PRODUCTION PLANNING & CONTROL

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Production system is encompassed by four factors:

Quantity Quality Cost Time

Production Planning and Control

What to produce When to produce How much to produce How to coordinate these resources
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What resources are needed in production

Production Control How to control the deviation from planned production

Objectives of production Planning and Control

Coordination among different resources and departments Establishment of targets Ensurance right product at right time in right quantity Minimum overall production cost Forecasting of demand Smooth flow of materials Elimination of bottlenecks Utilization of inventory in the optimal way
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Factors that affect the production system (because of

which there is deviation)

Non availability of materials Absenteeism of workers Plant, equipment and machine breakdown Change in demand and orders Lack of coordination and communication b/w various dept.

Difference between Production Planning and

Production Planning 1. pre- production activity 2. collection, maintenance and analysis of data

Production Control

Production Control In action when production activity begins Producing reports like output reports, productivity, etc.

3. sees that all the necessary Keeps track of all activities and resources are available to produce sees whether everything is going as a 5/15/12 in time product per schedule or not.

Main Functions of Production Planning and Control Department Production planning Production controlling
1.

1.

Estimating Routing Scheduling Loading

Dispatching Expediting/Followup Inspection Evaluating & Corrective action

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Hierarchical Nature of Planning

Items
Product lines or families

Production Planning
Aggregate production plan

Capacity Planning
Resource requirements plan

Resource Level
Plants

Individual products

Master production schedule

Rough-cut capacity plan

Critical work centers

Components

Material requirements plan

Capacity requirements plan

All work centers

Manufacturing operations

Shop floor schedule

Input/ output control

Individual machines

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 Aggregate planning involves translating

long-term forecasted demand into specific production rates and the corresponding labor requirements for the intermediate term.

Longterm demand

Aggregate planning

Production rates Labor requirements

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Aggregate Production Planning

Goal: Specify the optimal combination of

production rate (units/time) workforce level (how many workers?) inventory on hand (unsold product from previous runs) **the three items above are the basic controllable variables for production planning

Product group or broad category (Aggregation)

Aggregate Production Planning is done in an organisation to match the demand with the supply on a period-by-period basis in a cost effective Medium-Range: 6-18 months manner 5/15/12

The decisions involve Amount of resources (productive capacity and labour hours) to be committed Rate at which goods and services needs to be produced during a period Inventory to be carried forward from one period to the next An example from Garment Manufacturing Produce at the rate of 9000 metres of cloth everyday during the months of January to March Increase it to 11,000 metres during April to August Change the production rate to 10,000 metres during September to December Carry 10% of monthly production as inventory during the first 9 months of production. Work on a one-shift basis throughout the year with 20% over time during July to October
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Approaches to Aggregate Planning Two types of approaches

a. b.

Top- down approach Bottom up approach.

Top down approach:

1.

Working at highest level of consolidation of product Plan disaggregated to the product families. Relay 5/15/12 on proper amount of total capacity

2.

3.

Bottom Up Approach: Also called as Resource Requirement Planning(RRP) or Rough cut capacity planning.
1.

They are done with Master Production Schedule Ensures no over load occurs for any department. Quick and in-expensive way to find and correct the raw materials available and required for MPS.
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3.

Quantitative Techniques For APP

Pure Strategies Mixed Strategies Linear Programming Transportation Method Other Quantitative Techniques
Copyright 2006 John Wiley & Sons, Inc.

Pure Strategies
Example:

QUARTER Spring Summer Fall Winter

SALES FORECAST (LB) 80,000 50,000 120,000 150,000

Hiring cost = $100 per worker Firing cost = $500 per worker Regular production cost per pound = $2.00 Inventory carrying cost= $0.50 pound per quarter Production per employee= 1,000 pounds per quarter Beginning work force = 100 workers
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Level Production Strategy

Level production (50,000 + 120,000 + 150,000 + 80,000) 4 SALES FORECAST 80,000 50,000 120,000 150,000 = 100,000 pounds

QUARTER Spring Summer Fall Winter

PRODUCTION PLAN INVENTORY 100,000 100,000 100,000 100,000 400,000 20,000 70,000 50,000 0 140,000

Cost of Level Production Strategy (400,000 X $2.00) + (140,00 X $.50) = $870,000

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Chase Demand Strategy

WORKERS QUARTER FORECAST SALES PRODUCTION WORKERS WORKERS

Spring 80,000 Summer 50,000 Fall 120,000 Winter 150,000

80,000 50,000 120,000 150,000

PLAN

NEEDED

80 50 120 150

HIRED

0 0 70 30

FIRED

20 30 0 0 50

100

Cost of Chase Demand Strategy (400,000 X $2.00) + (100 x $100) + (50 x $500) = $835,000
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Level Production
Demand Production Units

Time
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Chase Demand
Demand Production Units

Time
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Strategies for Adjusting Production Planning

Level production

Producing at a constant rate and using inventory to absorb fluctuations in demand

Overtime and undertime

Increasing or decreasing working hours Let outside companies complete the work Hiring part time workers to complete the work Providing the service or product at a later time period

Chase demand

Subcontracting

Hiring and firing workers to match demand

Peak demand

Part-time workers

Maintaining resources for high-demand levels

Backordering

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Steps in Aggregate Production Prepare sales forecast for each product over the Planning
planning horizon (6 to 18 months) Sum up the individual products forecast into one aggregate demand for the factory Transform the aggregate demand for each time period into labour, materials, machines and other elements of production capacity required to satisfy aggregate demand. Select the capacity plan from among the alternatives considered that satisfy aggregate demand and best meets the objectives of the organization.
Approach to Aggregate Production Planning Bottom up Approach 5/15/12

Introduction : What is line balancing?

Everyone is doing the same amount of work Doing the same amount of work to customer requirement Variation is smoothed No one overburdened No one waiting Everyone working together in a BALANCED fashion
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What is Line balancing?

Introduction :

What is line balancing?

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Introduction :

What is line balancing?

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Line Balancing
Apportionment of sequential work activities into work stations in order to gain a high utilization of labour and equipment and therefore minimize idle time

In other words, arranging the production line so that there is even flow of production from one
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work station to next i.e. so that there are no

Line Balance : Simple Example

Over-processing Waiting

Overproduction which causes the other 6 wastes

Inventory

Rework

Transportation

Motion

5 mins

25 mins

15 mins

10 mins

3 This operator must WAIT for operator 2

4 This operator must WAIT for operator 3

Constraint Overburden

min s

2 5 2 0 1 5 1 0 5 1 2 3 4

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Promotes one-piece FLOW

Line Balance : Simple Example

Avoids overburde n
15 mins

Minimises the 7 wastes

Reduces Variation

15 mins

15 mins

10 mins

2 5 2 0 1 5 1 0 5

Redistribute the work

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Goal of Assembly Line Balancing

Minimize number of work stations Minimize work load variance Minimize idle time Maximize line efficiency

Assembly Line Balancing is the procedure to assign tasks to workstations so that: Precedence relationship is complied with No workstation takes more than the cycle time to complete Operational idle time is minimized

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How to Balance A Line

Specify the task relationship and their order of precedence Draw and label a precedence diagram Calculate desired cycle time/takt time Calculate the theoretical minimum number of work Group elements into work stations recognizing cycle time Evaluate the efficiency of line Repeat until desired line efficiency is reached
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stations

and procedure

Example The table shows the tasks performed in a production line. Our goal is to combine them into workstations. The assembly line operates 8 hours per day and the expected customer demand is 1000 units per day. Balance the line and calculate the efficiency and theoretical minimum number of workstations. Task A B C D E F G H I J K Total Time: Task Time (sec) 13 11 15 20 12 13 13 18 17 15 9 156 Preceding Task A A B B C C D, E F, G H, I J

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SOLUTION Step 1: Draw a precedence diagram according to the given sequential relationship

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Step 2: Determine Takt time or Workstation Cycle Time C=Production time per day / Customer demand (or output per day) C= 28800 sec (8 hours) / 1000 units = 28.8 Step 3: Determine the theoretical number of workstations required N= Total Task Time or total operation time / Takt time N= 156 / 28.8 = 5.42 (~6 workstations)
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Step 4: Define your assignment rules. For this example our primary rule will be number of following tasks and the secondary rule will be longest operation time Step 5: Assign tasks to workstations following the assignment rules and meeting precedence and cycle time requirements To form Workstation 1:

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 Forming Workstation 2:

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Following the same criteria we achieve our balancing with 7 workstations

Workstation Task 1 2 3 4 5 6 7
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A C B F D G E H I J K

Remaining Feasible Task with Task with Task Time Unassigned Remaining most LOT Time Tasks followers 13 15.8 B, C B, C C 15 0.8 11 17.8 E, F, G E, F, G F, G 13 4.8 20 8.8 13 15.8 E 12 3.8 18 10.8 17 11.8 15 13.8 K 9 4.8 -

Step 6: Calculate Efficiency Efficiency= Total Task Time / (Actual number of workstations * Takt Time) Efficiency= 156 / (7*28.8) = 77%

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Capacity Planning
In the context of capacity planning, "capacity" is the maximum amount of work or production that an organization is capable of completing in a given period of time. Capacity planning is the process of determining and adjusting the production capacity needed by an organization to meet changing demands for its products. It is concerned with defining the long term and short term capacity needs of a firm and determining how these needs will be met.

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Measurement of Capacity: By terms of input or output of firm. Example: Organisation Measure of Capacity

Automobile factory Number of vehicles Steel Mill Power Plant Job shop Airline Hospitals University 5/15/12 Tones of Steel Mega watt of electricity generated Labour hours worked. Number of seats Number of beds Number of students

Fixed Capacity capital assets the company have at particular time; they cannot be easily changed Adjustable Capacity size of workforce, no. of hours per week they work, no. of shifts and extent of sub-contracting\ Design Capacity max. planned output that can be achieved under the full scale operations. System Capacity max. output of a specific product or product mix that the system of workers and machines is capable of producing. Potential Capacity Capacity which can be made available within the decision horizon of top management

Types of Capacity

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Immediate Capacity - Capacity which can be made available within the current budgeted period Effective Capacity - Capacity which is used within the current budgeted period. Also known as practical capacity or operating capacity i.e.
Practical Capacity = Theoretical Capacity lost capacity due to inefficiency and scrap factor

Normal Capacity Estimated quantity of output that should be usually achieved. Also known as Average Capacity Actual Capacity Actual output achieved during a particular period.
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System Efficiency = (Actual output / System capacity)

Types of Capacity Planning

1. Long-term planningBased on time 2. Short-term planning 3. Finite planning 4. Infinite planning
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horizon

Based on amount of resources employed

The broad classes of capacity planning

1.

Lead strategy Match strategy Lead strategy is adding capacity in anticipation of an

2. Lag strategy
3.

increase in demand. Lead strategy is an aggressive strategy with the goal of luring customers away from the company's competitors. The possible disadvantage to this strategy is that it often results in excess inventory, which is costly and often wasteful.

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organization is running at full capacity or beyond due to increase in demand. This is a more conservative strategy. It decreases the risk of waste, but it may result in the loss of possible customers.

Lag strategy refers to adding capacity only after the

response to changing demand in the market. This is a more moderate strategy.

Match strategy is adding capacity in small amounts in

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Factors affecting Capacity decision

1.

Market demand for a product/service The amount of capital that can be invested Degree of automation desired Level of integration (i.e., vertical integration) Type of technology selected Dynamic nature of all factors affecting determination of plant capacity, viz., changes in the product design, process technology, market conditions' and product life cycle, etc. 5/15/12

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Difficulty in forecasting future demand and future technology. Obsolescence of product and technology over a period of time. Present demand and future demand both over short-range, intermediate-range and longrange time horizons. Flexibility for capacity additions.

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9.

10.

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Master Production scheduling (MPS)

1.

Master schedule Quantity of each end item to be completed in each time period( short range horizon)

2. MPS is developed to review market forecast, customer order, inventory levels etc..

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Objectives 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 (a) Translating aggregate plans into specific end items (b) Evaluating alternative schedules (c) Generating material requirements (d) Generating capacity requirements (e) Facilitating information processing (f) Maintaining valid priorities (g) Utilizing capacity effectively 5/15/12

Time Fences in MPS

MPS is divided into 4 section based on time called time fence

Frozen 1st section MPS cannot be changed except on extraordinary situation After getting authorization from higher levels Because costly 2. Firm Change occur but exceptional situation 3. Full All products are allocated to orders, Change makes production cost to be affected in less amount 4. Open Not all production capacity has been 5/15/12
1.

Procedure for developing MPS

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Guidelines to 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.

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Updating MPS v Updated weekly MPS in Produce to stock & Produce to order firm The element of MPS are affected by, a) Demand Management b) Lot Sizing c) No. of products to be scheduled. In produce to Stock v Order come from warehouse within company v Order based on future demand v Forecast play important role in demand 5/15/12 management.

In Product to order
1. 2.

Demand management is customer. Lot size is also depending on customer order.

Symptoms of poorly designed MPS

1. 2. 3.

4.

5. 6.

Overloaded facilities Under-loaded facilities. Excessive inventory levels on some end items and frequent stock-outs on others. Unrealistic schedules that production personnel do not follow. Unreliable delivery promises to customers. Excessive expediting or follow-up.
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