Module 3

Production
Planning Control
& Material
Management
Nepoleon Prabakaran
Productio
n Planning Control
 Convert Raw  Anticipate possible  Ensures the
Materials into problems consistency of
Finished goods production process
 Design solution to
ensure production
happens in smooth
way
Objectives of PPC
 Scheduling production activities to meet
 Target and check the deviations
delivery schedule
 Coordinates most effective and
 To ensure flexibility in production system to
economical manner among different
accommodate changes and uncertainty
departments.
 Optimizes the use of resources
 Elimination of bottleneck
 Stable production system, with least
 Utilization of inventory in the optimal
chaos, confusion and undue hurry.
way
 Smooth flow of material
 To ensure the production of right
product at right time in right
quantity with specification rightly suited
to customers
Process of PPC
 Forecasting the demands of the customers for the products and services.
 In advance preparing the production budget.
 Design the facility layout.
 Specify the types of machines and equipment.
 Appropriate production requirements of the raw materials, labor, and machinery.
 Drawing the apt schedule of the production.
 Confirming the shortage or any excess of the end product.
 Future plans are drawn for any sudden surge in the demand for the product.
 The rate and scale of production is setup.
 Elements of PPC
“PAM – Planning, Action & Monitoring”
 Production Pre Planning  Production Control
 Forecasting
 Inspection
 Product design
 Material and tool requirement planning  Reporting or Follow –
 Process Planning up
 Re-planning
 Production Planning
 Corrective Action
 Routing
 Scheduling
 Loading
 Dispatching
Functions of PPC
 Short Run Capacity Planning (SRCP)
 Release order on the basis ‘Priority Plan’.
 Assign jobs – “shop loading or machine loading”.
 Short Run Capacity Control(SRCC)
 Sequencing – specifically prioritizing to begin (what, when, how much)
 Dispatching – actual authorization
 Tracking & Expediting – lead time
 Status of jobs – summary, scrap, reworks & other reports
 Status of facilities – “input-output” reports
Forecasting
 Making Predictions based on past  Accurate  Important role of
data  Easy to understand product
 How many units to produce at development in
 Economical future
specific time period to avoid extra
cost of storage?
 To reduce the chance of making out
dated products
Product Design
 Designing the product  Designer + Engineer + Draftsmen
 Development of prototype  Deals with forms and function
 Convert the abstract ideas into  Forms---- Shape
working model  Function---- Working
 Extend the range of original idea
Process Planning
 Preparation of detailed planning  Determines most economical way
 How to manufacture a product to produce

 Necessaries to plan the process

 No of operations to be considered
for productions
Estimating / Material control
 Managerial activity that  Inventory control  Establishing operation
contains instruction to times.
 Cost of production
maintain adequate quality  Deciding the quantity of the
and quantity of materials.
 Planning materials product
 For non interruptive
 Purchase  Cost involved in Production
production process procedures on the basis of sale
forecast.
 Minimize the material cost
 Transportation
 Estimating manpower,
machine capacity and
material required
Tool control
 Process of determining Tool  Ensure the availability of right tool
requirements at time of production
 Procuring new tools
 No tool plan  Delay time 
 Controlling tools Expensive
Routing
 Route Sheet:
 Flow of Work in the plant  It defines each step of the production
 What work needs to be done? operations and lay down the precise
path or route through which the
 How to be done ? product will flow during the
 When to be done ? conversion process.
 Decides on - “Job shop, batch shop,
 Routing decides the path and
Assembly shop & Mass/ Continuous
sequence of operation between raw production” process
materials and finished goods.
SchedulingSynchronize “Materials, Men & Time”
 When and What sequence job will  It provides a timetable for
be done manufacturing activities.
 Deals with job and machine order  To utilize labor such a way that
 Which order on which machine, output is produced within
department, and which operator established lead time or cycle time
Scheduling Volume

 Infinite loading
 Finite loading
 Direction
 Forward scheduling
 Backward (Reverse) scheduling
 Master Scheduling (MS)
 Shop manufacturing
 Optimized Production Techniques (OPT)
 Limit
 Machine limited process
 Men limited process
 MRP – example of “Infinite & Backward
scheduling”.
Loading
 Relationship between load and  Process of converting operation
capacity of the work place schedule into practices in conjunctions
with routing.
 Work given to the labor and
 Assigning specific jobs to machines,
machinery without specifying when
men, or work centers based on relative
work needs to be done.
priorities and capacity utilization.
 Maximum possible utilization of
productive facilities and avoid
bottleneck in production.
Characteristics of Scheduling systems
Sequencing & Dispatching
 Sequencing – closely related to scheduling as they specify the order which
jobs to be processed at various work centers.
 Body Shop Assembly:
A B C D E F
a1 b1 c1 d1 e1 f1
a2 b2 c2 d2 e2 f2
a3 b3 c3 d3 e3 f3
a4 b4 c4 d4 e4 f4
Sequencing Rules
 Sequencing n jobs on 1 machine
 1. SPT rule (Shortest Processing Time).
 A rule that sequences jobs to be processed on a resource in ascending order of their
processing times.
 2. EDD rule (Earliest Due Date).
 A rule that sequences jobs to be processed on a resource in ascending order of their
due dates

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Sequencing Rules for n jobs in 2 or
more machines
 Johnson Rule
 Scheduling jobs in two work centers.
 From the list of unscheduled jobs,
 select the one with the shortest processing time in
either work centre.
 If the shortest time is at the first work centre,
 do the job first in the schedule otherwise do the job last in the
schedule.
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Dispatching
 The decision of assigning the various jobs to different machines and
equipment is called Dispatching.
 Dispatching is release of orders and instructions for starting of production in
accordance with routing sheet and scheduling charts.
 It gives necessary authority to start a particular work which has already
planned under routing and scheduling functions.
Inspection
 Related to maintenance of quality in production
 Evaluating the efficiency of the processes, methods and labors.
 Evaluating: To improve performance of machines, processes and labor.
 Cost control: Manufacturing cost is controlled by wastage reduction, value
analysis, inventory control and efficient utilization of all resources.
Elements of Production Planning
and Control
• Reporting or Follow – up
The manufacturing activity of a plant is said to be “in control” when the actual
performance is within the objectives of the planned performance.
When jobs are started and completed on schedule, there should be very little, if any,
concern about the meeting of commitments.
Optimum operation of the plant, however, is attained only if the original plan has
been carefully prepared to utilize the manufacturing facilities fully and effectively.
Elements of Production Planning
and Control
• Corrective Action
This is the keystone of any production planning and control activity.
A plant in which all manufacturing activity runs on schedule in all probability is not
being scheduled to its optimum productive capacity.
With an optimum schedule, manufacturing delays are the rule, not the exception.
Elements of Production Planning
and Control
• Re-planning
Re-planning is not corrective action.
Re-planning revise routes, loads, and schedules; a new plan is developed.
In manufacturing this is often required.
Changes in market conditions, manufacturing methods, or many other factors
affecting the plant will often indicate that a new manufacturing plan is needed.
Factors Affecting Production
Planning and Control
 Type of Product
Production control procedures are much more complex and involve
many more records in the manufacture of large steam turbine
generator sets or locomotives to customer orders then in the
production of large quantities of a standard product involving only a
few component parts, such as electric blankets, steam irons, or
similar small appliances.
 Type of Manufacturing
This is probably the most influential factor in the control situation.
Stages of Production Planning and
Control
 Production Planning & Control is done in three stages
namely,
 Pre-planning
 Planning
 Control
Stages of Production Planning and
Control
 Stage 1: Pre-Planning
 Under this phase of production planning, basic ground work on the
product design, layout design and work flow are prepared. The
operations relating to the availability, scope and capacity of men,
money materials, machines, time are estimated.
 Stage 2: Planning
 This is a phase where a complete analysis on routing, estimating and
scheduling is done. It also tries to find out the areas of concern for
short time and long time so that prominent planning can be prepared.
Stages of Production Planning and
Control
 Stage 3: Control
 Under this phase, the functions included are dispatching,
follow up, inspection and evaluation. It tries to analyze the
expedition of work in progress. This is one of the important
phases of the Production Planning and Control.
Benefits of PPC
 Improved organization for regular and timely delivery
 Better supplier communication for raw materials procurement
 Reduced investment in inventory
 Reduced production cost by increasing efficiency
 Smooth flow of all production processes
 Reduced waste of resources
 Production cost savings that improve the bottom line
Limitations of PPC
 Based on Assumptions
 Employees may resist change in production
 Time Consuming
 Difficult to implement when environmental factors
change rapidly.
Measurement of Effectiveness of
PPC
 Inventory turnover
 Delivery lead time
 Percent of time meeting delivery promises
 Percent of orders requiring “splits” because of
unavailable material.
 Average unit cost.
Inventory
 Inventory is the stock of any item or resource used in an
organization.
 An inventory system
 is the set of policies and controls that monitor levels of inventory
 determine what levels should be maintained,
 when stock should be replenished,
 how large orders should be.
Two Fundamental Inventory
Decisions
How much to order of each material when orders are placed with either
outside suppliers or production departments within organizations
When to place the orders

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Why We Want to Hold Inventories
 Improve customer service
 Reduce certain costs such as
 ordering costs
 stock out costs
 acquisition costs
 start-up quality costs
 Contribute to the efficient and effective operation of
the production system
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Costs in Inventory Planning
 Ordering Cost  Carrying Cost  Shortage Cost
 Costs to prepare the  Inventory storage and maintenance  When the stock of an
cost
purchase or item is depleted, an order
production order.  Inventory storage cost and cost of
for that item must either
capital
 Cost of procurement wait until the stock is
 Facilities, building rent, material
and inbound logistics. replenished or be
handling, IT (software), Depreciation
canceled.
Investments, Interest on working


capital, taxes on inventory and

insurance
(Cost of ordering too less + Cost of ordering = Total Stocking
excess)
Increase Increase cost
replenishme carrying cost
nt cost
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economic order quantity (EOQ)
 To decide
 How much of stock to order?
 When to order?
Types of Inventory
 Inventory Based on Demand
 Independent Demand Inventory
 Item does not depend upon demand of other item.
 Finished goods that are manufactured for stock and sale.
 This is based on confirmed customer orders. (Forecast, estimates and past data)
 Dependent Demand Inventory
 Demand of an item depend upon the demand of other item.
 Raw materials and component inventories.
 Managed through Material resource planning (MRP).
 Managing raw material inventory (periodic review of inventory counting and holding).
Different Types of Inventory
Alternative Classification Schemes
 ABC Classification (on the basis of consumption value)
 XYZ Classification (on the basis of unit cost of the item)
 High Unit cost (X Class item)
 Medium Unit cost (Y Class item)
 Low unit cost (Z Class item)
 FSN Classification (on the basis of movement of inventory)
 Fast Moving
 Slow Moving
 Non-moving
 VED Classification (on the basis of criticality of items)
 Vital
 Essential
 Desirable
 On the basis of sources of supply
 Imported
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 Indigenous (National Suppliers)

ABC Classification ABC analysis:
In this analysis, the classification of existing
inventory is based on:

1. Annual consumption and

2. The annual value of the items
Hence we obtain the quantity of inventory
item consumed during the year and multiply it
by unit cost to obtain annual usage cost.

The items are then arranged in the descending

order of such annual usage cost. The analysis
is carried out by drawing a graph based on the
cumulative number of items and cumulative
usage of consumption cost.
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Once ABC classification has been achieved, the
policy control can be formulated as follows:
 A-Item: Very tight control, the items being of high value. The control
need be exercised at higher level of authority.
B-Item: Moderate control, the items being of moderate value. The
control need be exercised at middle level of authority.
C-Item: The items being of low value, the control can be exercised at gross
root level of authority, i.e., by respective user department managers

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VED
VED analysis in inventory management deals with the classification of materials based
on their importance to other materials.

•Vital (V): These are essential materials whose non-availability while putting a halt to
business operation. These materials need to be in stock at all times else, production
will be affected.

•Essential (E): This refers to materials that you require a certain amount of. You just
require a minimum amount of them to keep production active.

•Desirable (D): This refers to materials that do not really affect production.
Production can run with or without these materials

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FSN Analysis
 FSN analysis in inventory management deals with the classification of items
based on usage, consumption rate, and quantity.

 Fast Moving (F): This refers to materials that have a high usage
frequency
 Slow Moving (S): This refers to materials that have a slow usage
frequency
 Non-Moving (N): This refers to materials that are only utilized for a
specific duration
MATERIAL REQUIREMENT
PLANNING
 Requirement of dependent items for the production

 Manage the availability of dependent items for production

 As per the Master Production schedule MRP system is implemented

 Gross requirement is converted to Net requirement

 Schedules and account- > in-house items, ordered items [based on

procurement/production lead time]

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MATERIAL REQUIREMENT
PLANNING
 MRP Technique:
 Act as requirement calculator

 Manufacturing, planning & control system

 Manufacturing resource planning system,

 MATERIAL REQUIREMENT PLANNING objectives:

 Improve customer service by meeting schedule & reduce delivery time

 Reduce inventory cost by reducing inventory level

 Improve plant operating efficiency by better resource utilization

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