Production Planning

 What to produce  When to produce  How to produce

Overview of Operational Planning Activities  Long-Range Planning ◦ Focuses on strategic issues relation to capacity, products, processes and plant location.  Intermediate-Range Planning ◦ Focuses on tactical issues pertaining to aggregate workforce and material requirements for the coming year (Aggregate Planning).  Short-Range Planning ◦ Addresses day-to-day issues of scheduling workers on jobs at assigned work stations.

Aggregate Planning Aggregate planning is medium -range capacity planning which typically covers a time horizon of anywhere from 3 to 18 months. The goal of aggregate planning is to achieve a production plan which will effectively utilize the organization’s resources to satisfy expected demand. Aggregate planning aims at an overall plan without Distinguishing products

 Aggregate production planning is done in an organization to match the demand with the supply on a period by period basis in a cost effective manner

Aggregate Demand Over all demand of different products and services, the company offers.

Aggregate Planning Strategies  Pure  Mix

Pure strategies are as follows  Building and utilizing inventory through constant work force  Varying the size of work force  Overtime utilization  Subcontracting

Mix Strategies  Mix strategies could be the combination of any pure strategies

Steps for Developing the Aggregate Plan  Step 1- Choose strategy: level, chase or hybrid  Step 2- Determine the aggregate production rate  Step 3- Calculate the size of the workforce  Step 4- Test the plan as follows:  Calculate Inventory, expected hiring/firing, overtime needs  Calculate total cost of plan  Step 5- Evaluate performance: cost, service, human resources, and operations

Aggregate plan for services firms Service organizations also use aggregate planning, some in exactly the same way with a manufacturing firm.  How many accounts we need to open  How many membership we need to sale  How many patient we need to serve

Master Production Schedule (MPS)

 MPS is product wise plan for manufacturing products Which product will produce at what time till what time

MPS specifies  The sizing and timing of production orders for specific items  The sequencing of individual jobs  The short term allocation of resources to individual activities and operations

Time Fences in MPS MPS is divided into 4 section based on time called time fence  1.Frozen-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 allocated

In produce – to Stock  Order come from warehouse within company  Order based on future demand  Forecast play important role in demand management.  Lot size depend on economy In Produce- to order  Demand management is customer.  Lot size is also depending on customer order  Production is normally demand based

Production, planning and control systems  Three main types:  Pond draining system  Push system  Pull system

Pond-Draining Systems  Emphasis on holding inventories (reservoirs) of materials to support production  Little information passes through the system  As the level of inventory is drawn down, orders are placed with the supplying operation to replenish inventory  May lead to excessive inventories and is rather inflexible in its ability to respond to customer needs

Push Systems  Use information about customers, suppliers, and production to manage material flows  Flows of materials are planned and controlled by a series of production schedules that state when batches of each particular item should come out of each stage of production  Can result in great reductions of raw-materials inventories and in greater worker and process utilization than pond-draining systems

Pull Systems  Look only at the next stage of production and determine what is needed there, and produce only that items  Raw materials and parts are pulled from the back of the system toward the front where they become finished goods  Raw-material and in-process inventories approach zero  Successful implementation requires much preparation

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