1. Production Planning and control

2. Introduction
The efficiency of production system is stated in terms of its ability to produce the products with required quantity and specified quality at predetermined cost and predetermined time
PPC aims at achieving efficient utilisation of resources (material, men and facility) in manufacturing organisation through planning, coordinating and control of production activities.

3. Introduction PPC issues directives to production department such as
- What to produce ?
- How many to produce ?
- When to produce ?
- What resources are required for production ?
- How to coordinate different resources ?
- How to control the deviation from the set plan ?

4. Production Planning and control
PPC defined as direction and coordination of a firms’ material and physical facilities towards the attainment of pre-specified production of goods, with highest production efficiency.
It deals with logistics problems encountered in manufacturing. Logistics problem deals with what and how many products to produce.

5. Production planning
Defined as the determination, acquistion and arrangement of all facilities necessary for future production of products.
It is concerned with:
- Deciding which products to make, how many of each and when they should be completed
- Scheduling the production and delivey of the parts and products
- Planning the manpower and equipment resources for accomplising the production plan

6. Activities of Production planning
Aggregate Production Planning
Master production planning
Materials requirements planning
Capacity planning

7. Production Control
Production control is concerned with determining whether the necessary resources to implement the production plan have been provided or not.
Production control takes corrective action to match expected and actual production
It reviews the progress of the work and takes corrective steps inorder to ensure programmed production takes place.

8. Activities of Production control
Shop floor control
Inventory control
Manufacturing resource planning (MRP II)
Just-in-time production systems
RELATIONSHIP BETWEEN PRODUCTION PLANNING AND PRODUCTION CONTROL

9. Aggregate Planning
Concerned with determining quantity and timing of production for the intermediate future ( often 3 – 8 months) ahead, setting employment, inventory and subcontracting.
It is coordinated among various functions in the firm including product design, production, marketing and sales
Provides data to plan the variable resources, which include full and temporary employment levels, total labour hours per period and number of subcontractors

10. Aggregate Production Planning
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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11. Aggregate Production Planning
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…
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12. Aggregate Production Planning
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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13. Aggregate Production Planning
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

14. Strategies in Aggregate Planning
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

15. Strategies in Aggregate Planning
Level plans
Production
Demand
Units
Time

16. Strategies in Aggregate Planning
Chase plans
Production
Demand
Units
Time

17. Strategies in Aggregate Planning
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

18. Master Production Planning
Aggregate production plan is converted into master production schedule (MPS)
MPS is a listing of the products to be manufactured, when they are to be delivered and in what quantities
Lists the production quantities of major product lines, whereas MPS provides a very specific schedule of individual products
MPS developed from customer orders and forecasts of future demands.

19. Master Production Schedule
Provides basis for:
Making good use of manufacturing resources
Making customer delivery promises
Resolving tradeoffs between sales and manufacturing
Attaining strategic objectives in the sales and operations plan

20. Aggregate production and Master Production plan

21. Master Production schedule
Master schedule should be based on accurate estimate of demand and a realistic assessment of the company’s production
Products included in MPS are divided into 3 categories
(1) Firm customer orders
(2) Forecasted demands
(3) Spare parts
Customer orders for specific priducts, the company is usually obligated to deliver the item by particular date

22. Master Production Scheduling
In the second category, the production output quantity are based on statistical forecasting techniques applied to previous demand patterns.
For many companies the largest portion of the master schedule is constituted by forecast demand.
In the third category, it consists of repair parts that either will be stocked in the company’s service department or sent directly to customer.

23. Master Production Schedule
Consists of medium range plan, since it must take into account of lead time to order raw materials and components, produce parts and then assemble end products
MPS are usually considered to be fixed in the near term. Changes are not allowed for six week horizon.
Aggregate Production schedule is not only the input to master production schedule. Other inputs such as new customer orders and changes in the sales forecast, makes difference from aggregate production plan.

24. Master Production Schedule (MPS)
Master schedule states quantity and delivery time of specific products.
It says we need 75 push lawnmowers in January. But it does not say how we get it - from production, or from inventory.
Master Production Schedule (MPS) is developed
based on Master Schedule.
MPS: Quantity and timing of planned production.
MPS determines the
Promised Inventory, and the
Production Requirements available to promise inventory for each period.

25. Master Scheduling Process
Inputs
Outputs
Beginning inventory
Projected inventory
Master production schedule
Uncommitted inventory
(Available to Promise)
Master
scheduling
Forecast
Customer orders
The key idea is: we have a forecast, but it turns into and actual order when we receive a customer order.
MPS starts with a preliminary calculation of projected inventory.
This reveals when we need production to get additional inventory.

26. Link between SOP and MPS
Month: January February March
Output:
SOP
January (weeks)
Push Mowers
Self-propelled
Riding
MPS

27. MRP and Related Concepts
TLA (Three Letter Acronym) Definitions
ATP: Available to Promise
BOM: Bill of Materials
DRP: Distribution Requirements Planning
MPS: Master Production Schedule
MRP: Materials Requirements Planning
PAC: Production Activity Control
SOP: Sales and Operations Planning

28. Where Does MRP Fit?

29. Assume that we’ve scheduled 500 chairs to be ready five weeks from now.
what?

30. Material Needed for a Chair
Back supports (3)
Side rails (2)
Front legs (2)
Cross bars (2)
Seat

31. Chair Structure Tree (aka “Bill of Materials”)
Leg
Assembly
Seat
Back Assembly
Legs (2)
Cross
bar
Side
rails (2)
Back
Supports (3)

32. Graphic Lead-Time Week 1 Week 2 Week 3 Week 4 Week 5
Back Support (2 weeks)
Side Rails (2 weeks)
Back
Assembly
Cross Bar (2 weeks)
(1 week)
Chair
Assembly
Seats (2 weeks)
(1 week)
Leg
Assembly
Legs (2 weeks)
Cross Bar (2 weeks)
(1 week)

33. Lead-Time Key Points
To have finished chairs at the beginning of Week 5, we must begin production and order materials in Week 1.
“Exploding” the bill of materials tells us when to order things.
Not much we can do to adjust output of chairs for the next 4 weeks. Why?

34. Material Requirements Planning (MRP)
We need the following inputs:
Bill-of-Materials (BOM)
Inventory records
Master production schedule
We’ll get the following outputs:
What items should be ordered
When each item should be ordered
How much of each should be ordered

35. The MRP Process Starts with the MPS
End items are also known as “Level 0” items

36. The “Parent / Child” Relationship
Refer back to bill of materials on slide 20, or insert duplicate after this slide for ready reference
Where do the gross requirements come from?
Do you understand the MRP logic?
©2006 Pearson Prentice Hall — Introduction to Operations and Supply Chain Management — Bozarth & Handfield

37. Going Deeper… 25 25 25

38. Moving from “Level 1” items to “Level 2” items . . .25 25 25
Where do the gross requirements for LEGS come from?

39. Combining Requirements: “Cross Bars”25 25 25
Note effect of differences in lead times and order sizes on the gross requirements for each component

40. Objectives of MRP
1.Ensure the availability of materials, components, and products for planned production and for customer delivery,
2. Maintain the lowest possible level of inventory,
3. Plan manufacturing activities, delivery schedules, and purchasing activities.

41. Inputs of MRP Master Production Schedule Product structure records
Inventory status records.

42. Shortcomings of MRP Capacity
- MRP expects the lead time to be constant regardless of how much work has been released into the production system, so it is implicitly assuming infinite capacity. This can create problems when production levels are at or near capacity.
- Rough-cut capacity planning (RCCP) attempts to do this by checking the capacity of a few critical resources.

43. Shortcomings of MRP Long Lead Times
There are many pressures to increase planned lead times in an MRP system
- To compensate, planners typically choose pessimistic estimates. Long lead times lead to large work-in-process (WIP) inventories.

44. Shortcomings of MRP Nervousness
MRP is typically applied in a rolling horizon basis.
- As customer orders firm up, and forecasts become better, a new MPS is fed to MRP which produces updated planned order releases that may be very different form the original.
- Even small changes in the MPS can result in large changes in planned order releases.

45. Capacity planning
Capacity planning is the process of determining the production capacity needed by an organization to meet changing demands for its products
 Effective capacity is the maximum amount of work that an organization is capable of completing in a given period due to constraints such as quality problems, delays, material handling, etc.

46. Capacity planning
Capacity planning is concerned with planning of production resources needed to meet the master schedule.
Capacity planning is used to identify the limitations of production resources so that unrealistic master schedule is not planned.