2.1 Prod Plg & Cont I

8/7/2019 2.1 Prod Plg & Cont I

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Manufacturing &Manufacturing &

Operations Management,Operations Management,

Materials & LogisticsMaterials & Logistics

SUDHIR BHATNAGARSUDHIR BHATNAGAR


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Production Planning & ControlProduction Planning & Control -- II

SESSION ISESSION I

Chapter IIChapter II Production Planning & ControlProduction Planning & Control


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PRODUCTION PLANNING & CONTROLPRODUCTION PLANNING & CONTROL

Introduction to PPCIntroduction to PPC

The basic objective of creating the manufacturing organizationThe basic objective of creating the manufacturing organizationis to make products. The production is thus the nucleus oris to make products. The production is thus the nucleus orcentre of the entire business operations.centre of the entire business operations.

Production Planning and Control functions look after theProduction Planning and Control functions look after themanufacturing activities & comprise planning, routing,manufacturing activities & comprise planning, routing,

dispatching & follow up functions in the manufacturing processdispatching & follow up functions in the manufacturing processso that the movement of materials, performance of machinesso that the movement of materials, performance of machines& operation of labour, however subdivided are directed && operation of labour, however subdivided are directed &coordinated as to quantity, quality, time and place.coordinated as to quantity, quality, time and place.

Planning & control are two basic & interrelated managerialPlanning & control are two basic & interrelated managerial

functions & are so well interrelated that they can be and arefunctions & are so well interrelated that they can be and areoften considered as one function only.often considered as one function only.


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PlanningPlanning

It is the preIt is the pre--operation activity while control is a postoperation activity while control is a post--

operations function.operations function. Planning sets the objectives, goals and targets on the basis ofPlanning sets the objectives, goals and targets on the basis of

available resources with their given constraints.available resources with their given constraints.

For the translation of such objectives, goals and targets intoFor the translation of such objectives, goals and targets intoreality, it is imperative to install control machinery for usingreality, it is imperative to install control machinery for using

the resources most optimally and assessing the performance.the resources most optimally and assessing the performance. Such assessments can be made effectively only when someSuch assessments can be made effectively only when some

standards of performance are set in advance.standards of performance are set in advance.

Planning sets such standards & controlling is done byPlanning sets such standards & controlling is done bycomparing the actual performance with these preset standardscomparing the actual performance with these preset standardsand deviations are ascertained and analyzed and correctiveand deviations are ascertained and analyzed and correctiveactions are taken.actions are taken.


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Production controlProduction control is primarily concerned with implementingis primarily concerned with implementing

the production plan. It is a continuous process which goes onthe production plan. It is a continuous process which goes onduring production process & consists essentially of followingduring production process & consists essentially of followingsteps:steps: --

Initiating productionInitiating production

Dispatching of items (laying down priorities betweenDispatching of items (laying down priorities between

production schedules competingproduction schedules competing for time on samefor time on samefacility)facility)

Progressing of productionProgressing of production

Reporting back to planningReporting back to planning

Control is the review of work progress, make corrections whereControl is the review of work progress, make corrections whererequired thereby ensuring that programmed production in termsrequired thereby ensuring that programmed production in termsof quality, quantity & time takes place. Simply put,of quality, quantity & time takes place. Simply put,

Production planning is planning the work or forward thinking &Production planning is planning the work or forward thinking &control is the mechanism for execution or working the plan.control is the mechanism for execution or working the plan.


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PRODUCTION PLANNINGPRODUCTION PLANNING

MeaningMeaning -- Production planning being an essentialProduction planning being an essentialprerequisite to production control involves managementprerequisite to production control involves managementdecisions on the resources that the firm will require for itsdecisions on the resources that the firm will require for itsmanufacturing operations and selection of these resources tomanufacturing operations and selection of these resources toproduce desired goods at appropriate time and in leastproduce desired goods at appropriate time and in least

possible cost.possible cost.

According to Alfred and Beatty, production planning is definesAccording to Alfred and Beatty, production planning is definesas:as: --

the technique of foreseeing or picturing ahead every step inthe technique of foreseeing or picturing ahead every step in

a long series of separate operations, each step to be taken ina long series of separate operations, each step to be taken inthe right place of the right degree and at the right time andthe right place of the right degree and at the right time andeach operation to be done at maximum efficiency.each operation to be done at maximum efficiency.


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ObjectivesObjectives Basic objectives of production planning are:Basic objectives of production planning are: --

On the basis of sales forecast and its engineering

On the basis of sales forecast and its engineeringanalysis, to estimate the kind of resources like men,analysis, to estimate the kind of resources like men,

material, machine, method etc. in proper quantities andmaterial, machine, method etc. in proper quantities andqualities.qualities.

It also estimates as to where and when these resourcesIt also estimates as to where and when these resources

will be required so that the production of desired goodswill be required so that the production of desired goodsis made most economically.is made most economically.

It also aims to make all necessary arrangements so thatIt also aims to make all necessary arrangements so thatthe production targets as set in the production budgetthe production targets as set in the production budgetand master schedule are reached.and master schedule are reached.

While attaining these targets adjustments are made forWhile attaining these targets adjustments are made forthe fluctuations in demand of customers.the fluctuations in demand of customers.


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Planning ProceduresPlanning Procedures

Purpose of production planning efforts is the formulation ofPurpose of production planning efforts is the formulation of

production plan. Plans are formulated in the light ofproduction plan. Plans are formulated in the light ofspecified future period and are implemented in the light ofspecified future period and are implemented in the light ofestimated costs and agreed policies.estimated costs and agreed policies.

The costs in this case are capital costs of assets and plantThe costs in this case are capital costs of assets and plantfacilities, inventory costs, labour costs and cost of settingfacilities, inventory costs, labour costs and cost of setting

up the operations.up the operations. Policies are framed keeping in view the planning techniquesPolicies are framed keeping in view the planning techniques

and strategies which have been developed for theand strategies which have been developed for theparticular plan. Important steps in production planning areparticular plan. Important steps in production planning are --

Demand ForecastDemand Forecast

Specification of Production RequirementsSpecification of Production Requirements

Setting the Production RateSetting the Production Rate

Controlling ProductionControlling Production


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Demand ForecastDemand Forecast The production planning function isThe production planning function isgeared to estimate demand for the products. Demandgeared to estimate demand for the products. Demandforecasting represents an anticipated level of demand andforecasting represents an anticipated level of demand and

it also reflects on the pattern of the demand.it also reflects on the pattern of the demand.

If seasonal or any other kind of symmetry can be predicted,If seasonal or any other kind of symmetry can be predicted,production can be planned to take advantage of theproduction can be planned to take advantage of thepredicted pattern of the demand.predicted pattern of the demand.

Specifications of Production RequirementsSpecifications of Production Requirements:: -- It isIt isnecessary to convert demand forecast into a specificationnecessary to convert demand forecast into a specificationof production requirement.of production requirement.

Forecast demands are adjusted as under while planning theForecast demands are adjusted as under while planning theactual production:actual production: --

On the basis of available production capacity, theOn the basis of available production capacity, theforecast demand is put on calendar schedule.forecast demand is put on calendar schedule.

Reasonable allowances are made for possible errors inReasonable allowances are made for possible errors inthe forecast.the forecast.


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The deficiency or surplus of the existing productionThe deficiency or surplus of the existing productioncapacity is ascertained in terms of machinery capacity andcapacity is ascertained in terms of machinery capacity andlabour force.labour force.

On the basis of temporary or permanent fluctuations in

On the basis of temporary or permanent fluctuations indemands, adjustments in machinery capacity and labourdemands, adjustments in machinery capacity and labour

force are planned well in advance.force are planned well in advance.

A schedule of material requirement is prepared. WhileA schedule of material requirement is prepared. Whiledeciding the quantities of materials, due consideration isdeciding the quantities of materials, due consideration isgiven to the seasonal advantage, cost of excess inventorygiven to the seasonal advantage, cost of excess inventorycarrying, cost of stock out etc.carrying, cost of stock out etc.

Setting the Production RateSetting the Production Rate Production requirementsProduction requirementsare broken into periods and the schedule of production isare broken into periods and the schedule of production isprepared. The production at any point of time is the result ofprepared. The production at any point of time is the result of

the prescribed rated capacity.the prescribed rated capacity. In the light of the desired production, the production rateIn the light of the desired production, the production rate

is planned on the basis of the existing productionis planned on the basis of the existing productioncapacity, overtime working, extracapacity, overtime working, extra--shift working or newshift working or newadditions to the existing production capacity.additions to the existing production capacity.


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The inventory level should be geared to the productionThe inventory level should be geared to the productionrates. On the basis of the set production rates, schedulerates. On the basis of the set production rates, schedule

of the periodic production and inventory holding shouldof the periodic production and inventory holding shouldbe prepared.be prepared.

The setting of the production rate is relatively difficult inThe setting of the production rate is relatively difficult inthe case of seasonal demands.the case of seasonal demands.

However, adjustments can be made by continuing theHowever, adjustments can be made by continuing theaverage production throughout the year and byaverage production throughout the year and bymanipulating inventories if it accrues some costmanipulating inventories if it accrues some costadvantages.advantages.


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Controlling ProductionControlling Production Once the production plan is madeOnce the production plan is madeand set to operations, it is likely that the actual stock of finishedand set to operations, it is likely that the actual stock of finishedgoods inventory will fall below or may exceed the plannedgoods inventory will fall below or may exceed the planned

balances due to discrepancies in planned and actual sales.balances due to discrepancies in planned and actual sales. Marginal imbalances in the estimated and actual sales areMarginal imbalances in the estimated and actual sales are

resolved by providing for some safety level stock level ofresolved by providing for some safety level stock level ofinventories.inventories.

Size of the safety stock depends on promptness of productionSize of the safety stock depends on promptness of production

adjustments with a view to bring in inventories into line.adjustments with a view to bring in inventories into line.Adjustments in plans are made under following conditions:Adjustments in plans are made under following conditions: --

Where only a short span of production cycle is over,Where only a short span of production cycle is over,revision in original forecast should be made by adjustingrevision in original forecast should be made by adjustingthe expected sales changes to the cumulative forecast forthe expected sales changes to the cumulative forecast for

the remainder of the planned cycle.the remainder of the planned cycle.

Where the planned cycle is on the verge of completion,Where the planned cycle is on the verge of completion,the forecast may be extended to cover next planningthe forecast may be extended to cover next planningcycle.cycle.


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Factors Determining Production Planning ProceduresFactors Determining Production Planning Procedures

Production planning may begin with a product idea and a plan forProduction planning may begin with a product idea and a plan forthe design of the product and the entire production/ operatingthe design of the product and the entire production/ operating

system to manufacture the product.system to manufacture the product.It also includes the task of planning for the manufacturing of aIt also includes the task of planning for the manufacturing of amodified version of an existing product using existing facilities.modified version of an existing product using existing facilities.Three major factors will determine the production planningThree major factors will determine the production planningprocedures:procedures: --

Volume of ProductionVolume of Production

Amount & intensity of production planning is determinedAmount & intensity of production planning is determinedby the volume and the character of the operations andby the volume and the character of the operations andthe nature of the manufacturing process. Productionthe nature of the manufacturing process. Productionplanning is expected to reduce manufacturing costs.planning is expected to reduce manufacturing costs.

Planning of production in case of custom order job shop isPlanning of production in case of custom order job shop islimited planning for purchase of raw materials andlimited planning for purchase of raw materials andcomponents and determination of work centres whichcomponents and determination of work centres whichhave the capacity of manufacturing the product in thehave the capacity of manufacturing the product in thequantity desired.quantity desired.


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In high volume operations, extensive productionIn high volume operations, extensive productionplanning is necessary for design of both the product asplanning is necessary for design of both the product as

well as the production process in order to achievewell as the production process in order to achievesubstantial cost advantage.substantial cost advantage.

Nature of Production ProcessesNature of Production Processes

In small job shop, the production planning may beIn small job shop, the production planning may be

informal and the development of work methods is leftinformal and the development of work methods is leftto the individual skilled workman.to the individual skilled workman.

In high volume production, many product designers,In high volume production, many product designers,equipment designers, process engineers and methodequipment designers, process engineers and methodengineers are involved and they put in coordinatedengineers are involved and they put in coordinated

efforts in designing the product and the rightefforts in designing the product and the rightproduction process.production process.


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Nature ofOperationsNature ofOperations Detailed initial productionDetailed initial productionplanning is required for repetitive operations. Variants inplanning is required for repetitive operations. Variants in

manufacturing approach are:manufacturing approach are: --

Manufacturing on firm customers order which may orManufacturing on firm customers order which may ormay not be repeated at regular intervals.may not be repeated at regular intervals.

Manufacturing for stock and sell (under repetitive batchManufacturing for stock and sell (under repetitive batch

or mass production)or mass production) A

utomobiles, watches, commonA

utomobiles, watches, commonuser consumables etc.user consumables etc.

Manufacturing for stock and sell (under continuousManufacturing for stock and sell (under continuousprocess production)process production) Chemical and food products,Chemical and food products,soap, synthetic yarn etc.soap, synthetic yarn etc.


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Market Requirements

Product Specification

Product Idea Final Product Design

Product Development

Product Research

Process R & D

Work Station Selection

Operations Contents Operations Methods

Work Flow Analysis

Process Design

Operations Design

Product Planning SystemProduct Planning System

Process Planning SystemProcess Planning System

ProductionPlanning SystemProductionPlanning System


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2.1 Prod Plg & Cont I