Production Planning and Control: Unit Notes
Production Planning and Control: Unit Notes
Production Planning and Control: Unit Notes
com
DEPARTMENT OF MECHANICAL ENGINEERING
PRODUCTION PLANNING AND CONTROL
UNIT NOTES
UNIT - 1
INTRODUCTION
Production is a process or procedure developed to transform a set of inputs like men, materials,
capital, information and energy into a specified set of outputs like finished products and services
in proper quantity and quality. It consists of series of sequential operations to produce a desirable
product acceptable to customer and meet the customer demand with respect to quality and
intended function.
PPC is aimed to achieving the efficient utilization of resources (material, men , facility)
in the manufacturing organizations through planning , coordinating and control the
production activities that transform the raw materials in to finished product
1. To deliver quality goods in required quantities to the customer in the required delivery
schedule in order to achieve maximum customer satisfaction.
2. To ensure optimum utilization of resources/materials.
3. To minimize the production/manufacturing cycle time.
4. To maintain optimum inventory levels.
5. To schedule production facilities in optimum manner.
1|Page
www.rejinpaul.com
PRODUCTION PLANNING
Production planning is a pre-production activity. It is a plan in which the facilities needed
for production are determined and arranged.
It deals with basic concepts of what to produce, when to produce, where to produce, how much
to produce. It takes a long term view at the overall production.
According to Raywild “production planning is the determination, acquisition and
arrangement of all facilities necessary for future production of products.”
1. To ensure the availability of raw materials, equipments etc. in right quantity and
quality during the time of production.
2. To ensure all preparations for manufacturing, in order to reach the production goals
established in the production budget and master production schedule (MPS) for the
production process.
PRODUCTION CONTROL
Meaning:-
Production control guides and directs flow of production so that products are manufactured
in a best way and conform to a planned schedule and are of the right quality.Control facilitates
the task of manufacturing and see that every theme goes as per the plan.
Definition:-
"Production control refers to ensuring that all which occurs is in accordance with the rules
established and instructions issued.“ -HENRY FAYOL.
2|Page
ESSENTIAL STEPS FOR CONTROL PROCESS
www.rejinpaul.com
1. Initiation the production
2. Progressing
1.To implement production plans by issuing orders to those who are supposed to implement
them.
2.To ensure that various inputs like men, machine, materials etc. are available in the required
quantity and quality.
4.To ensure that goods are produced according to the prescribed standards and quality norms
7.To ensure rapid turnover of production and minimizing of inventories of raw materials and
finished products.
1. Control of planning
2. Control of tooling
3. Control of materials
4. Control of activities
6. Control of information
7. Control of quantity
2. Planning Phase
3. Control Phase
3|Page
PRE – PLANNING PHASE
www.rejinpaul.com
Micro planning, Analysis of data, outline of basic planning (Demand , Market analysis,
and product design and development)
2. Process design
4. Sales forecasting
5. Estimating
7. Equipment policy
2. PLANNING PHASE
3. CONTROL PHASE
FUNCTIONS OF PPC
METHODS PLANNING(Identify the alternate methods and select the best methods)
4|Page
www.rejinpaul.com
ESTIMATING (Production orders and detailed root sheets)
PRODUCTION SYSTEM
4. Process or continuous production (Manufacture the products where the demand is high)
PRODUCT ANALYSIS
5|Page
FACTORS INFLUENCING PRODUCT ANALYSIS:
www.rejinpaul.com
Marketing aspects
Product characteristics
Functional aspects
Operational aspects
Aesthetic aspects
. Economic analysis
1.Standardisation
Setting up standards
Definition:
Process of defining and applying the conditions necessary to ensure that given
range of requirements can normally be met with a minimum variety and in a
reproducible and economic manner based on current techniques.
It applicable for all factors such as, Men machines and materials
6|Page
OBJECTIVES OF STANDARDISATION
www.rejinpaul.com
1. To achieve maximum overall economy by,
1. Cost
2. Human effort
3. Materials
CLASSIFICATION OF STANDARDISATION
BENEFITS OF STANDARDISATION:
2. Reduction in manufacturing cost per unit automatically reduces cost of the product.
7|Page
www.rejinpaul.com
LIMITATIONS OF STANDARDISATION
2. Changes in product design or new product design may take a very long time
2. Simplification
It reduction in
Product range
Assembly and
CONSIDERATION IN SIMPLIFICATION
EFFECT OF SIMPLIFICATION
8|Page
BENEFITS OF SIMPLIFICATION
www.rejinpaul.com
1. Reduce manufacturing operations
LIMITATIONS OF SIMPLIFICATION
3.SPECIALISATION
Name itself shows specialization means EXPERT In particular product line, instead of
diversion.
ADVANTAGES
2. Higher productivity
3. Greater efficiency
4. Better quality
DIS ADVANTAGES:
1. Lesser flexibility
ECONOMIC ANALYSIS
9|Page
www.rejinpaul.com
Capital expenditure in terms of fixed and variable costs
Price (cost+profit)
Quantity manufactured
PROFIT CONSIDERATION
Sales volume remain same total profit would proportional to increase the margin
profit
2. MARKETING STRATERGIES
10 | P a g e
www.rejinpaul.com
1. Selling price remain constant for all sales( no discount)
It is break even chart Graphical representation of relation ship between Cost and revenue
at given time
GRAPHICAL METHOD
11 | P a g e
UNIT-II WORK STUDY
www.rejinpaul.com
• Work study investigates the work done in an organization and aims at finding the best
and the most efficient way of utilizing the available resources (man, material, money and
machinery) to achieve best possible quality work in minimum possible time.
Method Study
• Method Study is the systematic recording and critical examination of existing and
proposed ways of doing work, as a means of developing and applying easier and more
effective methods and reducing costs.
• Can be used to
– the design of a new plant,
– the design of a new product,
– the design of a new process,
– the improvement of an existing process,
– the improvement of an existing workplace
Objectives of Method Study
1. Improvement of manufacturing processes and procedures.
2. Improvement of working conditions.
3. Improvement of plant layout and work place layout.
4. Reducing the human effort and fatigue.
5. Reducing material handling
6. Improvement of plant and equipment design.
7. Improvement in the utility of material, machines and manpower.
8. Standardization of method.
9. Improvement in safety standard.
12 | P a g e
www.rejinpaul.com
7. Physical catalysts: The equipment and physical resources that aid in the steps of the sequence
without becoming part of the output.
8. Information aids: Knowledge and information resources that aid in the steps of the sequence
without becoming part of the output.
BASIC PROCEDURE FOR METHOD STUDY
1. Select the work to be studied.
2. Record all facts about the method by direct observation.
3. Examine the above facts critically.
4. Develop the most efficient and economic method.
5. Define the new method.
6. Install the new method
7. Maintain the new method by regular checking.
Select
While selecting a job for doing method study, the following factors are considered:
Economical Factors
• The money saved as a result of method study should be sufficiently more. Then only the
study will be worthwhile.
• Based on the economical factors, generally the following jobs are selected.
– Operations having bottlenecks (which holds up other production activities).
– Operations done repetitively.
– Operations having a great amount of manual work.
– Operations where materials are moved for a long distance.
Human Factors
• The method study will be successful only with the co-operation of all people concerned
viz., workers, supervisor, trade unions etc. Workers may resist method study due to
1. The fear of unemployment.
2. The fear of reduction in wages.
3. The fear of increased work load
Technical Factors
• To improve the method of work all the technical details about the job should be available.
Every machine tool will have its own capacity
Record
• All the details about the existing method are recorded. This is done by directly observing
the work. Symbols are used to represent the activities like operation, inspection,
transport, storage and delay. Different charts and diagrams are used in recording.
• They are:
13 | P a g e
www.rejinpaul.com
1. Operation process chart: All the operations and inspections are recorded.
2. Flow process chart
(a) Man type All the activities of man are recorded
(b) Material type All the activities of the material are recorded
(c) Equipment type All the activities of equipment or machine are recorded.
3. Two-handed process chart: Motions of both lands of worker are Right hand-Left hand chart
recorded independently.
4. Multiple activity chart: Activities of a group of workers doing a single job or the activities of a
single worker operating a number of machines are recorded.
5. Flow diagram: This is drawn to suitable scale. Path of flow of material in the shop is recorded.
6. String diagram: The movements of workers are recorded using a string in a diagram drawn to
scale.
Examine
• Critical examination is done by questioning technique.
• This step comes after the method is recorded by suitable charts and diagrams.
• The individual activity is examined by putting a number of questions.
• The following factors are questioned
1. Purpose – To eliminate the activity, if possible.
2. Place – To combine or re-arrange the activities.
3. Sequence – -do-
4. Person – -do-
5. Means – To simplify the activity.
Develop
• The answer to the questions given below will result in the development of a better
method.
1. Purpose – What should be done?
2. Place – Where should it be done?
3. Sequence – When should it be done?
4. Person – Who should do it?
5. Means – How should it be done?
DEFINE
• The report should show
(a) Brief description of the old method
(b) Brief description of the new method.
(c) Reasons for change.
14 | P a g e
(d) Advantages and limitations of the new method.
www.rejinpaul.com
Install
• This step is the most difficult stage in method study. Here the active support of both
management and trade union is required.
• Here the work study man requires skill in getting along with other people and winning
their trust
• Install stage consists of
(a) Gaining acceptance of the change by supervisor.
(b) Getting approval of management.
(c) Gaining the acceptance of change by workers and trade unions.
Maintain
• The work study man must see that the new method introduced is followed.
• The workers after some time may slip back to the old methods. This should not be
allowed.
• The new method may have defects. There may be difficulties also. This should be
rectified in time by the work study man.
• Periodical review is made. The reactions and suggestions from workers and supervisors
are noted. This may lead to further improvement.
• The differences between the new written standard practice and the actual practice are
found out.
• Reasons for variations are analysed. Changes due to valid reasons are accepted.
Process chart
• A process chart is setting out the sequence of flow of a product or a procedure by
recording all events under review using appropriate process chart-symbols.
• This chart gives a record of all events associated with the worker.
– Operation,inspection, movement and delay
Application-Process charts
• Generally used as a principal means of recording work methods
• Helps to understand the overall nature of the system being studied
• Helps to eliminate flow patterns that are not suitable
• Helps to allow storage space adequate to support the production rate
CHARTS FOR PROCESS
1. Outline process charts
2. Flow process chart: man type, material type, equipment type
3. Two handed process chart
4. Multiple activity chart: using time scale
15 | P a g e
5. Simo chart: using time scale
www.rejinpaul.com
6. Flow diagrams
7. String diagrams
8. Cyclograph
9. Chronocyclegraph
10. Travel Chart
METHOD STUDY CHARTS AND DIAGRAMS
• Charts indicating process sequence
- Outline process chart,Flow process chart – Man, Material and Equipment type,Two-handed
process chart
• Charts using a time scale
- Multiple activity chart,Simo chart,PMTS chart
• Diagrams indicating movement
- Flow diagram, Chronocyclegraph, Sting diagram, Travel chart,Cyclograph
SYMBOLS USED IN PROCESS CHARTS
16 | P a g e
www.rejinpaul.com
Operation Process Chart
• An operation process chart is a graphic representation of the sequence of all
operations and inspections taking place in a process.
• It is also known as outline process chart.
• It gives a bird‘s eye view of the overall activities.
• Entry points of all material are noted in the chart.
• The fig. shows operation process chart of a motor assembly unit
17 | P a g e
www.rejinpaul.com
Flow chart-Operator
type
Two-Handed Process Chart (or) Right Hand, Left Hand Chart
• It is the process chart in which the activities of two hands of the operator are recorded.
• It shows whether the two hands of the operator are idle or moving in relation to one
another, in a timescale.
• It is generally used for repetitive operations.
18 | P a g e
www.rejinpaul.com
19 | P a g e
•
www.rejinpaul.com
The chart shows the idle time of the worker or machine during the process.
• To record the time, ordinary wrist watch or stop watch is used. High accuracy is not
needed.
• Here one operator two semi-automatic machines simultaneously.
• The activities of the operator is recorded in a separate vertical column
• The activities of the two machines are recorded in two separate vertical columns.
• SIMO ChartsA basic motion-time chart used to show the simultaneous nature of motions;
• Commonly a therblig chart for two-hand work with motion symbols plotted vertically
with respect to time, showing the therblig abbreviation and a brief description for each
activity, and individual times values and body-member detail.
20 | P a g e
• Also known as simultaneous motion-cycle chart.
www.rejinpaul.com
Therbligs
• Therbligs are 18 kinds of elemental motions used in the study of motion economy in the
workplace.
• A workplace task is analyzed by recording each of the therblig units for a process, with
the results used for optimization of manual labor by eliminating unneeded movements.
21 | P a g e
Flow Diagram
www.rejinpaul.com
• In any production shop, repair shop or any other department, there are movements of men
and material from one place to another. Process charts indicate the sequence of activities.
• They do not show the frequent movements of men and material.
• If these movement are minimized, a lot of savings can be achieved in cost and effort
• The flow diagram are used for the following purposes:
1. To remove unwanted material movement.
2. To remove back tracking.
3. To avoid traffic congestion.
4. To improve the plant layout.
String Diagram
• We make use of flow diagram for recording the movement of men or material when the
movement is simple and the path is almost fixed.
• But when the paths are many and are repetitive, it may not be possible to record them in
a flow diagram. Here a string diagram is used.
• String diagram is a scaled plan of the shop.
• Location of machines and various facilities are drawn to scale in a drawing sheet.
22 | P a g e
www.rejinpaul.com
23 | P a g e
•
www.rejinpaul.com
By using still photography, the path of light of bulb (in other words, that of the body
member) as it moves through space for one complete cycle is photographed.
• The working area is kept relatively less illuminated while photograph is being taken.
• More than one camera may be used in different planes to get more details. After the film
is developed, the resulting picture (cycle graph) shows a permanent record of the motion
pattern employed in the form of a closed loop of white continuous line with the working
area in the background.
• A cycle graph does not indicate the direction or speed of motion.
• It can be used for Improving the motion pattern, and Training purposes in that two cycle
graphs may be shown with one indicating a better motion pattern than the other.
24 | P a g e
•
www.rejinpaul.com
Momentum should be employed to assist the worker whenever possible, and it should be
reduced to a minimum if it must be overcome by muscular effort.
• Smooth continuous motions of the hands are preferable to zigzag motions or straight-line
motions involving sudden and sharp changes in direction.
Arrangement of the Work Place
• There should be a definite and fixed place for all tools and materials.
• Tools, materials, and controls should be located close in and directly in front of the
operator.
• Drop delivers should be used whenever possible.
• Materials and tools should be located to permit the best sequence of motions.
• Arrange the height of the workplace and chair for alternate sitting and standing, when
possible.
• Provide a chair of the type and height to permit good posture.
Design of Tools and Equipment
• Combine tools whenever possible.
• Preposition tools and materials.
• Where each finger performs some specific movement, the load should be distributed in
accordance with the inherent capacities of the fingers.
• For light assembly, a screwdriver handle should be smaller at the bottom.
• Momentum should be used to help the worker in doing their task not to increase their
task.
MICROMOTION STUDY
It is a technique for recording and timing an activity.
• It consists of taking motion pictures ofthe operation with a clock in the picture (or with a video
camera running at aknown speed.
• The film is a permanent record of the method and the time and is always ready
to be examined when needed.
Purposes of Micromotion Study
To assist in finding the preferred method of doing the work.
To assist in training the workers to understand the meaning of motion study and to enable them
to apply motion economy principles in a professional way.
Micromotion study as an Aid in Improving Methods
The procedure of making a micromotion study consists of:
1. Filming the operation to be studied.
2. Analysing the film.
3. Charting the results of the analysis.
4. Developing the improved method.
25 | P a g e
Micromotion study
www.rejinpaul.com
• The speed of the camera used ranges from 960 to 1000 frames per minute. But faster
cameras may be used to study very fast hand motions or complex operations.
• The pictures should be enlarged many times to facilitate the analysis of the motions.
• Micromotion study should be used when it is economical to do so (short cycle highly
repetitive operations, large volume production, or operation performed by a large number
of workers).
MEMOMOTION STUDY
• In memomotion study, the camera speed is at 60 or 100 frames per minute.
• In addition to its use in industrial operations, it is used to study many other operations
such as check-in operations as airline counters, the manner in which customers select
items in the store, traffic flow on highways, and in banks.
• It costs less than micromotion study (only costs 6% of the cost of a micromotion study
CRITICAL EXAMINATION
• Means by which each activity is subjected to a systematic and progressive series of
questions.
• Grouping of activities: Five sets of activities can be grouped in two categories
• Those in which something actually happens to the work-piece (it is moved, worked upon
or examined)
• Those in which it is not being touched (in storage or in delay)
• Objective is to maximize proportion of “do” activities.
• All other activities, however necessary, are considered “non-productive.”
DEVELOPMENT
• The shortcomings of the present process are brought out by the systematic questioning
process that is combined with a knowledge relevant to the process being examined.
• Industrial may have the knowledge required or may not have the adequate knowledge.
• They need to have a knowledge library to support their effort as well as access to the
experts during the study period.
• Alternatives to the current activities which have the shortcomings are to be generated
during this stage.
IMPLEMENTATION
• Industrial engineers of methods study persons have to train the operators and their
supervisors in the new method and participate in installing the method.
• Industrial engineers have to conduct a periodic review of methods to observe
modifications brought into the installed methods by operators and supervisors and if they
are beneficial, they have to be made part of standard operating procedure (SOP).
26 | P a g e
www.rejinpaul.com
WORK MEASUREMENT
• Work measurement is the application of techniques designed to establish the time for an
average worker to carry out a specified manufacturing task at a defined level of
performance.
• It is concerned with the length of time it takes to complete a work task assigned to a
specific job.
TIME STUDY
• Time study is a direct and continuous observation of a task, using a timekeeping device
(e.g., decimal minute stopwatch, computer-assisted electronic stopwatch, and videotape
camera) to record the time taken to accomplish a task and it is often used when
– there are repetitive work cycles of short to long duration,
– wide variety of dissimilar work is performed, or
– process control elements constitute a part of the cycle.
WORK SAMPLING
There are several recommended steps when starting to prepare a work sampling study:
• Define the manufacturing tasks for which the standard time is to be determined.
• Define the task elements. These are the defined broken-down steps of the task that will be
observed during the study. Since a worker is going to be observed, additional categories
will likely be included as well, such as "idle", "waiting for work", and "absent".
• Design the study. This includes designing the forms that will be used to record the
observations, determining how many observations will be required, deciding on the
number of days or shifts to be included in the study, scheduling the observations, and
finally determining the number of observers needed.
• Identify the observers who will do the sampling.
• Start the study. All those who are affected by the study should be informed about it.
• Make random visits to the plant and collect the observations.
PREDETERMINED MOTION TIME SYSTEM
• A predetermined motion time system (PMTS) is frequently used to set labor rates in
industry by quantifying the amount of time required to perform specific tasks.
• The first such system is known as Methods-time measurement, released in 1948 and
today existing in several variations, commonly known as MTM-1, MTM-2, MTM-UAS,
MTM-MEK and MTM-B.
• Obsolete MTM standards include MTM-3 and MMMM (4M). The MTM-2 standard has
also largely been phased out by the organization, but is still used in some commercial
applications.
27 | P a g e
UNIT-III
www.rejinpaul.com
PRODUCTION PLANNING AND PROCESS PLANNING
PRODUCT PLANNING
• Product Planning is the ongoing process of identifying and articulating market
requirements that define a product’s feature set.
• Product planning serves as the basis for decisions about price, distribution and promotion.
28 | P a g e
VALUE ANALYSIS
www.rejinpaul.com
Value, as defined, is the ratio of function to cost. Value can therefore be increased by either
improving the function or reducing the cost
29 | P a g e
STEPS IN PROCESS PLANNING
www.rejinpaul.com
• Analyzing environment
• Establishing objectives or goals
• Seeking necessary Information
30 | P a g e
www.rejinpaul.com
Variables
• K = setup cost
• D = demand rate
• F = holding cost
• T = cycle length
• P = production rate
Formula: Sqrt(2x annual demandx setup costs)/(inventory carrying cost per unit)
It is necessary to break down a task (job) into elements for the following reasons:
1. To separate productive time and unproductive time.
2. To assess the rating of the worker more accurately.
3. To identify the different types of elements and to measure their timings separately.
4. To determine the fatigue allowance accurately.
5. To prepare a detailed work specification.
6. To fix standard time for repetitive elements (such as switch on or switch off of machine).
Classification of elements
1. Repetitive elements
2. It is an element which occurs in every work cycle of the job.
3. Example-Loading the machine, locating a job in a fixture.
Constant element -It is an element for which the basic time remains constant whenever it is
performed.
31 | P a g e
UNIT-IV
www.rejinpaul.com
PRODUCTION SCHEDULING
PRODUCTION CONTROL
LOADING AND
SCHEDULING
LOADING
• Once the route has been established, the work required can be loaded against the selected
machine or workstation.
32 | P a g e
•
www.rejinpaul.com
The total time required to perform the operation is computed by multiplying the unit
operation times given on the standard process sheet by the number of parts to be
processed.
• This total time is then added to the work already planned for the workstation.
• This is the function of loading, and it results in a tabulated list or chart showing the
planned utilization of the machines or workstations in the plant
SCHEDULING
• Scheduling is the last of the planning functions.
• It determines when an operation is to be performed, or when work is to be completed; the
difference lies in the detail of the scheduling procedure.
• In a centralized control situation - where all process planning, loading, and scheduling for
the plant are done in a central office- the details of the schedule may specify the starting
and finishing time for an operation.
• On the other hand, the central schedule may simply give a completion time for the work
in a given department.
MASTER SCHEDULING
33 | P a g e
SCHEDULING -BENEFITS
www.rejinpaul.com
• Inventory reduction,
• Process change-over reduction
• leveling
• Reduced scheduling effort
• Increased production efficiency
• Labor load leveling
• Accurate delivery date quotes
• Real time information
GANTT CHART
•
A Gantt chart is a type of bar chart, developed by Henry Gantt,
34 | P a g e
LINE OF BALANCE
www.rejinpaul.com
• Find a feasible defined replacement for all undefined (‘ANY’) ergonomic constraints on
workstations, i.e. one compatible with the ergonomic constraints and precedence
constraints defined on operations, as well as zoning constraints and possible drifting
operations
• Solve the within-workstation scheduling problem on all workstations, for all products
being assembled on the line
• Assign the operations to workstations to achieve the best average balance, while keeping
the peak times at a manageable level.
Linear Scheduling Method
• Linear Scheduling Method (LSM) is a graphical scheduling method focusing on
continuous resource utilization in repetitive activities. It is believed that it originally
adopted the idea of Line-Of-Balance method.
• The main advantages of LSM over Critical Path Method (CPM) is its underlying idea of
keeping resources continuously at work. In other words, it schedules activities in such a
way that:
1. resource utilization is maximized;
2. interruption in on-going process is minimized, including hiring-and-firing; and
3. the effect of the learning curve phenomenon is minimized
BATCH PRODUCTION SCHEDULING
• Batch production scheduling is the practice of planning and scheduling of batch
manufacturing processes.
• Although, scheduling may apply to traditionally continuous processes, such as refining, it
is especially important for batch processes such as those for pharmaceutical active
ingredients, biotechnology processes and many specialty chemical processes.
MRP
35 | P a g e
www.rejinpaul.com
KANBAN
DISPATCHING
• Authorizing the start of an operation on the shop floor is the function of dispatching.
• This function may be centralized or decentralized.
• The departmental dispatcher would authorize the start of each of the machine operations
– the dispatch actions are based on the foreman’s routing and scheduling of the work
through his department. This is decentralized dispatching.
36 | P a g e
www.rejinpaul.com
37 | P a g e
www.rejinpaul.com
UNIT-V INVENTORY CONTROL AND RECENT TRENDS IN PPC
Inventory control
• Inventory Control is the supervision of supply, storage and accessibility of items in order
to ensure an adequate supply without excessive oversupply.
• It can also be referred as internal control - an accounting procedure or system designed to
promote efficiency or assure the implementation of a policy or safeguard assets or avoid
fraud and error etc.
• Inventory control may refer to:
– In economics, the inventory control problem, which aims to reduce overhead cost
without hurting sales
– In the field of loss prevention, systems designed to introduce technical barriers
to shoplifting
– It answers the 3 basic questions of any supply chain:
1. When?
2. Where?
3. How much?
Purpose of holding stock
• Safety stock is the amount of inventory a business carries over and above their
calculations for actual need. ie, a packaging company maintains enough plastic to
manufacture packaging ordered by customers in the amount needed until their next
shipment of plastic arrives.
• But, because orders vary and shipping times vary, the company decides to keep 5% more
on hand than likely to be needed. This extra 5% is safety stock.
Effect of demand of inventories
38 | P a g e
www.rejinpaul.com
Robust method for reducing demand inventory variation
39 | P a g e
Order cycle
www.rejinpaul.com
EOQ
• Economic order quantity (EOQ) is the classical inventory model for stock held on cycle
with assumptions of known demand and production lead time. The objective is to select
an order quantity that minimizes the marginal annual costs for holding inventory and
placing orders.
40 | P a g e
Economic Lot Size
www.rejinpaul.com
ABC analysis
• The ABC analysis is a business term used to define an inventory categorization technique
often used in materials management. It is also known as Selective Inventory Control.
Policies based on ABC analysis:
• A ITEMS: very tight control and accurate records
• B ITEMS: LESS TIGHTLY CONTROLLED and good records
• C ITEMS: simplest controls possible and minimal records
ABC analysis
41 | P a g e
www.rejinpaul.com
Computer integrated production planning
JIT manufacturing
42 | P a g e
www.rejinpaul.com
43 | P a g e
MRP-II
www.rejinpaul.com
• Manufacturing resource planning (MRP II) is defined as a method for the effective
planning of all resources of a manufacturing company. Ideally, it addresses operational
planning in units, financial planning, and has a simulation capability to answer "what-if"
questions and extension of closed-loop MRP.
MRP Objectives
MRP has several objectives, such as:
Reduction in Inventory Cost: By providing the right quantity of material at right time to meet
master production schedule, MRP tries to avoid the cost of excessive inventory.
Meeting Delivery Schedule: By minimizing the delays in materials procurement, production
decision making, MRP helps avoid delays in production thereby meeting delivery schedules
more consistently. Improved Performance: By stream lining the production operations and
minimizing the unplanned interruptions, MRP focuses on having all components available at
right place in right quantity at right time.
44 | P a g e