Chapter Two
Production Planning and
Control
2.1 Introduction & Meaning
Production planning and control is a tool available to the management to achieve
the stated objectives
Production planning starts with the analysis of demand for products & delivery
schedule. On the basis of the information available, a scheme of utilisation of
firms resources like machines, materials and men are worked out to obtain the
target in the most economical way
Production control comes into action if there is any deviation between the
actual and planned. The corrective action is taken so as to achieve the targets
set as per plan by using control techniques
2.2 Need for Production
Planning & Control
Production planning and control is needed to achieve:
1. Effective utilisation of firms’ resources.
2. To achieve the production objectives with respect to quality, quantity, cost and
timeliness of delivery.
3. To obtain the uninterrupted production flow in order to meet customers demand
with respect to quality and committed delivery schedule.
4. To help the company to supply good quality products to the customer on the
continuous basis at competitive rates
2.3 Objectives of Production Planning
& Control
1. Systematic planning of production activities to achieve the highest efficiency
in production of goods/services.
2. To organize the production facilities like machines, men, etc., to achieve stated
production objectives with respect to quantity, quality, time and cost.
3. Optimum scheduling of resources.
4. Coordinate with other departments relating to production to achieve regular
balanced and uninterrupted production flow.
5. To conform to delivery commitments.
6. Materials planning and control.
7. To be able to make adjustments due to changes in demand and rush orders
2.4 Phases of Production
Planning
& Control
Production planning and control has three phases namely:
A. Planning Phase B. Action Phase C. Control Phase
2.4.1 Planning Phase is an exercise of intelligent anticipation in order to establish
how an objective can be achieved or a need fulfilled Product Development
& Design
Prior Planning Forecast
Aggregate Planning
MPS
Planning Phase MRP
Process Planning
Routing
Material Planning
Active Planning
Tool Planning
Loading
Scheduling
Cont.
2.4.2 Action Phase has the major step of dispatching. In this phase, the worker is
ordered to start manufacturing the product. The tasks which are included in
dispatching are job order, store issue order, tool order, time ticket, inspection order,
move order etc Action Phase Dispatching
2.4.3 Control Phase
Progress
Data Processing
Reporting
Control Phase
Corrective Action Expediting Replanning
Cont.
1. Progress Reporting the data regarding what is happening with the job is
collected. The various data pertaining to materials rejection, process variations,
equipment failures, operator efficiency, operator absenteeism, tool life, etc., are
collected and analyzed for the purpose of progress reporting.
2. Corrective Action make provisions for an unexpected event. Some examples of
corrective actions are creating schedule flexibility, schedule modifications, capacity
modifications, make or buy decisions, expediting the work, pre-planning, and so on.
2.5 Functions of Production Planning &
Control
Functions of production planning and controlling is classified into:
1. Pre-planning fuction 2. Planning function 3. Control function
1. Pre-planning is a macro level planning deals with analysis of data and is an
outline of the planning policy based upon the forecasted demand, market analysis
and product design and development.
2.Planning Function is a micro level planning starts once the task to be
accomplished is specified, with the analysis of four M’s, i.e., Machines, Methods,
Materials and Manpower. This is followed by process planning (routing)
3. Control Function is effected by dispatching, inspection and expediting materials
control, analysis of work-in-process. Finally, evaluation makes the PPC cycle
5.6 Operations Planning &
Scheduling Systems
concern with the volume and timing of outputs, the utilisation of operations
capacity at desired levels for competitive effectiveness
Components of Operations Planning and Scheduling System
1. The Business Plan is a statement of the organization’s overall level of business
activity for the coming six to eighteen months, usually expressed in terms of
outputs (in volume of sales) for its various product groups
The business plan is not concerned with all the details and specific timing of
the actions for executing the plan. Instead, it determines a feasible general
posture for competing to achieve its major goals.
Cont.
2. Aggregate Production (Output) Planning The process of determining output
levels of product groups over the coming 6 to 18 month
It identifies the overall level of outputs in support of the business plan
recognizes the division’s existing fixed capacity and overall policies for
maintaining inventories and backlogs, employment stability & subcontracting
3. Aggregate Capacity Planning is the process of testing the feasibility of
aggregate output plans and evaluating overall capacity utilisation.
Capacity and output must be in balance
each plant, facility, or division requires its own aggregate capacity plan
capacity plan translates an output plan into input terms
Cont.
4. Master Production Scheduling (Mps) is a schedule showing week by week how
many of each product must be produced according to customer orders and demand
forecasts
Its purpose is to meet the demand for individual products in the product
group
more detailed level of planning disaggregates the product groups into
individual products and indicates when they will be produced.
The MPS is an important link Between Marketing And Production
5. Resource Requirement Planning is the process of testing the feasibility of
master production schedule in terms of capacity.
ensures that a proposed MPS does not inadvertently overload any key
6. Material Requirement Planning is
a system of planning and scheduling
the time phased material requirements
for releasing and receiving materials
that enable the master production
schedule to be implemented
provides information such as due
dates for components that are
subsequently used for shop floor
control
What? How much? When?
Fig. Operations planning and scheduling system
Cont.
7. Capacity Requirement Planning is an iterative process of modifying the MPS
or planned resources to make capacity consistent with the production schedule
CRP is a companion process used with MRP to identify in detail the capacity
required to execute the material requirement planning.
8. Shop Floor Control involves the activities that execute and control shop
operations namely loading, sequencing, detailed scheduling and expediting jobs in
production
It coordinates the weekly and daily activities that get jobs done.
9. Loading establishing how much of a load each work centre must carry during the
coming planning period.
Cont.
10. Sequencing establishes the priorities for jobs in the queues (waiting lines) at the
work centres.
specifies the order in which the waiting jobs are processed
11. Detailed Scheduling determines start times, finish times and work assignments
for all jobs at each work centre
Calendar times are specified when job orders, employees, and materials, as
well as job completion (outputs), should occur at each work centre.
12. Expediting is a process of tracking a job’s progress and taking special actions to
move it through the facility.
equipments breakdowns, unavailable materials, priority changes, require
managers to deviate from schedules and expedite an important job
Cont.
13. Input/Output Control related to the activities to monitor actual versus planned
utilisation of a work centre’s capacity.
Output plans and schedules call for certain levels of capacity at a work centre,
but actual utilisation may differ from what was planned.
Actual versus planned utilisation of the work centre’s capacity can be
monitored by using input-output reports
when discrepancies exist, adjustments can be made
2.7 Aggregate Planning
the process of planning to the quantity and timing of output over the intermediate
time horizon
evaluate the capacity requirements and to plan the best way to make the
capacity available
fluctuations in demand must be met by varying labour and inventory schedule
Aggregate planning seeks the best combination to minimise costs.
Aggregate Planning Strategies
The variables of the production system are labour, materials and capital. More
labour effort is required to generate higher volume of output.
Cont.
controllable variables constitute pure strategies by which fluctuations in demand
and uncertainties accommodated by using the following steps:
1. Vary the size or the workforce: Output is controlled by hiring or laying off
workers in proportion to changes in demand.
2. Vary the hours worked: Maintain the stable workforce, but permit idle time when
there is a slack and permit overtime (OT) when demand is peak.
3. Vary inventory levels: Demand fluctuations can be met by large amount of
inventory.
4. Subcontract: Upward shift in demand from low level. Constant production rates
can be met by using subcontractors to provide extra capacity.
2.8 Master Production Schedule
(Mps)
Master scheduling follows aggregate planning. It expresses the overall plans in
terms of specific end items or models that can be assigned priorities
Time interval used in master scheduling depends upon the type, volume, and
component lead times of the products being produced; Normally weekly time
intervals are used
The time horizon covered by the master schedule also depends upon product
characteristics and lead times
Functions of MPS
1.translate aggregate plans into specific end items 2.Evaluate alternative schedules
3.Generate material requirement 4.Generate capacity requirements
5. Facilitate information processing 6.Effective utilization of capacity
2.9 Material Requirement
Planning (Mrp)
is a technique for determining the quantity and timing for the acquisition of
dependent demand items needed to satisfy MPS requirements
2.9.1 Objectives of MRP
1. Inventory reduction: helps to procure the materials/ components as and when
needed and thus avoid excessive build up of inventory.
2. Reduction in the manufacturing and delivery lead times: avoid delays in
production and priorities production activities by putting due dates on job order
3. Realistic delivery commitments: give marketing timely information about likely
delivery times
4. Increased efficiency: provides a close coordination among various work centres
and help to achieve uninterrupted flow of materials through the production line
Cont.
2.9.2 MRP System
The inputs to the MRP system are: (1) A master production schedule, (2) An
inventory status file and (3) Bill of materials (BOM).
1. Mps is a series of time phased quantities for each item that a company produces,
indicating how many are to be produced and when
2. Inventory Status File gives complete and up to date information on the on-hand
quantities, gross requirements, scheduled receipts and planned order releases
3. Bill of Materials (BOM) identifies how each end product is manufactured,
specifying all subcomponents items, their sequence of build up, their quantity in each
finished unit and the work centres performing the build up sequence.
MRP provides order release requirements, order rescheduling and planned orders
2.10 Capacity Planning
Capacity is the rate of productive capability of a facility
2.10.1 Measurement of Capacity Planning
1. Design capacity: engineered rate of output of goods or services under full scale
operating conditions E.g. the designed capacity of the cement plant is 100 TPD
2. System capacity: the maximum output of the specific product or product mix the
system of workers and machines is capable of producing as an integrated whole.
𝐴𝑐𝑡𝑢𝑎𝑙 𝑂𝑢𝑡𝑝𝑢𝑡
𝑆𝑦𝑠𝑡𝑒𝑚 𝐸𝑓𝑓𝑖𝑐𝑒𝑛𝑐𝑦=
𝑆𝑦𝑠𝑡𝑒𝑚 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦
3. Licensed capacity: Capacity licensed by the various regulatory agencies
4. Installed capacity: The capacity provided at the time of installation of the plant
5. Rated capacity: Capacity based on the highest production rate established by
actual trials
2.11 Routing
the selection of most advantageous path which each part of the product will
follow while being transformed from raw materials to finished products
routing involves the following steps:
(a) Type of work to be done on product or its parts.
(b) Operation required to do the work.
(c) Sequence of operation required
(d) Where the work will be done.
(e) A proper classification about the personnel required and the machine for
doing the work.
Cont.
2.11.1 Techniques of Routing
1. Route card: indicates the material used during manufacturing and their progress
from one operation to another.
2. Work sheet: It contains
(a) Specifications to be followed while manufacturing.
(b) Instructions regarding routing of every part with identification number of
machines and work place of operation
3. Route sheet: It deals with specific production order made from operation sheets.
These includes the following:
(a) Number and other identification of order. (b) Symbol and identification of part.
(c) Number of pieces to be made (d) Number of pieces in each lot (e) Operation data
2.12 Scheduling
prescribing of when and where each operation necessary to manufacture the
product is to be performed
aim of scheduling is to plan the sequence of work so that production can be
systematically arranged towards the end of completion of all products by due
date
2.12.1 Principles of Scheduling
1. The principle of optimum task size: tends to achieve maximum efficiency when
the task sizes are small
2. Principle of optimum production plan: planning should be such that it imposes
an equal load on all plants.
2.13 Scheduling Methodology
The scheduling methodology depends upon the type of industry, organization,
product, and level of sophistication required. They are:
1. Charts and boards-have been extensively used scheduling devices in the past,
although many of the charts are now drawn by computer. They are used in
progress charts, Load charts & Record chart forms
2. Priority decision rules-are simplified guidelines for determining the sequence in
which jobs will be done. Following are some of the priority rules followed FCFS,
EDD, LS, SPT, LPT, PCO, RS
3. Mathematical programming methods
Cont.
(a) Linear programming model: Here all the constraints and objective functions
are formulated as a linear equation and then problem is solved for optimality.
Simplex method, transportation methods and assignment method are major methods
used here.
(b) PERT/CPM network model: PERT/CPM network is the network showing the
sequence of operations for a project and the precedence relation between the
activities to be completed.
Assignment-2-10%
1. Why do you need production planning and control? (1pt)
2. Discus parameters for production planning and control (2pt)
3. What are the guidelines for aggregate planning? (2pt)
4. Explain types of scheduling (2pt)
5. Relating with your internship experience, explain the following questions: (3pt)
1. Phase of production planning and production control of your hosting company
2. routing steps used by your hosting company
