PRODUCTION PLANNING & CONTROL5/15/12 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 5/15/12 Production Planning 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 5/15/12 1. 2. 3. 4. 5. 6. 7. 8. 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 1. 1. 1. 1. 1. 1. 5/15/12 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 5/15/12 . 5/15/12 . • 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 5/15/12 . 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 . 000 metres during April to August – Change the production rate to 10. – Work on a one-shift basis throughout the year with 20% over time during July to October • 5/15/12 .000 metres during September to December – Carry 10% of monthly production as inventory during the first 9 months of production.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. Top. 3. . Top down approach: 1.down approach Bottom –up approach. b.Approaches to Aggregate Planning Two types of approaches a. 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. 1. . They are done with Master Production Schedule Ensures no over load occurs for any department. 5/15/12 2. 3.Bottom – Up Approach: Also called as Resource Requirement Planning(RRP) or Rough cut capacity planning. Quick and in-expensive way to find and correct the raw materials available and required for MPS. Quantitative Techniques For APP • Pure Strategies Mixed Strategies Linear Programming Transportation Method Other Quantitative Techniques Copyright 2006 John Wiley & Sons. • • • • . Inc. 000 Hiring cost = $100 per worker Firing cost = $500 per worker Regular production cost per pound = $2.000 120.000 50.00 Inventory carrying cost= $0.000 pounds per quarter Beginning work force = 100 workers 5/15/12 .50 pound per quarter Production per employee= 1.000 150.Pure Strategies Example: QUARTER Spring Summer Fall Winter SALES FORECAST (LB) 80. 000 X $2.000 pounds QUARTER Spring Summer Fall Winter PRODUCTION PLAN INVENTORY 100.000 70.000 100.50) = $870.000 150.Level Production Strategy Level production (50.000 + 80.000 50.000 Cost of Level Production Strategy (400.000 5/15/12 .00) + (140.000) 4 SALES FORECAST 80.000 0 140.000 100.000 400.000 100.000 20.000 120.000 = 100.000 + 150.000 + 120.000 50.00 X $. 000 5/15/12 .Chase Demand Strategy WORKERS QUARTER FORECAST SALES PRODUCTION WORKERS WORKERS Spring 80.000 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 Fall 120.000 X $2.000 Summer 50.000 120.000 150.000 Winter 150.000 80.000 50.00) + (100 x $100) + (50 x $500) = $835. Level Production Demand Production Units Time 5/15/12 . Chase Demand Demand Production Units Time 5/15/12 . 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 – 5/15/12 . machines and other elements of production capacity required to satisfy aggregate demand. Approach to Aggregate Production Planning – Bottom up Approach 5/15/12 . materials. • Select the capacity plan from among the alternatives considered that satisfy aggregate demand and best meets the objectives of the organization.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. 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 5/15/12 What is Line balancing? . Introduction : What is line balancing? 5/15/12 . Introduction : What is line balancing? 5/15/12 . 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.e. arranging the production line so that there is even flow of production from one 5/15/12 work station to next i. 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 1 2 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 5/15/12 . 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 1 2 3 4 2 5 2 0 1 5 1 0 5 Redistribute the work 5/15/12 . 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 5/15/12 . 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 5/15/12 • • • stations • and procedure • • . 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. Our goal is to combine them into workstations. E F. The assembly line operates 8 hours per day and the expected customer demand is 1000 units per day. G H. Balance the line and calculate the efficiency and theoretical minimum number of workstations. I J 5/15/12 .Example The table shows the tasks performed in a production line. SOLUTION •Step 1: Draw a precedence diagram according to the given sequential relationship 5/15/12 . 42 (~6 workstations) 5/15/12 .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.•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. 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: 5/15/12 .•Step 4: Define your assignment rules. • Forming Workstation 2: 5/15/12 . 8 11 17.8 15 13.8 18 10.•Following the same criteria we achieve our balancing with 7 workstations Workstation Task 1 2 3 4 5 6 7 5/15/12 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 E. C C 15 0.8 - .8 E 12 3.8 20 8. G 13 4. C B.8 17 11. F.8 K 9 4. G E.8 B. G F. F.8 13 15. 8) = 77% 5/15/12 .•Step 6: Calculate Efficiency Efficiency= Total Task Time / (Actual number of workstations * Takt Time) Efficiency= 156 / (7*28. It is concerned with defining the long term and short term capacity needs of a firm and determining how these needs will be met. 5/15/12 .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. Measurement of Capacity: By terms of input or output of firm. Number of seats Number of beds Number of students . 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. they cannot be easily changed… Adjustable Capacity – size of workforce. no. of hours per week they work. no. System Capacity – max. of shifts and extent of sub-contracting\ Design Capacity – max. Potential Capacity – Capacity which can be made available within the decision horizon of top management Types of Capacity 5/15/12 .Fixed Capacity – capital assets the company have at particular time. planned output that can be achieved under the full scale operations. output of a specific product or product mix that the system of workers and machines is capable of producing. Also known as Average Capacity Actual Capacity – Actual output achieved during a particular period.Capacity which can be made available within the current budgeted period Effective Capacity . Also known as practical capacity or operating capacity i. Practical Capacity = Theoretical Capacity – lost capacity due to inefficiency and scrap factor Normal Capacity – Estimated quantity of output that should be usually achieved.Capacity which is used within the current budgeted period.Immediate Capacity .e. 5/15/12 . Infinite planning 5/15/12 horizon Based on amount of resources employed .System Efficiency = (Actual output / System capacity) Types of Capacity Planning 1. Short-term planning 3. Long-term planningBased on time 2. Finite planning 4. Lead strategy Match strategy Lead strategy is adding capacity in anticipation of an 2.The broad classes of capacity planning 1. The possible disadvantage to this strategy is that it often results in excess inventory. which is costly and often wasteful. Lag strategy 3. 5/15/12 . Lead strategy is an aggressive strategy with the goal of luring customers away from the company's competitors. increase in demand. Match strategy is adding capacity in small amounts in 5/15/12 . This is a more conservative strategy.organization is running at full capacity or beyond due to increase in demand. It decreases the risk of waste. This is a more moderate strategy. Lag strategy refers to adding capacity only after the response to changing demand in the market. but it may result in the loss of possible customers. market conditions' and product life cycle.e. vertical integration) Type of technology selected Dynamic nature of all factors affecting determination of plant capacity. etc.Factors affecting Capacity decision 1. 5. viz.. 4. 6. Market demand for a product/service The amount of capital that can be invested Degree of automation desired Level of integration (i.. process technology. . 5/15/12 2. 3. changes in the product design. Present demand and future demand both over short-range. Obsolescence of product and technology over a period of time. 8. 5/15/12 . 10.7. 9. intermediate-range and longrange time horizons. Flexibility for capacity additions. Difficulty in forecasting future demand and future technology. customer order. 5/15/12 .Master Production scheduling (MPS) 1. Master schedule – Quantity of each end item to be completed in each time period( short range horizon) 2. inventory levels etc. MPS is developed to review market forecast.. To schedule end items to be completed promptly and when promised to customers. 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 . 2. To avoid overloading or under-loading the production facility.Objectives 1. so that. Open – Not all production capacity has been 5/15/12 1. Change makes production cost to be affected in less amount 4. . Full – All products are allocated to orders.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. Procedure for developing MPS 5/15/12 . 3. 4. 5. Work from an aggregate production plan. Load facilities realistically.Guidelines to Master Scheduling 1. 6. Reschedule as required. 2. Release orders on a timely basis. 5/15/12 . Schedule common modules when possible. Monitor inventory levels closely. of products to be scheduled. .Updating MPS v Updated weekly MPS in Produce to stock & Produce to order firm The element of MPS are affected by. 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. a) Demand Management b) Lot – Sizing c) No. 4. Demand management is customer. Unrealistic schedules that production personnel do not follow.In Product to order 1. 3. Overloaded facilities Under-loaded facilities. Excessive inventory levels on some end items and frequent stock-outs on others. 5. 2. 2. Unreliable delivery promises to customers. 6. Excessive expediting or follow-up. Lot size is also depending on customer order. 5/15/12 . Symptoms of poorly designed MPS 1.
Report "Production Planning and Control Methods, Aggregate Planning, Capacity Planing, Scheduling"