Production Management System 2 Production Management System Strategic and Operation Decisions 1

DECISIONS IN OPERATIONS/PRODUCTION MANAGEMENT EFFECTIVNESS Are we doing the right things? STRATEGIC DECISIONS Operations system design ( preparation) OPERATION DECISIONS Production run (activity) EFFICIENCY Are we doing the things right?

Strategic Decisions in Production Management STRATEGIC DECISIONS (PRODUCTION SYSTEM DESIGN) Focoused EFFECTIVNESS Are we doing the right things ? Phase Operations system design Objectives Product, process, capacity, localization, layout and work system design Product design (What product mix to produce?) Process design (How to produce? What processes to choose? Make or buy?) Capacity planning (How much to produce? ) Localization choice (Where to produce? ) Facility layout design (What layout to choose? How facilities should be arranged (layout)? Work system design (Job Design and Work Measurement )

Operation decisions in Production Management Focoused EFFICIENCY Are we doing the things right ? Phase Operation of Production System Objectives Production Planning and Control in order to manufacture required products Production planning – what output levels for the forthcoming periods? Master Production Scheduling (short term planning) – what, how much and when to produce the final products Material Requirements Planning (short term planning) – what, how much, when to order (production orders and purchase orders) Production Control – production orders dispatching and coordination, priority of production orders, Purchasing Control – purchasing orders dispatching and coordination

PRODUCTION MANAGEMENT SYSTEM LONGTERM PLANNING Strategic Plan MIDTERM PLANNING Production Planning (aggregate) PLANNING STAGE Master Production Schedule SHORTTERM PLANNING Material Requirements Planning CONTROL STAGE (execution) Purchasing Control Production Control

Integration of Management Functions and Management Stages in Enterprise DISTRIBUTION PRODUCTION PURCHASING MANAGEMENT STAGES MANAGEMENT FUNCTIONS PLANNING ORGANIZATION LEADERSHIP CONTROLING Planning – determining of production objectives and plans and the ways of their achievement Organization – resources assignment to perform the plans Leadership – motivating and directing the plans performance Controlling – assessment of plans execution and making correction activities

Management Contuity Loop (Deming weel) Planning Stage 1. PLAN 4. ACT 2. DO Control Stage (execution) 3. CHECK Plan. Work planning Do. Work execution Check. Check results Act. Plan revision if needed

Production planning levels in organisation Long range STRATEGIC PLANNING SOP AGGREGATE PRODUCTION PLANNING MPS MASTER PRODUCTION SCHEDULING MRP MATERIAL REQUIREMENTS PLANNING PAC DETAILED SCHEDULING (PRODUCTION ACTIVITY CONTROL) Short range High specific

Characteristics of Production Planning Levels OBJECT OF PLANNING FACILITY PLANNING HORIZONT PLANNING PERIOD STRATEGIC Product mix Production program Company > year (few years) year Production Planning Product families Enterprise < year month Master Production Scheduling Final products Plant < few months few weeks week, day Materials Requirements Planning Produced and purchased componements Department/ work centre