PRODUCTION PLAN: AN OVERVIEW AND TYPES

Operational Plan (Functional Plan): o It is derived from business plan which is derived from all functional plans. o It contains information regarding: Production processes Manufacturing facilities Inventory requirement Supplier for critical and other materials o The plan is made on the basis of sales estimate o A production plan specifies Quantity of items to be produced Quantity & timing of production Final schedule for completion of the production o Output expressed in terms of Revenue earned (sales volume) Physical output i.e. no. of trans. produce/ MVA produced or units of aggregate that represents all products in product line of and organisation Power transformer. Industrial transformer. Instrumental transformer. Operation plan should be aligned with business plans & objectives of other functional areas like finance, mktg., HR., etc. Operational plans based on Time frame Long range (strategic planning)
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Time period in between 2 yrs. to 15 yrs. Top management is involved (all functional directors) Deciding what products/new products to be made Level of technology absorption Which product lines divisions, factors, mktg., to be tapped & business unit to be formed Where to locate Factories, Ware Houses Major supplies for critical materials Long range focus on utilization of production facilities to achieve business objectives Long range capital investment, manufacturing technology, product life, etc Long range plans becomes constraint on intermediate & short term plans MAJOR CAPACITY ADDITIONS, PRODUCT & PROCESS DECISIONS

Intermediate / Medium Range / Tactical Planning Time horizon period between 3 months to 18 months Middle level management (line operations managed at dept level)

Aggregate Plan Man power recruitment Machinery & utility plan Subcontract & material supply contracts Facility modification plan Aggregate Inventory plan Capacity change plan

Short term / Operational plan (MPS, CRP, MRP) It is developed by junior level management i.e. foreman, supervisor, etc. Time horizon is less than 3 months It is concerned with the utilization of existing facilities rather than creation of new facilities It involves proper utilization of key resources such as materials, machine capacity energy It establishes short range schedule which specifies the quantities of specific product to be produced in each month, week, hour, day i.e. micro entity planning at micro level It takes into account current customer(s) orders, priorities material availability absenteeism rate, cash flows & it is designed to respond quickly to change in production level & market conditions This plan consists of: o Short range production schedule o Short range schedule for parts, components, subassemblies final assemblies(for e.g. Automobiles) o Plans for materials purchasing o Short term shop floor plan o This planning take decisions on day to day problems o Detailed scheduling, routing, alternative work centre & O.T.

Business Plan

Operations

Output planning

Capacity Planning

Aggregate Out Planning Operational Planning

Aggregate Capacity Planning

Master production scheduling

Rough cut capacity planning

M R Planning

Detailed Capacity Planning

Loading

Shop floor activity control

Sequencing

Short Term Capacity (Input-Output Control)

Detailed Scheduling

Expediting

Production planning as Process Input

PROCESSING

Output Production plan

(statement of quantity produces time and completion of plan)

Production Planning

Factory and plant planning

Process planning

Operational planning

Production planning: 1) factory and plant planning(1st level) 2) process planning(2nd level) 3) operational planning(3rd level) Operational Planning: It is concerned with planning organizing directing and controlling the materials and methods to be used to make products and the way in which production facilities such as building, materials equipment puts should be laid in the space available for production. Planning the session of operations/processes/work tasks to be carried out to complete required product routing.

PRODUCTION MANAGEMENT 1) Aggregate planning 2) Capacity planning/capacity decision waiting lines

1. Aggregate Planning It involves planning the best quantity to produce during intermediate range.i.e. Often (3 months to 18 months) and planning the lowest cost method of providing adjustable capacity to accommodate the production requirements for manufacturing organizations. Aggregate planning involves planning workforce size, production rate (work hrs per week) and inventory levels. 1) Work force Mal nos of people available that time. 2) Production rate - quantity products/ unit time. 3) Inventory levels surplus and stock out conditions. Surplus inventory is positive and stock out is negative. Surplus when production is more than forecast and stock out condition is production is lesser than production. Aggregate planning is process of devising a plan for providing capacity scheme to support intermediate range sales forecast.

CONCEPT OF AGGREGATION: a) Aggregate is total. This is used to identify the meaningful measure of the output. An organization with single product it is easier to measure. in case of sugar factory output is measured in terms of tons of sugar produced but for the organization with large product portfolio like FMCG firms. it is difficult to measure that defines the complete product portfolio. b) In such cases meaning of measure can be found out by identifying groups or families of individual products. These products are although different from one another. Share common production processes or consume similar resources. c) Three models of television sets form a single product family or group or different modes of radioes.The planning for such group can be done. in terms of a representative or typical product model that broadly represents all products in group.
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AGGREGATE PLAN It defines how resources can be best employed to meet market demand for the given product. The objective of aggregation is to minimize production costs, make appropriate changes in production rates and workforce levels and to improve profits. Customer service and utilization of resources. The process of aggregate planning is complex due to nos of variables that must be considered in the planning process.

OBJECTIVE OF AGGREGATE PLANNING:1. FEASIBLE:- the plan should provide for the portion of demand that firm intends to meet and should be within the financial and physical capacity of the firm. 2. OPTIMAL:- Resources should be used optimal to keep cost as less as possible. 3. To increase the range of alternatives of capacity that that can be considered by management of the firm.

COST ASSOCIATED WITH AGGREGATE PLANNING The various alternatives are identified and respective cost must identified and measured so that aggregate plan can be evaluated on total cost criteria. Some cost items may be relevant. 1. Payroll cost 2. Cost of O.T. second shifts and subcontracts. 3. Cost of hiring and training and lying of workers. 4. Cost of excess inventory or stock out costs. 5. Cost of production rate changes.

Aggregate Planning strategies for capacity

Strategies

s 1. Level strategy 2. Chasing strategy

1. Pure strategy 2. Mixed strategy 1. Active 2. Passive

1. Level strategy: Uniform strategies per day from time period to period Average period= Total demand Total time

Here inventory is built up and used during peak period. Inventory should rise or fall as they will buffer differences between aggregate demand and production levels from time to time.

2. Chase strategy: Matching capacity with demand Plan (each) period to period (every defined quarter). The workforce is fluctuated to support aggregate planning. They will have lower levels of inventories results lower costs. Here frequent changes in workforce loyalty are reduced. Material supplied changes machine capacity utilization increases/decreases.

1. Active strategies: The objective is to smooth out the peaks and valleys of demand during planning horizon to obtain smoother load on production facilities. 1) Price discount 2)backlog ordering 3)Select a product mix which consists of counter seasonal products room coolers during summer and room heaters during winters. 2. Passive strategies: The objective is not to change demand but to absorb the demand by changing adjustable capacity by increasing rate of production. Workforce level, subcontracting inventory and capacity utilization by increasing shift.

1. Pure strategy: Varying any one of the factories only such as workforce, production rate, subcontracting, capacity utilization. 2. Mixed strategy: This involves the use of two or more pure strategies at each planning period.

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Various pure strategies: 1) Strategy I: To vary the workforce size in accordance with fluctuation in demand. 2) Strategy II: To vary out rate while keeping workforce size same and using OT or idle time or short work week with reduced pay to the worker 3) Strategy III: Level production and use of inventory built up in periods of high demand built up production in low demand 4) Strategy IV: Subcontracting work during high demand and produce in house during regular time. 5) Strategy V: By varying utilization of capacity this can be used in some industry like power plants, airlines, in low demand time to someone.

Capacity planning

1. Fixed Capacity: 1) the capital assets (Types of capacity: Building erupts, machinery, manufacturing, inspection, test apparatus material handling erupts). 2) They cant be easily changed within intermediate time horizon. 3) It represents an upper limit to the internal capacity that company concentrates, can use in its efforts to meet demand. 2. Adjustable capacity: It is one and the size of workforce the number of hours per week. They work under the number of shifts and the extent of contracting, overtime working. 3. Designed capacity: of a facility is planned rate of output or engineering rate of output under full scale operating conditions. It is also known as installed capacity. It sets maximum limit to capacity and serves to judge the actual utilization of capacity. 4. Installed capacity: It is provided at the time of installation of plant. 5. Licensed capacity: The capacity licensed by various regulatory agencies or government authorities. This is the limitation on the output exercised by the government. 6. Rated capacity: It is based on the highest production rate established by industrial engineering by actual trials. Actual capacity is expressed as % of rated capacity. Rated capacity is less than or equal to the design capacity. Rated Capacity = (Designed Capacity) * (Utilization) (Efficiency)

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7. System Capacity: It is maximum output of specific product mix the system of workers and machines are capable of producing an integral whole. System capacity is less than designed capacity or at most equal because of the limit atria of product mix, quality specifications, breakdowns.

Actual machine hrs required at 80% efficiency = equipment hrs required/ capacity utilization = 235/0.8 =294 hrs. The standard time required in assembly & testing work center & numbers of unit to be assembled tested for various model of values per year are given below. Calculate the man power required for assembly center as well as testing center. Assume an efficiency of 70% for assembly & 85% for testing. Product A B Quantity 3500 1800 Standard man hrs per values Assembly Testing 0.25 0.20 0.50 0.35

Man hrs required for product A & B for assembly = (Quantity)* standard man hrs = (3500 +0.25) + (1800*0.50) = 875 + 900 = 1775 man hrs

Assuming 220 days working in a year on working are shift of 8hrs. Therefore, Total hrs available or man or years at 100% efficiency = 220*8 =1760 hrs or man

But effective man hrs or man or years for the Assembly department
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=1760*0.70 =1232 man hrs or man

Numbers of man power required= hrs required to produce /hrs actually available or man or year =1775/1232 =1.4 (roughly 2)

CAPACITY PLANNING Capacity = works + waste The different types of waste in operations 1) Waste in planning 2) Waste in operation 3) Waste in start up 4) Waste in equipment 5) Waste in defects 6) Waste in material 7) Waste in indirect labor 8) Waste in human resources 9) Waste in expenses 10) Unscheduled breakdown & longer tine to restores the machines to operations.

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Operation planning and control

Operations scheduling: 1) Process focused productions system Forward and Backwards scheduling 2) Stage in scheduling, load chart and machines load charts priority sequencing 3) Scheduling product focused system batch scheduling 4) Scheduling for high and continuous production system 5) Scheduling services 1) 2) 3) 4) What is scheduling / scheduling is required across organizations Objectives of scheduling / purpose of scheduling Element of scheduling / factors to be considered in preparing scheduling Methods of scheduling A) Forward B) Backward Scheduling involves A) Routing B) Loading C) Dispatching Sequencing(priority) rules for prioritizing Scheduling principles Scheduling techniques A) Use of Gantt chart a) Load chart b) Machines chart B) Pert / cpm techniques C) Queing theory D) Critical ration methods E) Input output control F) Theory of constraint Drunk Buffer Rope (DBR) [optimized production techniques] G) By balancing line methods [L.O.B for assembly lines] H) Finite capacity scheduling I) Scheduling by types of operations

5)

6) 7) 8)

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This is different for the different types of operations: 1) Manufacturing operations 2) Services operations

Manufacturing operations: 1) Product complexity and greater material requirement 2) Great effort requires for scheduling inventories for materials 3) Co ordinations with the vendor and workers and hence they have to ensure that there is no wastage of resources and idle time of the machinery and equipments is also minimal. Services operations: With vendor & workforce & hence they have to ensure that there is no wastages of resources & the idle time of the machinery & profit is also minimal . Service operators :- Services are delivered only when demanded . Thus operations management should the service operations according to demand requirements . In hospitals management has to ensure adequate health facilities to meet patients demand. He has to match demands of patients and doctors to deliver effectively. Hence operations manager has to understand the type of operations Manufacturing of operation o o o o o Project type of work Job Order Batch Order Mass Order (Repetitive type) Labor intensive type

What is operational scheduling ? Operational scheduling is the third level of operation planning 1 Aggregate Planning: - Time horizon 3 month to 18 months (intermediate quarterly or monthly facility utilization) Master production scheduling chosen in sub contract up to 3 months (intermediate term weekly). MRP & CRP Disintegrates aggregate plans.

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2 Operational Panning: - short term scheduling (days, hrs, minutes, work centre loading, job scheduling & dispatching. Make finite capacity schedule at micro level by matching specific taste to specific machine & people on time Factory planning-----dispatching planning-------operational scheduling 3 Allocation of Resources over time to accomplish specific task i.e. it specifies when labor equipment & facilities are needed to produce a product or service. 4 It is the last stage of production planning 5 It is done when managerial decisions have been made 6 Scheduling refers to setting up operation processing times so that job will be completed by the time they are due 7 scheduling can be either a medium range or short range planning activity on the basis of strategic & technical decisions made in organization. 8 scheduling is the process of deciding the path or route of work work centre (facility) the sequence in which it is carried out , when the work should start & when it will get completed. Thus it decides the time table of production activities . The scheduling must ensure that operations are properly deviated such that material semi finished assemblies arrive at right time to their work center so that the plant is not necessarily physically & financially loaded (inventory) 9 Thus scheduling decides the time table & hence scheduler must have complete knowledge of ther work involved and availability of resources.

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2) Allocation of Resources over time to accomplish specific task. i.e. it specifies when labour, equipment or facilities need to produce a product or service. 3) It is the last stage of production planning. 4) It is done when managerial decisions are made. 5) Scheduling refers to setting up operation processing times so that job will be completed by the time they are due. 6) Scheduling can either be medium range or short range activity on the basis of strategic and tactical decisions made in an organization. 7) Scheduling is the process of deciding the path or route of work, work center (facility), the sequence in which it is carried out, when the work should start and when it will get completed. Thus it decides the timetable of production activities. 8) The scheduling must ensure that the operations are properly detailed such that the material, semi finished assemblies arrive at right time to the work centers. So that the plant is not physically and financially loaded (inventory). 9) Thus scheduling decides the timetable and hence scheduler must have complete knowledge of work involved and resources available.

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II.

Scheduling is required across organizations.

1) Scheduling activities involves mainly 3 activities: I. Routing II. Loading III. Dispatching

A. Routing: It decides the flow of work, sequence of operations & processes to be followed in order to produce a particular product. Routing determines: a. What work to be done? b. Where and how it is to be done? Routing file gives detailed information about the sequence in which product is produced. This file also gives list of operations performed by an operator and the skills required to perform the job.

B. Loading: It can be defined as assigning specific jobs to each work center for the planning period. For loading capacity, limitations of each work center has to be considred. In general objective, managers load jobs on a work center upto its standard capacity. When capacity limitation is not critical, the activity of loading aims at minimizing costs by reducing the cycle time and amount of inventory. Loading also includes task of sequencing the jobs so that the machine idle times are minimized and that the jobs are completed with least possible time.

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C. Dispatching: Dispatching is the final act of releasing job orders to workers to go ahead with production process. In this activity an operation manager releases job orders in accordance with planned sequence. Then the manager controls the production process to ensure effective implementation of the schedule in order to achieve the objectives specified in the master schedule. Dispatching rules are called as priority rules. III. Objectives of Scheduling:1. 2. 3. 4. 5. 6. Meeting Customers due date Minimizing job lateness Minimizing the completion time Maximizing labour and machine utilization. To find total time required to perform a job or product activity. It helps to determine how many number of various products can be made effectively by loading all plant capacity. 7. To get feedback from shop floor like stoppage delay, interruptions which may hold up production activity. 8. To minimize idle time and WIP. 9. To have shop floor control. 10. To get data on the performance of standards for revision methods and changes in methods or machines. 11. To get updated information regarding: a. Availability of material or machine b. Expected deliveries c. Material rejection, stoppage, purchase order, cancellation etc.

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Methods of Scheduling:

Forward

Backward

Forward Scheduling:- A schedule that begins as soon as requirements are known. In this operation manager Schedules each operation forward in time starting from the date of production. Using this schedule operation manager determine start and finish time of jobs to be done by assigning them in the earliest available time slot at work centre. As the job start earliest possible time they are complete before they are required at subsequent work centre. Therefore WIP is high (new product, mass production) Example: Forward scheduling is used in variety of the organization like 1) Hospital 2) Clinics, fine dining restaurant 3) M/c tools manufacturer 4) Fabrication operations where the products are customized 2) BACKWARD SCHEDULING: 1. 2. 3. 4. 5. This method schedules orders according to due dates And schedule final operation first and then other steps in reverse order By subtracting lead time for each item the start time is obtained However the resources necessary to accomplish the schedule may not exist In this start and finish time of the jobs are assigned according to latest available slot time 6. Wholesalers are using forward method for the process of replenishing 7. Backward scheduling is commonly used when making arrangement for special events like marriages, exam studies This can be done in service industries when the demand of services can be anticipated earlier JIT in time exam
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SCHEDULING CRITERIAS The correct scheduling techniques depends upon 1. 2. 3. 4. Volume of order The nature of operations Overall complicity of jobs Importance placed on each criteria

The following are the criteria 1) Minimum completion time this criteria is evaluated by determining average completion time per job 2) Maximum utilization : Percentage of the time facility is utilized 3) Minimum work in progress inventory : This is evaluated by determining the average number of jobs in the system. The relationship between the numbers of jobs in the system and WIP inventory is high and lesser the number of jobs, WIP is lower. 4) Minimize customer waiting time: This is determined by evaluating the average number of late days

Sequencing or Prioritizing Determining the order in which jobs should be done at each work centre 1. Scheduling provides a basis for assigning jobs to work centre 2. Loading is a capacity control technique 3. That highlights overloads and underloads Priority Rules for dispatching jobs It provides guidelines for the purposed sequence in which jobs should be worked. The rules are applicable for process

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Priority Rules 1. First come first serve (FCFS) First job to arrive at a work centre is process first eg: petrol filling service 2. Shortest processing time (STP) The shortest jobs handled first and completed prioritize the work centre on the basis of shortest processing jobs. The job which has shortest processing time is given the highest priority. Firm uses this rule when they want to maximize numbers of completed jobs and keep lower number of jobs in waiting. 3. Earliest due date : The job with earliest due date is selected first then the next earliest job second as so on. 4. Longest Processing Time (LPT) The longer, bigger jobs having largest processes time are selected first and then next second and so on. 5. Slack time remaining (STR) Here operation manager calculate slack time of each job i.e. difference between the time required, jobs with shortest slack time are dispatched first

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ABC ltd is involved in printing and binding of works .The company got an order from five customers in the same order A,B,C,D,E (in the same order ) at the beginning of the week .The processing time and due dates of these jobs is given blow. Develop the order in which these jobs are to be processed by using the following dispatching rules. Also calculate the average delay of jobs in each case.

Jobs A B C D E

Job work processing time in Job due date in days days 6 8 2 6 8 18 3 15 9 23

1. Earliest due date 2. Longest processing time 3. Shortest processing time 4. First in First serve 5. Slack time remaining

1. First come first served The sequence is A-B-C-D-E The flow time in the system for this sequence measures the time each job spends waiting plus time between processes. Job B for eg waits 6 days while job A being processed. Then takes two more days of operations so it will be completed in 8 days which is two days later than its due date. Flow time- Total time that job is in the system the sum of waiting time and processing time focused facilities such as clinics, printshop and manufacturing jobs. The relative prioritization determines actual time schedule for every individual jobs. This priority can be based on the number of criteria How priority rule can influence PRODUCTION PERFORMANCE
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1. Average waiting time per job 2. Average number of jobs waiting in the line 3. The amount of WIP 4. Completion of job in shortest possible time to satisfy the customer 5. To reduce the idle time of the facilities Actually in factory a job involves number of operations with the use of number of machines, having different capacity and different processing time. Therefore the sequencing is significant and affect the performance of shop. There is a dynamic system where the relative urgency of the jobs are changing this makes the system more complicated. Under this circumstances the priority can be decided based on the number of criterias based on production output control Thus objective of scheduling is scheduling and sequencing is to meet demands, with right time with least cost. If cost is no problem and machine capacity is large there would be no need to bother about sequencing. However this is not the case. Hence we need to achieve. 1. BEST UTILIZATION OF MACHINE AND MANPOWER 2. KEEP WIP AS SMALL AS POSSIBLE

JOB SEQUENCE A B C D E TOTAL

Processing time 6 2 8 3 9 28

Flow time 0+6=6 6+2=8 8+8=16 16+3=19 19+9=28 77

Job due date 8 6 18 15 23 -

Delay in lateness 0 2=(8-6) 0 4 5 11

job

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Measures of Effectiveness 1. Average completion time = Sum of total flow time/number of jobs =77/5 = 15.4 days 2 Utilization % = Total processing time(total Job works)/sum of total flow time =28/77*100 = 36.4 %

3 . Average number of jobs in the system = Sum of total flow time/total processing time = 77/28 = 2.75 jobs 4 Average job delay = Total delay time / number of jobs = 11/5 =2.75 jobs 2. Shortest processing time Job sequence- B-D-A-C-E Job sequence B D A C E Processing time 2 3 6 8 9 28 Flow time 0+2=2 2+3=5 5+6=11 11+8=19 19+9=28 65 Job due date 6 15 8 18 23 Delay 0 0 3 1 5 9

Measurement of effectiveness 1) 2) 3) 4) AV completion time=65/5= 13 days Utilization = 28/ 65 = 43.1 % AV numbers of job in system =65/28 = 2.32 jobs Average job delay = 9/5 = 1.8 days

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Earliest due date sequence is B-A-D-C-E Job sequence B A D C E Time 2 6 3 8 9 28 Flow time 0+2=2 2+6=8 8+3=11 11+8=19 19+9=28 68 Job due date 6 8 15 18 23 Job delay 0 0 0 1 5 6

Effectiveness measurements 1) 2) 3) 4) AV completion time=68/5= 13.6 days Utilization = 28/ 68 = 41.2 % AV numbers of job in system =68/28 = 2.43 jobs Average job delay = 6/5 = 1.2 days

Longest processing time sequence is E-C-A-D-E Job sequence E C A D E Time 9 8 6 3 2 28 Flow time 0+9=9 9+8=17 6+17=23 3+23=26 26+2=28 103 Job due date 23 18 8 15 6 Job delay 0 0 15 11 22 48

Measurement of effectiveness 1) 2) 3) 4) AV completion time=103/5= 20.6 days Utilization = 28/ 103 = 27.2 % AV numbers of job in system =103/28 = 3.68 jobs Average job delay = 48/5 = 9.6 days

The results of the four rules are summarize

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Earliest due date sequence is B-A-D-C-E Rule FCFS S.P.T E.D.D L.P.T AV completion Utilization % time 15.4 36.4 13.00 43.1 13.6 41.2 20.6 27.2 AV numbers of Average job in system delay 2.75 2.2 2.32 1.8 2.43 1.2 3.68 9.6 job

Effective measurement of sequencing for ABC limited 1) L.P.C is less effective 2) S.P.T is superior in three Since utilization is highest & AV completion time, AV jobs in the system & AV delay is least The result of the dispatch rule change depends on upon how full is capacity

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