Production control- Definition, Objectives, Levels and

Factors
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Production Control
All organizations irrespective of size, use production control to some degree. In small
organizations, the production control may be performed by one person; but in large complex
industries the production control department is normally well-organised and highly
specialized. Production control presupposes the existence of production plans, and it
involves the use of various control techniques to ensure production performance as per plans.
Co-ordinating men and materials and machines is the task of production control.
Production control may be defined as “the process of planning production in advance of
operations; establishing the exact route of each individual item, part of assembly; setting and
finishing dates for each important item, assembly and the finished products, and releasing the
necessary orders as well as initiating the required follow-up to effectivate the smooth
functioning of the enterprises.” According to Henry Fayol, production control is the art and
science of ensuring that all which occurs is in accordance with the rules established and the
instructions issued”. Thus, production control regulates the orderly flow of materials in the
manufacturing process from the raw material stage to the finished product.
Production control aims at achieving production targets, optimum use of available resources,
increased profits through productivity, better and more economic goods and services etc. An
effective production control system requires reliable information, sound organization
structure, a high degree of standardization and trained personnel for its successful operation.
A sound production control system contributes to the efficient operation of plant. In terms of
manufacturing customer’s orders, production control assures a more positive and accurate
completion and delivery date. Delivering an order on time is obviously important to the
customer and to the development of customer goodwill. Production control also brings plan
and order to chaotic and haphazard manufacturing procedures. This not only increases the
plant efficiency but also makes it a more pleasant place in which to work. Most people
recognize that employees prefer to work and do better work under conditions of obvious
control and plan. Morale may be considerably improved.. Effective production control also
maintains working inventories at a minimum, making possible a real saving in both labour
and material investment. Thus, good production control helps a company operate and
produce more efficiently and achieve lowest possible costs.
Objectives of Production Control
The success of an enterprise greatly depends on the performance of its production control
department. The production control department generally has to perform the following
functions:
• Provision of raw material, equipment, machines and labour.
• To organize production schedule in conformity with the demand forecasts.
• The resources are used in the best possible manner in such a way that the cost of
production is minimized and delivery date is maintained.
• Determination of economic production runs with a view to reduce setup costs.
 • Proper co-ordination of the operations of various sections/departments responsible for
production.
• To ensure regular and timely supply of raw material at the desired place and of
prescribed quality and quantity to avoid delays in production.
• To perform inspection of semi-finished and finished goods and use quality control
techniques to ascertain that the produced items are of required specifications.
• It is also responsible for product design and development.
Thus the fundamental objective of production control is to regulate and control the various
operations of production process such a way that orderly flow of material is ensured at
different stages of the production and the items are produced of right quality, in right
quantity, at the right time with minimum efforts and cost.
Levels of Production Control
Production control starts with some particular goal and formulation of some general strategy
for the accomplishment of desired objectives. There are three levels of production control
namely programming, ordering and dispatching. Programming plans the output of products
for the factory as a whole. Ordering plans the output of components from the suppliers and
processing departments. Dispatching considers each processing department in turn and plans
the output from the machine, tools and other work centers so as to complete the orders by due
date.
Factors Determining Production Control Operations
The nature of production control operations varies from organization to organization. The
following factors affect the nature and magnitude of production control methods in an
organization.
• Nature of production: In job-oriented manufacturing, products and operations are
designed for some particular order which may or may not be repeated in future.
Hence production usually requires more time, whereas in a continuous manufacturing
system inventory problems are more complex but control operations are rather simple
due to fixed process. In mixed stock and custom manufacturing systems the problem
of control is further complicated due to simultaneous scheduling of combined process.
• Nature of operations/activities: In intermittent manufacturing system the operations
are markedly varied in terms of their nature, sequence and duration. Due to this the
control procedure requires continuous modifications and adjustments to suit the
requirements of each order.
• Magnitude of operations: Centralised control secures the most effective co-
ordination but as an organization grows in size, decentralization of some production
control functions becomes necessary. The degree to which the performance of an
activity should be decentralized depends upon the scope of operations and
convenience of their locations.
Production Planning and Control

Jun 18, 2010 Maureen Cutajar

Classic Feedback Control Loop - Kjell Magne Fauske

The production function within an organization is dependent upon other areas of

the organization to forecast future demands and levels of production.

The production process involves the planning and control of how goods will be
manufactured. This usually includes the identification of raw materials required, the
quantities of components needed to manufacture items, and the human workforce required to
produce these products. These functions are the tasks carried out by the Production Planning
and Control Department.
Production Planning Process
The production planning process within the production department involves the planning of
what materials are required for the production of supplies and what is required to put these
materials together. Issues to consider when conducting the production planning process
include:
• Future Demand Planning – what is the trend of customers’ orders? Are
there any upcoming events that might increase or decrease the number of
orders?
• Lead Times – What are the time frames to manufacture an item? Are all
the materials and tools required to manufacture an item available?
• Components Availability – are the components required to manufacture an
item in stock? If the components are to be ordered this has to be taken
into account and included in the time required to manufacture the item.
• Workforce Availability – this takes into consideration the skills and
availability of the workforces.
The above considerations will be taken into account by the production team during the
planning activity as a reference to organize the work involved according to the skills and
machinery available.
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By drawing up thorough production planning procedures that take into account all the
materials and time required to manufacture a product, it is possible to calculate the
production planning tools required and the cost of manufacturing.
Production Control Process
Production quality control involves the monitoring of the product manufacturing to ascertain
that the products are produced according to the methodology specified and that the product
performs to the planned functionality.
These functions are performed by the Quality Control team. Their role is to check products to
ensure that they meet the company’s manufacturing standards. Quality control inspection will
then proceed to identify any flaws in the established process.
Read on
• Sales and Marketing Management
• MRP vs. ERP vs. CRM, Pros & Cons for Businesses
• Manufacturing Methodology: Influencing Factors
The ultimate aim of production control is to minimize the number of product rejections and
ensure that the process of production is optimized.
Importance of Production Planning and Control
To summarize the planning and control functions within a production department involve
three main activities:
• Production work is initiated
• The work carried out is measured and monitored
• Any necessary alterations are made.
These three main activities are referred to as the classic feedback control loop. The feedback
control loop may yield results that indicate a necessary change in raw materials,
manufactured items and so on.

Techniques of Demand Forecasting

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Broadly speaking, there are two approaches to demand forecasting- one is to obtain
information about the likely purchase behavior of the buyer through collecting expert’s
opinion or by conducting interviews with consumers, the other is to use past experience as a
guide through a set of statistical techniques. Both these methods rely on varying degrees of
judgment. The first method is usually found suitable for short-term forecasting, the latter for
long-term forecasting. There are specific techniques which fall under each of these broad
methods.
Simple Survey Method:
For forecasting the demand for existing product, such survey methods are often employed. In
this set of methods, we may undertake the following exercise.
1) Experts Opinion Poll: In this method, the experts on the particular product whose demand
is under study are requested to give their ‘opinion’ or ‘feel’ about the product. These experts,
dealing in the same or similar product, are able to predict the likely sales of a given product
in future periods under different conditions based on their experience. If the number of such
experts is large and their experience-based reactions are different, then an average-simple or
weighted –is found to lead to unique forecasts. Sometimes this method is also called the
‘hunch method’ but it replaces analysis by opinions and it can thus turn out to be highly
subjective in nature.
2) Reasoned Opinion-Delphi Technique: This is a variant of the opinion poll method. Here
is an attempt to arrive at a consensus in an uncertain area by questioning a group of experts
repeatedly until the responses appear to converge along a single line. The participants are
supplied with responses to previous questions (including seasonings from others in the group
by a coordinator or a leader or operator of some sort). Such feedback may result in an expert
revising his earlier opinion. This may lead to a narrowing down of the divergent views (of the
experts) expressed earlier. The Delphi Techniques, followed by the Greeks earlier, thus
generates “reasoned opinion” in place of “unstructured opinion”; but this is still a poor proxy
for market behavior of economic variables.
3) Consumers Survey- Complete Enumeration Method: Under this, the forecaster
undertakes a complete survey of all consumers whose demand he intends to forecast, Once
this information is collected, the sales forecasts are obtained by simply adding the probable
demands of all consumers. The principle merit of this method is that the forecaster does not
introduce any bias or value judgment of his own. He simply records the data and aggregates.
But it is a very tedious and cumbersome process; it is not feasible where a large number of
consumers are involved. Moreover if the data are wrongly recorded, this method will be
totally useless.
4) Consumer Survey-Sample Survey Method: Under this method, the forecaster selects a
few consuming units out of the relevant population and then collects data on their probable
demands for the product during the forecast period. The total demand of sample units is
finally blown up to generate the total demand forecast. Compared to the former survey, this
method is less tedious and less costly, and subject to less data error; but the choice of sample
is very critical. If the sample is properly chosen, then it will yield dependable results;
otherwise there may be sampling error. The sampling error can decrease with every increase
in sample size
5) End-user Method of Consumers Survey: Under this method, the sales of a product are
projected through a survey of its end-users. A product is used for final consumption or as an
intermediate product in the production of other goods in the domestic market, or it may be
exported as well as imported. The demands for final consumption and exports net of imports
are estimated through some other forecasting method, and its demand for intermediate use is
estimated through a survey of its user industries.
Complex Statistical Methods:
We shall now move from simple to complex set of methods of demand forecasting. Such
methods are taken usually from statistics. As such, you may be quite familiar with some the
statistical tools and techniques, as a part of quantitative methods for business decisions.
(1) Time series analysis or trend method: Under this method, the time series data on the
under forecast are used to fit a trend line or curve either graphically or through statistical
method of Least Squares. The trend line is worked out by fitting a trend equation to time
series data with the aid of an estimation method. The trend equation could take either a linear
or any kind of non-linear form. The trend method outlined above often yields a dependable
forecast. The advantage in this method is that it does not require the formal knowledge of
economic theory and the market, it only needs the time series data. The only limitation in this
method is that it assumes that the past is repeated in future. Also, it is an appropriate method
for long-run forecasts, but inappropriate for short-run forecasts. Sometimes the time series
analysis may not reveal a significant trend of any kind. In that case, the moving average
method or exponentially weighted moving average method is used to smoothen the series.
(2) Barometric Techniques or Lead-Lag indicators method: This consists in discovering a
set of series of some variables which exhibit a close association in their movement over a
period or time.
For example, it shows the movement of agricultural income (AY series) and the sale of
tractors (ST series). The movement of AY is similar to that of ST, but the movement in ST
takes place after a year’s time lag compared to the movement in AY. Thus if one knows the
direction of the movement in agriculture income (AY), one can predict the direction of
movement of tractors’ sale (ST) for the next year. Thus agricultural income (AY) may be
used as a barometer (a leading indicator) to help the short-term forecast for the sale of
tractors.
Generally, this barometric method has been used in some of the developed countries for
predicting business cycles situation. For this purpose, some countries construct what are
known as ‘diffusion indices’ by combining the movement of a number of leading series in the
economy so that turning points in business activity could be discovered well in advance.
Some of the limitations of this method may be noted however. The leading indicator method
does not tell you anything about the magnitude of the change that can be expected in the
lagging series, but only the direction of change. Also, the lead period itself may change
overtime. Through our estimation we may find out the best-fitted lag period on the past data,
but the same may not be true for the future. Finally, it may not be always possible to find out
the leading, lagging or coincident indicators of the variable for which a demand forecast is
being attempted.
3) Correlation and Regression: These involve the use of econometric methods to determine
the nature and degree of association between/among a set of variables. Econometrics, you
may recall, is the use of economic theory, statistical analysis and mathematical functions to
determine the relationship between a dependent variable (say, sales) and one or more
independent variables (like price, income, advertisement etc.). The relationship may be
expressed in the form of a demand function, as we have seen earlier. Such relationships,
based on past data can be used for forecasting. The analysis can be carried with varying
degrees of complexity. Here we shall not get into the methods of finding out ‘correlation
coefficient’ or ‘regression equation’; you must have covered those statistical techniques as a
part of quantitative methods. Similarly, we shall not go into the question of economic theory.
We shall concentrate simply on the use of these econometric techniques in forecasting.
We are on the realm of multiple regression and multiple correlation. The form of the equation
may be:
DX = a + b1 A + b2PX + b3Py
You know that the regression coefficients b1, b2, b3 and b4 are the components of relevant
elasticity of demand. For example, b1 is a component of price elasticity of demand. The
reflect the direction as well as proportion of change in demand for x as a result of a change in
any of its explanatory variables. For example, b2< 0 suggest that DX and PX are inversely
related; b4 > 0 suggest that x and y are substitutes; b3 > 0 suggest that x is a normal
commodity with commodity with positive income-effect.
Given the estimated value of and bi, you may forecast the expected sales (DX), if you know
the future values of explanatory variables like own price (PX), related price (Py), income (B)
and advertisement (A). Lastly, you may also recall that the statistics R2 (Co-efficient of
determination) gives the measure of goodness of fit. The closer it is to unity, the better is the
fit, and that way you get a more reliable forecast.
The principle advantage of this method is that it is prescriptive as well descriptive. That is,
besides generating demand forecast, it explains why the demand is what it is. In other words,
this technique has got both explanatory and predictive value. The regression method is
neither mechanistic like the trend method nor subjective like the opinion poll method. In this
method of forecasting, you may use not only time-series data but also cross section data. The
only precaution you need to take is that data analysis should be based on the logic of
economic theory.
(4) Simultaneous Equations Method: Here is a very sophisticated method of forecasting. It
is also known as the ‘complete system approach’ or ‘econometric model building’. In your
earlier units, we have made reference to such econometric models. Presently we do not intend
to get into the details of this method because it is a subject by itself. Moreover, this method is
normally used in macro-level forecasting for the economy as a whole; in this course, our
focus is limited to micro elements only. Of course, you, as corporate managers, should know
the basic elements in such an approach.
The method is indeed very complicated. However, in the days of computer, when package
programmes are available, this method can be used easily to derive meaningful forecasts. The
principle advantage in this method is that the forecaster needs to estimate the future values of
only the exogenous variables unlike the regression method where he has to predict the future
values of all, endogenous and exogenous variables affecting the variable under forecast. The
values of exogenous variables are easier to predict than those of the endogenous variables.
However, such econometric models have limitations, similar to that of regression method.
An Overview of Forecasting Methodology
1993 © David S. Walonick, Ph.D.

Most people view the world as consisting of a large number of alternatives. Futures research
evolved as a way of examining the alternative futures and identifying the most probable.
Forecasting is designed to help decision making and planning in the present.
Forecasts empower people because their use implies that we can modify variables now to
alter (or be prepared for) the future. A prediction is an invitation to introduce change into a
system.
There are several assumptions about forecasting:
1. There is no way to state what the future will be with complete certainty. Regardless of the
methods that we use there will always be an element of uncertainty until the forecast horizon
has come to pass.
2. There will always be blind spots in forecasts. We cannot, for example, forecast completely
new technologies for which there are no existing paradigms.
3. Providing forecasts to policy-makers will help them formulate social policy. The new
social policy, in turn, will affect the future, thus changing the accuracy of the forecast.
Many scholars have proposed a variety of ways to categorize forecasting methodologies. The
following classification is a modification of the schema developed by Gordon over two
decades ago:
Genius forecasting - This method is based on a combination of intuition, insight, and luck.
Psychics and crystal ball readers are the most extreme case of genius forecasting. Their
forecasts are based exclusively on intuition. Science fiction writers have sometimes described
new technologies with uncanny accuracy.
There are many examples where men and women have been remarkable successful at
predicting the future. There are also many examples of wrong forecasts. The weakness in
genius forecasting is that its impossible to recognize a good forecast until the forecast has
come to pass.
Some psychic individuals are capable of producing consistently accurate forecasts.
Mainstream science generally ignores this fact because the implications are simply to difficult
to accept. Our current understanding of reality is not adequate to explain this phenomena.
Trend extrapolation - These methods examine trends and cycles in historical data, and then
use mathematical techniques to extrapolate to the future. The assumption of all these
techniques is that the forces responsible for creating the past, will continue to operate in the
future. This is often a valid assumption when forecasting short term horizons, but it falls short
when creating medium and long term forecasts. The further out we attempt to forecast, the
less certain we become of the forecast.
The stability of the environment is the key factor in determining whether trend extrapolation
is an appropriate forecasting model. The concept of "developmental inertia" embodies the
idea that some items are more easily changed than others. Clothing styles is an example of an
area that contains little inertia. It is difficult to produce reliable mathematical forecasts for
clothing. Energy consumption, on the other hand, contains substantial inertia and
mathematical techniques work well. The developmental inertia of new industries or new
technology cannot be determined because there is not yet a history of data to draw from.
There are many mathematical models for forecasting trends and cycles. Choosing an
appropriate model for a particular forecasting application depends on the historical data. The
study of the historical data is called exploratory data analysis. Its purpose is to identify the
trends and cycles in the data so that appropriate model can be chosen.
The most common mathematical models involve various forms of weighted smoothing
methods. Another type of model is known as decomposition. This technique mathematically
separates the historical data into trend, seasonal and random components. A process known
as a "turning point analysis" is used to produce forecasts. ARIMA models such as adaptive
filtering and Box-Jenkins analysis constitute a third class of mathematical model, while
simple linear regression and curve fitting is a fourth.
The common feature of these mathematical models is that historical data is the only criteria
for producing a forecast. One might think then, that if two people use the same model on the
same data that the forecasts will also be the same, but this is not necessarily the case.
Mathematical models involve smoothing constants, coefficients and other parameters that
must decided by the forecaster. To a large degree, the choice of these parameters determines
the forecast.
It is vogue today to diminish the value of mathematical extrapolation. Makridakis (one of the
gurus of quantitative forecasting) correctly points out that judgmental forecasting is superior
to mathematical models, however, there are many forecasting applications where computer
generated forecasts are more feasible. For example, large manufacturing companies often
forecast inventory levels for thousands of items each month. It would simply not be feasible
to use judgmental forecasting in this kind of application.
Consensus methods - Forecasting complex systems often involves seeking expert opinions
from more than one person. Each is an expert in his own discipline, and it is through the
synthesis of these opinions that a final forecast is obtained.
One method of arriving at a consensus forecast would be to put all the experts in a room and
let them "argue it out". This method falls short because the situation is often controlled by
those individuals that have the best group interaction and persuasion skills.
A better method is known as the Delphi technique. This method seeks to rectify the problems
of face-to-face confrontation in the group, so the responses and respondents remain
anonymous. The classical technique proceeds in well-defined sequence. In the first round, the
participants are asked to write their predictions. Their responses are collated and a copy is
given to each of the participants. The participants are asked to comment on extreme views
and to defend or modify their original opinion based on what the other participants have
written. Again, the answers are collated and fed back to the participants. In the final round,
participants are asked to reassess their original opinion in view of those presented by other
participants.
The Delphi method general produces a rapid narrowing of opinions. It provides more
accurate forecasts than group discussions. Furthermore, a face-to-face discussion following
the application of the Delphi method generally degrades accuracy.
Simulation methods - Simulation methods involve using analogs to model complex systems.
These analogs can take on several forms. A mechanical analog might be a wind tunnel for
modeling aircraft performance. An equation to predict an economic measure would be a
mathematical analog. A metaphorical analog could involve using the growth of a bacteria
colony to describe human population growth. Game analogs are used where the interactions
of the players are symbolic of social interactions.
Mathematical analogs are of particular importance to futures research. They have been
extremely successful in many forecasting applications, especially in the physical sciences. In
the social sciences however, their accuracy is somewhat diminished. The extraordinary
complexity of social systems makes it difficult to include all the relevant factors in any
model.
Clarke reminds us of a potential danger in our reliance on mathematical models. As he points
out, these techniques often begin with an initial set of assumptions, and if these are incorrect,
then the forecasts will reflect and amplify these errors.
One of the most common mathematical analogs in societal growth is the S-curve. The model
is based on the concept of the logistic or normal probability distribution. All processes
experience exponential growth and reach an upper asymptopic limit. Modis has hypothesized
that chaos like states exist at the beginning and end of the S-curve. The disadvantage of this
S-curve model is that it is difficult to know at any point in time where you currently are on
the curve, or how close you are to the asymtopic limit. The advantage of the model is that it
forces planners to take a long-term look at the future.
Another common mathematical analog involves the use of multivariate statistical techniques.
These techniques are used to model complex systems involving relationships between two or
more variables. Multiple regression analysis is the most common technique. Unlike trend
extrapolation models, which only look at the history of the variable being forecast, multiple
regression models look at the relationship between the variable being forecast and two or
more other variables.
Multiple regression is the mathematical analog of a systems approach, and it has become the
primary forecasting tool of economists and social scientists. The object of multiple regression
is to be able to understand how a group of variables (working in unison) affect another
variable.
The multiple regression problem of collinearity mirrors the practical problems of a systems
approach. Paradoxically, strong correlations between predictor variables create unstable
forecasts, where a slight change in one variable can have dramatic impact on another
variable. In a multiple regression (and systems) approach, as the relationships between the
components of the system increase, our ability to predict any given component decreases.
Gaming analogs are also important to futures research. Gaming involves the creation of an
artificial environment or situation. Players (either real people or computer players) are asked
to act out an assigned role. The "role" is essentially a set of rules that is used during
interactions with other players. While gaming has not yet been proven as a forecasting
technique, it does serve two important functions. First, by the act of designing the game,
researchers learn to define the parameters of the system they are studying. Second, it teaches
researchers about the relationships between the components of the system.
Cross-impact matrix method - Relationships often exist between events and developments
that are not revealed by univariate forecasting techniques. The cross-impact matrix method
recognizes that the occurrence of an event can, in turn, effect the likelihoods of other events.
Probabilities are assigned to reflect the likelihood of an event in the presence and absence of
other events. The resultant inter-correlational structure can be used to examine the
relationships of the components to each other, and within the overall system. The advantage
of this technique is that it forces forecasters and policy-makers to look at the relationships
between system components, rather than viewing any variable as working independently of
the others.
Scenario - The scenario is a narrative forecast that describes a potential course of events.
Like the cross-impact matrix method, it recognizes the interrelationships of system
components. The scenario describes the impact on the other components and the system as a
whole. It is a "script" for defining the particulars of an uncertain future.
Scenarios consider events such as new technology, population shifts, and changing consumer
preferences. Scenarios are written as long-term predictions of the future. A most likely
scenario is usually written, along with at least one optimistic and one pessimistic scenario.
The primary purpose of a scenario is to provoke thinking of decision makers who can then
posture themselves for the fulfillment of the scenario(s). The three scenarios force decision
makers to ask: 1) Can we survive the pessimistic scenario, 2) Are we happy with the most
likely scenario, and 3) Are we ready to take advantage of the optimistic scenario?
Decision trees - Decision trees originally evolved as graphical devices to help illustrate the
structural relationships between alternative choices. These trees were originally presented as
a series of yes/no (dichotomous) choices. As our understanding of feedback loops improved,
decision trees became more complex. Their structure became the foundation of computer
flow charts.
Computer technology has made it possible create very complex decision trees consisting of
many subsystems and feedback loops. Decisions are no longer limited to dichotomies; they
now involve assigning probabilities to the likelihood of any particular path.
Decision theory is based on the concept that an expected value of a discrete variable can be
calculated as the average value for that variable. The expected value is especially useful for
decision makers because it represents the most likely value based on the probabilities of the
distribution function. The application of Bayes' theorem enables the modification of initial
probability estimates, so the decision tree becomes refined as new evidence is introduced.
Utility theory is often used in conjunction with decision theory to improve the decision
making process. It recognizes that dollar amounts are not the only consideration in the
decision process. Other factors, such as risk, are also considered.
Combining Forecasts
It seems clear that no forecasting technique is appropriate for all situations. There is
substantial evidence to demonstrate that combining individual forecasts produces gains in
forecasting accuracy. There is also evidence that adding quantitative forecasts to qualitative
forecasts reduces accuracy. Research has not yet revealed the conditions or methods for the
optimal combinations of forecasts.
Judgmental forecasting usually involves combining forecasts from more than one source.
Informed forecasting begins with a set of key assumptions and then uses a combination of
historical data and expert opinions. Involved forecasting seeks the opinions of all those
directly affected by the forecast (e.g., the sales force would be included in the forecasting
process). These techniques generally produce higher quality forecasts than can be attained
from a single source.
Combining forecasts provides us with a way to compensate for deficiencies in a forecasting
technique. By selecting complementary methods, the shortcomings of one technique can be
offset by the advantages of another.
Difficulties in Forecasting Technology
Clarke describes our inability to forecast technological futures as a failure of nerve. When a
major technological breakthrough does occur, it takes conviction and courage to accept the
implications of the finding. Even when the truth is starring us in the face, we often have
difficulty accepting its implications.
Clark refers to this resistance to change as cowardice, however, it may be much deeper.
Cognitive dissonance theory in psychology has helped us understand that resistance to change
is a natural human characteristic. It is extremely difficult to venture beyond our latitudes of
acceptance in forecasting new technologies.
Clarke states that knowledge can sometimes clog the wheels of imagination. He embodied
this belief in his self-proclaimed law:
"When a distinguished but elderly scientist states that something is possible, he is almost
certainly right. When he states that something is impossible, he is very probably wrong."
Nearly all futurists describe the past as unchangeable, consisting as a collection of knowable
facts. We generally perceive the existence of only one past. When two people give conflicting
stories of the past, we tend to believe that one of them must be lying or mistaken.
This widely accepted view of the past might not be correct. Historians often interject their
own beliefs and biases when they write about the past. Facts become distorted and altered
over time. It may be that past is a reflection of our current conceptual reference. In the most
extreme viewpoint, the concept of time itself comes into question.
The future, on the other hand, is filled will uncertainty. Facts give way to opinions. As de
Jouvenel points out, the facts of the past provide the raw materials from which the mind
makes estimates of the future. All forecasts are opinions of the future (some more carefully
formulated than others). The act of making a forecast is the expression of an opinion. The
future, as described by de Jouvenel, consists of a range of possible future phenomena or
events. These futuribles are those things that might happen.
Defining a Useful Forecast
Science fiction novelist Frederik Pohl has suggested that the "only time a forecast has any
real utility is when it is not totally reliable". He proposes a thought experiment where a
Gypsy fortune teller predicts that we will be run over and killed when we leave the tea room.
If we know that the Gypsy's predictions are one hundred percent accurate, then Pohl states
that the fortune is useless, because we would be unable to alter the forecast. In other words,
predictions only become useful when they are not completely reliable.
The apparent paradox created by Pohl's thought experiment is only a function of the
particular situation. The paradox exists only when 1) we want the future to be different than
the prediction, and 2) when we believe that there is no way for us to adapt to or affect the
forthcoming changes. Pohl's thought experiment actually doesn't even meet that criteria, since
one could present a convincing argument that it is more desirable to spend the rest of our
lives confined to the comfort of a tea room than to leave and meet certain death. Obviously,
our new life would be difficult to accept and adapt to, but it could be done. Prisoners do it all
the time.
A forecast can be one hundred percent accurate and still be useful. For example, suppose our
Gypsy had told us that after leaving her tea room we would safely return home. Again, since
we know that her forecasts are completely accurate, we would receive emotional comfort
from her predictions. In a more tangible example, suppose the prediction is that our
manufacturing company will receive twice as many orders for widgets as we had anticipated.
Since the forecast is one hundred percent accurate, we would be wise to order more raw
materials and increase our production staff to meet the coming demand.
Pohl is wrong. The goal of forecasting is to be as accurate as possible. In the case of business
demand forecasting, it is naive to suggest that an accurate forecast is useless. On the contrary,
a more accurate forecast enables us to plan the use our resources in a more ecological
fashion. We can minimize waste by adapting to our expectations of the future.
It is sometimes useful in thought experiments to look at the situation from the opposite
perspective. Suppose we know that our Gypsy is always wrong in her predictions. Her
accuracy is guaranteed to be zero. Note that this is different than random forecasts, where she
might hit the mark once in a while. The Gypsy sighs with relief and says that there is no fatal
accident in store for us today. According to Pohl's reasoning, this should provide the most
useful forecast because it has the least accuracy. It's obvious, though, that this fortune is as
useless as the one where she is completely accurate. Leaving the Gypsy's tea-room is not
something we would want to do.
If we view accuracy as a continuum, it may be that the antonym of accuracy is randomness
(instead of inaccuracy). In this case, Pohl's theory would suggest that random forecasts are
more useful than accurate forecasts. In demand forecasting, the degree of over- and under-
utilization of our resources is proportional to the difference between the observed and
predicted values. Random forecasts are entirely unacceptable for this type of application.
Pohl's thought experiment is very important because it forces us to look at the theoretical
foundations of forecasting. First, Pohl's experiment may not be valid because it violates a
basic assumption of forecasting (i.e., we cannot predict the future with one hundred percent
accuracy). Second, the usefulness of a forecast does not always seem to be related to its
accuracy. Both extremes (completely accurate and completely inaccurate) can produce useful
or useless forecasts.
The usefulness of a forecast is not something that lends itself readily to quantification along
any specific dimension (such as accuracy). It involves complex relationships between many
things, including the type of information being forecast, our confidence in the accuracy of the
forecast, the magnitude of our dissatisfaction with the forecast, and the versatility of ways
that we can adapt to or modify the forecast. In other words, the usefulness of a forecast is an
application sensitive construct. Each forecasting situation must be evaluated individually
regarding its usefulness.
One of the first rules of doing research is to consider how the results will be used. It is
important to consider who the readers of the final report will be during the initial planning
stages of a project. It is wasteful to expend resources on research that has little or no use. The
same rule applies to forecasting. We must strive to develop forecasts that are of maximum
usefulness to planners. This means that each situation must be evaluated individually as to the
methodology and type of forecasts that are most appropriate to the particular application.
Do Forecasts Create the Future
A paradox exists in preparing a forecast. If a forecast results in an adaptive change, then the
accuracy of the forecast might be modified by that change. Suppose the forecast is that our
business will experience a ten percent drop in sales next month. We adapt by increasing our
promotion effort to compensate for the predicted loss. This action, in turn, could affect our
sales, thus changing the accuracy of the original forecast.
Many futurists (de Jouvenel, Dublin, Pohl, and others) have expressed the idea that the way
we contemplate the future is an expression of our desire to create that future. Physicist Dennis
Gabor, discoverer of holography, claimed that the future is invented, not predicted. The
implication is that the future is an expression of our present thoughts. The idea that we create
our own reality is not a new concept. It is easy to imagine how thoughts might translate into
actions that affect the future.
Biblical records speak of faith as the force that could move mountains. Recent research in
quantum mechanics suggests that this may be more than just a philosophical concept. At a
quantum level, matter itself might simply be a manifestation of thought. Electrons and other
subatomic particles seem to exist only when physicists are looking for them, otherwise, they
exist only as energy.
An incredible discovery was made at the University of Paris in 1982. A team of researchers
lead by Alain Aspect found that under certain conditions, electrons could instantaneously
communicate with each other across long distances. The results of this experiment have been
confirmed by many other researchers, although the implications are exceedingly hard to
accept. Three explanations are possible: 1) information can be transferred at speeds
exceeding the speed of light, 2) the passage of time is an illusion, 3) the distance between the
electrons is an illusion. All three explanations rock our perception of reality.
David Bohm has explained Aspect's experiment by hypothesizing a holographic universe in
which reality is essentially a projection of some deeper dimension that we are not able to
comprehend. Instantaneous communication is possible because the distance between the
particles is an illusion. Neurophysiologist Karl Pribram has also theorized about the
holographic nature of reality. His theory is based on a study of the way that the brain recalls
memory patterns, but the implications are the same. Reality is a phantasm.
If reality is an illusion, then the future is also an illusion.
The phenomena of being able to see the future is known as precognition. Most people believe
that (to some degree) they can predict the future. Fortune-tellers, however, believe they can
view the future. There is a major difference. We predict the future based on knowledge,
intuition and logic. Precognitive persons claim to "see" the future. Knowledge and logic are
not involved.
Throughout history, there have been many reports of gifted psychics with precognitive
powers. Through some unknown mechanism, these people are able predict things that will
happen in the future. If we admit that even a single person in history has possessed this
capability, then we must accept the fact that our concept of reality needs dramatic alteration.
Time itself may not exist as we currently perceive it. Forecasting may be a method of
creating illusions.
Forecasting can, and often does, contribute to the creation of the future, but it is clear that
other factors are also operating. A holographic theory would stress the interconnectedness of
all elements in the system. At some level, everything contributes to the creation of the future.
The degree to which a forecast can shape the future (or our perception of the future) has yet
to be determined experimentally and experientially.
Sometimes forecasts become part of a creative process, and sometimes they don't. When two
people make mutually exclusive forecasts, both of them cannot be true. At least one forecast
is wrong. Does one person's forecast create the future, and the other does not? The
mechanisms involved in the construction of the future are not well understood on an
individual or social level.
Modis believes that the media provides the mechanism by which social forecasts take on a
creative context. In this theory, extensive media coverage acts as a resonating cavity for
public opinion, and creates a "cultural epidemic" that modifies social behavior.
Dublin points out that the "future has become so integral to the fabric of modern
consciousness that few people feel compelled to question it...". Because of the power of a
prediction to affect the future, he goes on to state that prophesy is usually a self-interest quest
for power.
The Ethics of Forecasting
Are predictions of the future a form of propaganda, designed to evoke a particular set of
behaviors? Dublin states that the desire for control is implicit in all forecasts. Decisions made
today are based on forecasts, which may or may not come to pass. The forecast is a way to
control today's decisions.
Dublin is correct. The purpose of forecasting is to control the present. In fact, one of the
assumptions of forecasting is that the forecasts will be used by policy-makers to make
decisions. It is therefore important to discuss the ethics of forecasting. Since forecasts can and
often do take on a creative role, what right do we have to make forecasts that involve other
peoples futures?
Nearly everyone would agree that we have the right to create our own future. Goal setting is a
form of personal forecasting. It is one way to organize and invent our personal future. Each
person has the right to create their own future. On the other hand, a social forecast might alter
the course of an entire society. Such power can only be accompanied by equivalent
responsibility.
There are no clear rules involving the ethics of forecasting. In Future Shock, Toffler
discussed the importance of value impact forecasting, the idea that social forecasting must
involve physical, cultural and societal values. It is doubtful that forecasters can leave their
own personal biases out of the forecasting process. Even the most mathematically rigorous
techniques involve judgmental inputs that can dramatically alter the forecast.
Many futurists have pointed out our obligation to create socially desirable futures.
Unfortunately, a socially desirable future for one person might be another person's nightmare.
For example, modern ecological theory says that we should think of our planet in terms of
sustainable futures. The finite supply of natural resources forces us to reconsider the
desirability of unlimited growth. An optimistic forecast is that we achieve and maintain an
ecologically balanced future. That same forecast, the idea of zero growth, is a catastrophic
nightmare for the corporate and financial institutions of the free world. Our Keynesian system
of profit depends on continual growth for the well-being of individuals, groups, and
institutions.
Desirable futures is a subjective concept. It can only be understood relative to other
information. The ethics of forecasting certainly involves the obligation to create desirable
futures for the person(s) that might be affected by the forecast. If a goal of forecasting is to
create desirable futures, then the forecaster must ask the ethical question of "desirable for
whom?".
To embrace the idea of liberty is to recognize that each person has the right to create their
own future. Forecasters can promote libertarian beliefs by empowering people that might be
affected by the forecast. Involving these people in the forecasting process, gives them the
power to become co-creators in their futures.
There are various types of demand forecasting techniques der.
1.Survey technique
a.Complete enumeration survey
b.Sample survey
c.experts opinon
d.End user survey
2.Statistical method
diffusion index
Regression and correlation
trend analysis
barometric tech
econometric tech

Read more:
http://wiki.answers.com/Q/Dicuss_the_various_types_of_demand_forecasting_techniques#ix
zz1Bjw3ohak

What is Operations Scheduling?

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Introduction
In the operations management or the production management, this technique of operations
scheduling forms a very important part and acts as the back – bone for the performance of the
manufacturing or the service organizations. With the help of the operations scheduling, two
very important factors or the aspects of the resources within an organization that can be
pertained are as follows –
1. Allocating the resources within an organization.
2. Setting up the time – table.
In today’s competitive world, the orders that are placed either from the side of the customer
or from the side of the assembly benches – are to be completed on or before the contracted or
the promised date. For fulfilling this, operations scheduling plays a very critical and an
essential role and completely ensures that these dates are met.
Operations scheduling helps in the confirmation or the revision of the tentative delivery date
that has been promised in the original quotation. Sometimes during the operations scheduling
of the work order, it may be discovered that the delivery date originally and tentatively
promised cannot be met. All this may be due to the several problems like the materials that
are required may not be available at that particular time or may not be available immediately.
This problem can also occur due to the increased plant loading while the customer is deciding
whether or not to award the quoted job to this company.
It has been observed that the operations scheduling has a direct affect on the effectiveness of
the production function and this relation was actually explained by Vollman.
According to Vollman, “The priority planning and the shop floor control and the scheduling
elements ultimately determine the performance of the production system.”
If the operations scheduling is carried out in an efficient manner, then there occurs a
considerable improvement in the performance in the delivery. Also helps in the achievement
of the goals that have been set by the company. Efficient operations scheduling playa a very
critical part in the reduction of the production lead times.

Methods of Scheduling Operations

November 14, 2007
in Operations Management
We discuss methods of scheduling tasks or operations on available resources so as to achieve
some specified objectives. An example of a scheduling problem is to determine the order in
which jobs in a manufacturing plant will be completed so that the numbers of timely
deliveries are the highest. Other examples of scheduling include the running of programs at a
computing center, the processing of loan applications by a bank, the landing of aircraft at an
airstrip and performing medical tests on a patient. An arbitrary procedure, such as “First
come first served” or scheduling by default may lead to solutions that are far from optimal
with respect to a company’s objectives. We hope to demonstrate that, by using scientific
procedures for scheduling, a company can achieve significantly better performance on stated
objectives.
Types and characteristics of alternative production systems were described. While scheduling
problems occur to varying degrees in all types of systems, they are particularly salient in job
shops. . A job shop is a process focused production system that employs general purpose
processors. Production is to order and a large number of different products are produced, each
in relatively small volume. Examples of job shops include machining shops, multi-specialty
clinics, computer centers, and consulting firms.
A production manager of a job shop will use the result of scheduling in several aspects of
decision making. At the broadest level is capacity planning, in which the need for additional
capacity and the type of capacity needed are identified. A simulation analysis of forecasted
order patterns could reveal bottlenecks and the requirements for additional capacity. In some
cases, efficient scheduling can improve the utilization of existing processors (machines) so
that expensive additions to capacity can be postponed.
The next level at which the results of scheduling are useful is in decisions concerning order
acceptance, due date specification, and product mix considerations. For example, scheduling
may reveal that, given the nature of the processors in a job shop, accepting a mix of smaller
volume and larger volume orders and quoting similar due dates for both types of orders
creates bottlenecks and late deliveries. Management may then wish either to focus on one
type of order or to quote differential due dates to avoid bottlenecks and late deliveries.
Further down, in the level of detail in shop loading, where the manager must decide on a
daily basis how many jobs and which job to release to the shop for processing. The criteria of
machine utilization and customer service will be important.
Finally the manager must develop procedures for deciding the order in which the operations
of different jobs should be performed on a processor of several operations is competing for
the same processor. Simple procedures, such as “first come first served” or random
selection, will often produce unacceptable solutions resulting in delayed deliveries, the
unbalanced utilization of processors, and the like. A clear understanding of the nature of
scheduling problems at this most detailed level and of the procedures of scheduling will
provide inputs to the higher level decisions. We will therefore focus on the job shop
scheduling problem at this level of detail. To illustrate the differences among alternative
scheduling procedures and the impact of a choice of a scheduling procedure on a desired
performance, measure, here we are examining single processor scheduling in some detail.
Consider a hypothetical automated chemical plant that produces several different products,
but only one product can be produced at a time. Suppose that the production mangers of the
plant has to decide on the scheduling of four products, the production times and due dates in
the tables, For example, that a product ‘4’ will require 8 days in manufacturing and that
it is due to be delivered in 17 days. The production manager has several alternatives for
scheduling the production of these products. For example, he could produce product 1 first
and then product 2, followed by product 3 and finally product 4. Alternatively, he could
produce product 4 first, product 2 next then product 1, and finally product 3. In fact, there are
4 x 3 x 2 x 1 = 24 distinct ways of scheduling the production of these four products. The
decision facing the production manager is which one of these possible 24 schedules should be
chosen?
This simplified example illustrates the problem of scheduling on a single processor. Single
processor or single machine scheduling is of interest for the following reasons:
1. There are many situations where an entire plant can be viewed as a single processor, as is
the case in chemical manufacturing, paint manufacturing, and the manufacturing of products
in automated plants.
2. In plants that employ multiple processors, there is often a bottlenecks processor that
controls the output of the plant because of its limited capacity. The analysis of this bottleneck
processor may determine the decisions for the entire plant.
3. The analysis of a single processor illustrates many important problems that arise in more
complex scheduling situations; therefore, it serves as a building block for understanding the
decision problems in these more complex situations.

What are the Objectives and Functions of the Operations

Scheduling

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Objectives of the Operations Scheduling –

1. Making efficient use of the labour.
2. Making best possible use of the equipments that are available for the use.
3. Increasing the profit.
4. Increasing the output.
5. Improving the service level.
6. Maximizing the delivery performance i.e. meeting the delivery dates.
7. Minimizing the inventory.
8. Reducing the manufacturing time.
9. Minimizing the production costs.
10. Minimizing the worker costs.
Functions of the operations scheduling –
1. Allocation of the resources.
2. Shop floor control.
3. Making maximum use of the plant at minimum possible cost.
4. Ensure that the needs of the manpower are optimum.
5. Determination of the sequence of the jobs.
6. Specifying the start and the end time for each job (actively scheduled).
7. Getting quick feedback from the shops regarding the delays and the various interruptions.
8. Possess up – to – date information for the availability of the materials, expected delivery
dates etc.
9. Possess up – to – date data on the machine regarding its breakdown, servicing etc.
10. Keep itself abreast of the hiring, dismissals, holidays etc. of the work force.