Reassign workers to preventive maintenance

during lulls

Influencing Demand

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Concerned with timetable of production

Scheduling arranges the different manufacturing

operations in order of priority, fixing the time & date

for the commencement & completion of each

operation.

Types of scheduling

Forward scheduling

Backward scheduling Apr-15

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The pattern of scheduling differs from one job to

another which is explained as below.

Master Schedule

Production Schedule

Manufacturing Schedule

Scheduling of Job Order Manufacturing

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To find out and direct

Right people

Right place

Right time

Right price

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Issues

Basic Staffing Calculations and labor hours

Working Environment

Flexibility/Agility

Quality

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MRP is a production planning and inventory control

system used to manage manufacturing processes.

An MRP system has 3 major objectives

Ensure materials are available for production and

products are available for delivery to customers

Maintain the lowest possible level of inventory

Plan manufacturing activities, delivery schedules

and purchasing activities

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MRP steps

Takes output from the planning phase (master plan)

Combines that with the information from the

inventory record and product structure records

Determines a schedule of timing and quantities for

each item

The basic idea is to get the right materials to the right

place at the right time.

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The process of determining the production

capacity needed to meet changing demands

Maximum amount of work that an organization is

capable of completing in a given period of time

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Wrong Capacity

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Classes of capacity planning

Lead strategy

Lag strategy

Match strategy

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Issues

Stand-alone capacities and congestion effects

Capacity Strategy

Make-or-Buy

Flexibility

Scalability and learning curves

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JIT is the technique for reducing inventories and

elimination of waste in the production system.

Objectives

To eliminate waste

To improve quality

To minimize lead time

To reduce costs

To improve productivity

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Pull production and kanban

JIT is associated with pull systems.

Toyota was the first developer of kanban system.

Examples

McDonalds'

Office Xerox Paper

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Issues

JIT Interdependencies

Implementing Issues

JIT purchasing

Expected Outcomes

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Objective

To control flow of work through plant and coordinate

with other activities (e.g., quality control, preventive

maintenance, etc.)

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Functions

Gross Capacity Control

Match line to demand by staffing (workers/shifts)

Varying length of work week (or work day)

Using outside vendors to augment capacity

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Functions

Bottleneck Planning

Handling of bottlenecks

Cost of capacity is the key

Stable bottlenecks are easier to manage

Span of Control

Physically or logically decompose system

Span of labor and process managementApr-15

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Issues

Customization

SFC is often the most highly customized activity in

a plant.

Information Collection

SFC represents the interface with the actual

production processes and is therefore a good

place to collect data.

Contd… Apr-15

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Issues

Simplicity

Departures from simple mechanisms must be

carefully justified.

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