CHAPTER FOUR

OPERATIONS PLANNING & CONTROL

4.1. Aggregate production planning
Aggregate plan: is a statement of a company’s
production rates, workforce levels, and inventory holding
based estimates of customer requirements and capacity
limitations.
Production plan: is a manufacturing firm’s aggregate
plan, which generally focuses on production rate and
inventory holdings. It determines the quantity and
timing of production for the immediate future.
• aggregate planning decisions and policies should be
made concerning over time, hiring, layoff,
subcontracting, and inventory levels.
Aggregate planning: is an intermediate term
planning decision. (3 months to one year).
It is the process of planning the quantity and timing
of output over the intermediate time horizon
• Within this range, the physical facilities are
assumed to be fixed for the planning period.
• Fluctuations in demand must be met by varying
labor and inventory schedule.
• It is also translating annual and quarterly
business plan into labor and production output
plans for the intermediate term.
• It seeks the best combination to minimize costs.
 The objective of APP
•To bring optimal combination of production rate,
work force level, and inventory on hand.
•To get over all output levels in the near to
medium future in the face fluctuating or
uncertain demand
•To set ground for decisions and policies should
be made concerning over time, hiring, layoff,
subcontracting, and inventory levels.
•To maintain families to the supply side and on
the demand side by groups of customers.
• To minimize the cost of resources required to
meet demand over that period.
Main purpose of aggregate planning
• It facilitates fully loaded facilities and minimizes
overloading and under loading.
• It provides adequate production capacity
• It facilitates the orderly and systematic transition
of production capacity
• In times of scarce production resources, it
enhances the probability of getting the most
output for the amount of resources available.
AGGREGATE PRODUCTION PLANNING STRATEGIES

• Managers often combine reactive (workforce

adjustment, anticipation of inventory, workforce
utilization, vacation schedules, subcontractors and
backlog, backorder and stocks) and aggressive
(complementary products, and creative pricing)
alternatives in various ways to bring an acceptable
aggregate plan.
1. Chase strategy: a strategy that matches
demand during the planning horizon by varying
either the workforce level or the output rate.
first method, varying the workforce level to match
demand, it relies on just one reactive alternative-workforce
variation.
• Advantage of no inventory investment, overtime, or
under time.
•Drawback, including the expense of continually adjusting
workforce levels, hostility of the workforce, and the loss of
productivity and quality b/c of constant change in the
workforce
• The second methods, varying the output rate to match
demand. opens up additional reactive alternatives beyond
changing the workforce level.
• Sometimes called the utilization strategy.
• it is changed through overtime, under- time and vacation
are taken. Subcontracting, including temporary help during
the peak season
2. Level strategy: a strategy that maintains a constant
workforce level or constant output rate during the
planning horizon.
• First method, maintain a constant workforce level, it
might consist of not hiring or laying off workers (except
at the beginning of the planning horizon).
• using under-time in slack periods and overtime up to
contracted limits for peak periods.
• second method, maintaining a constant output rate, it
allows hiring and layoffs in addition to other alternatives
of first level strategy.
3. Mixed strategy: Strategies that consider and
implements a full range of receive alternatives and goes
beyond a “Pure” chase or level strategy.
• it used as per organizations environment and planning
objectives.
Proper Strategy is selected based on:
1. how much of each production resource is
available
2. How much capacity is provided by each type of
resource?
3. At what step in production we determine capacity
/labour hour available, or machine hour available
4. How much does it cost to scale capacity up or
down cost of hiring, laying off, recalling/
The Aggregate Production Process
1. Determining demand requirements
2. Identifying alternatives, constraints, and costs:
• Constraints represent the physical limitations or
managerial policies associated with the aggregate plan.
• The planner usually considers several types of costs
when preparing aggregate plans: Regular time costs ,
Overtime costs, Hiring and layoff costs, Inventory
holding costs and Backorder and stock out costs.
3. Preparing an acceptable plan:
• It is necessary to design alternative plan which pass
through further revision and adjustment.
• The plan must then be checked against constraints and
evaluated in terms of strategic objectives.
4. Implementing and updating the plan
• It requires the comment of manager in all functional
areas.
• Acceptance of the plan does not necessarily mean that
everyone is in total agreement, but it does imply that
everyone will work to achieve it.
• The planning committee may recommend changes in
the plan during implementation or updating to balance
conflicting objectives better.
MATERIALS REQUIREMENTS PLANNING (MRP)
“getting the right materials to the right place at
the right time.”
• is a means for determining the number &
time schedule of parts, components, and
materials needed to produce a product.
• The basic purposes are to control inventory
levels, assign operating priorities for items, and
plan capacity to load the production system.
Inputs to MRP
• is a processor which processes inputs
(relating data) to give a time phased detailed
schedule for raw materials and components.
MRP system has three major inputs:-
1. Master Production Schedule (MPS)
• is a list of what, how many and when end products are to be
produced and be ready for shipment.
• is the determinant of future load, inventory investment, production,
and delivery service. The MPS is derived from the aggregate
schedule.
• Cumulative lead time: The sum of the lead times that sequential
phases of a process require from ordering of parts or raw materials to
completion of final assembly.
2. Bill of materials (BOM)
• It is file which lists all assemblies together.
• product structure is specified by the bill of materials, which is a
structured list of all the component parts, assemblies and
subassemblies that make up each product.
• The other information contained in it are: the part number, child
parent numbers, the date each child is to become effective or to be
removed from use in the bill, dropout and yield percentages.
 3. inventory records File (IRF) /Item Master File/
• It contains data such as the number of units on hand and on
order. Group Assignment
Discuss in detail on the following points and with good
example( select or create ideal organization) on the application of
them.
Part of the Assignment
I. Background of the organization
II. Introduction _______________
III. Application__________________
IV. Conclusion and Recommendation
1. Gross requirement (GR):
2. Scheduled receipts (SR):
3. Projected available balance (PAB):
5. Net requirements:
6. Planned order receipt
7. Planned order release
8. Material Requirement Planning Process
4.2 OPERATIONS SCHEDULING
• Scheduling is the determination of when labor,
equipment and facilities are needed to produce a product or
provide a service.
• it specifies the timing and sequence of production.
characteristics Operation Scheduling
• Schedule must be realistic: being achieved within the
capacity limitations of the manufacturing facilities.
• Scheduling should be clearly. it set time framework for
tasks.
• it design for tasks that has sequential or loading nature.
Objectives of scheduling
To meet the due date, To minimize job lateness
To minimize the lead time or setup time, To minimize wok-in-
process inventory
Scheduling system
1. Finite loading: refers to loading activities with regard to
capacity. Tasks are never loaded beyond capacity. Tasks are never
loaded beyond capacity.
• If an operation is delayed due to a part or parts shortage, the
order will sit in queue and wait until the part is available from a
preceding operation.
2. Infinite loading:
• work is assigned to a work center simply based on what is
needed over time. No consideration tangible capacity, resources
required to complete the work.
3. Backward loading
The purpose of back ward loading is to calculate the capacity
required in each work centre for each time period.
4. Forward loading begins with the present date and loads jobs
forwards in time.
Scheduling in manufacturing
Scheduling in manufacturing is the process of assigning
priorities to manufacturing orders and allocating
workloads to a specific work centers. Scheduling is
challenging if the task variety is high.
Job shop scheduling
• here decision can be quite complex because of the nature
of variety of jobs (customer orders) that are processed,
each with distinctive routing & processing requirement.
Priority rules for allocating jobs to machine - sequencing
• Priority rules are the criteria by which the sequence of
jobs is determined.
• The process of determine which job is started first on a
particular machine or work centre is known as priority
sequencing rules.
•Some of the most common priority rules for sequencing
jobs are:
1. First come, first served (FCFS: the oldest first rule.
2. Shortest processing time (SPT): shortest operating
time first.
3. Earliest due date first (due date): a job that is due
tomorrow has a higher priority than the job that is due
next week or next month.
4. Critical ratio (CR): CR = due date – today’s date = time remaining
Total shop time remaining lead time remaining
• In the CR rule, jobs are sequenced from lowest CR to
highest CR. CR < 1 considered behind schedule and need
to be first schedule.
• The following describes the most common performance
measure used in operation schedule:
A. Job flow time
Flow time = waiting time + processing time (set up,
delays resulting from machine breakdowns, component
unavailability)
Average flow time = (sum of total flow time) (no of job
processed)
B. make span time
Make span time: It is the total amount of time required to
complete a group of job.
Make span time =processing time of each job
C. Tardiness (past due): refers to the amount by which
completion time exceeds the due date of a job.
D. Utilization = total processing time total flow time
 Test
1.List the Aggregate Production Process
step.
2.List the 3 sources of information for
material requirement plan.
1. Define Scheduling in manufacturing
2. The process of determine which job is
started first on a particular machine or
work centre is known as ___________