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PRODUCTION AND OPERATIONS MANAGEMENT WITH TQM

CHAPTER 5

PRODUCTION PLANNING AND CONTROL

INTRODUCTION AND MEANING:

Production planning and control can be defined as the “direction and coordination of
firms’ resources towards attaining the prefixed goals”.

Firms resources:
1. Machines
2. Materials
3. Men

Production planning and control helps to achieve uninterrupted flow of materials

through production line by making available the materials at right time and required quantity.

NEED FOR PRODUCTION PLANNING AND CONTROL:

Production planning and control serves as a useful tool to coordinate the activities of
production system by proper planning and control system.

Production system can be compared to the nervous system with PPC as a brain.

Production planning and control is needed to achieve:

1. Effective utilization of firms’ resources.

2. To achieve the production objectives with respect to quality, quantity, cost and
timeliness of delivery.
3. To obtain the uninterrupted production flow in order to meet customers varied
demand with respect to quality and committed delivery schedule.
4. To help the company to supply good quality products to the customer on the
continuous basis at competitive rates.

Production planning is a pre-production activity. It is the pre-determination of

manufacturing requirements such as manpower, materials, machines and manufacturing
process.

Production planning is the determination, acquisition and arrangement of all facilities

necessary for future production of products. It represents the design of production system. It is
going to establish the production program to meet the targets set using the various resources.

PRODUCTION CONTROL:

Some of the factors that affect the production plan:

1. Non-availability of materials (due to shortage, etc.)

2. Plant, equipment and machine breakdown
3. Changes in demand and rush orders
4. Absenteeism of workers
5. Lack of coordination and communication between various functional areas of
business.
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If there is a deviation between actual production and planned production, the control
function comes into action. Production control reviews the progress of the work, and takes
corrective steps in order to ensure that programmed production takes place.

The essential steps in control activity are:

1. Initiating the production

2. Progressing
3. Corrective action based upon the feedback and reporting back the production
planning.

OBJECTIVES OF PRODUCTION PLANNING AND CONTROL

1. Systematic planning of production activities to achieve the highest efficiency in production

of goods/services.
2. To organize the production facilities like machines, men, etc. to achieve stated production
objectives with respect to quantity and quality of time and cost.
3. Optimum scheduling of resources.
4. Coordinate with other departments relating to production to achieve regular balanced and
uninterrupted production flow.
5. To conform to delivery commitments.
6. Materials planning and control.
7. To be able to make adjustments due to changes in demand and rush orders.

PHASES OF PRODUCTION PLANNING AND CONTROL

A. Planning phase
B. Action phase
C. Control phase

A. PLANNING PHASE:

Prior planning Active planning

Product development Process planning

Production design Routing
Forecasting Materials planning
Aggregate planning Tools planning
Master scheduling Loading
Materials requirements planning Scheduling

B. ACTION PHASE: Dispatching

C. CONTROL PHASE:

Progress reporting Corrective action

Data processing Expediting

Replanning
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PLANNING PHASE

Planning is an exercise of intelligent anticipation in order to establish how an

objective can be achieved or a need fulfilled in circumstances, which are invariably
restrictive. Production planning determines the optimal schedule and sequence of
operation economic batch quantity, machine assignment and dispatching priorities for
sequencing.

It has two categories:

A. Prior planning
Prior planning means pre-production planning. This includes planning
efforts, which are taking place prior to the active planning.

Modules of pre-planning:

1. Product development and design

It is the process of developing a new product with all the
features, which are essential for effective use in the field, and
designing it accordingly.
At the design stage, one has to take several aspects of design
like, design for selling, design for manufacturing and design for
usage.

2. Forecasting
It is an estimate of demand, which will happen in the future. It is
an estimate based on the past demand. Given the sales
forecast, the factory capacity, the aggregate inventory levels
and size of the workforce, the manager must decide at what
rate of production to operate the plant over an intermediate
planning horizon.

3. Aggregate planning
It aims to find out a product wise planning over the
intermediate planning horizon.

4. Master scheduling
It expresses the overall plans in terms of specific end items or
models that can be assigned priorities.

5. Material requirement planning

It is a technique for determining the quantity and timing for the
acquisition of dependent items needed to satisfy the master
production schedule.

B. Active Planning

1. Process planning and routing

It is a complete determination of the specific technological
process steps and their sequence to produce products at the
desired quality, quantity and cost. It determines the method of
manufacturing a product, selects the tools and equipments,
analyzes how the manufacturing of the product will fit into the
facilities.
Routing in particular prescribes the flow of work in the plant
and it is related to the considerations of layout, temporary
locations for raw materials and components and materials
handling systems.
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2. Material planning
It is a process which determines the requirements of various
raw materials/subassemblies by considering the trade-off
between various cost components like carrying cost, ordering
cost, shortage cost, etc.

3. Tools planning
It determines the requirements of various tools by taking
process specification (surface finish, length of the job, overall
depth of cut, etc.), material specifications (type of material
used, hardness of the material, shape and size if the material,
etc.) and equipment specifications (speed range, feed range,
depth of cut range, etc.)

4. Loading
It is the process of assigning jobs to several machines such that
there is a load balance among the machines.

5. Scheduling
It is the time phase of loading and determines when and in what
sequence the work will be carried out. This fixes the starting as
well as the finishing time for each job.

ACTION PHASE

Action phase has the major step of dispatching. Dispatching is the transition
from planning phase to action phase. In this phase, the worker is ordered to start
manufacturing the product.

The tasks included in dispatching are:

1. Job order
The job order number is the key item which is to be mentioned in all
other reports/orders. Job order is the official authorization to the shop
floor to start manufacturing the produt.

2. Stores issue order

It gives instruction to stores to issue materials for manufacturing the
product as per product specifications.

3. Tool order
It instructs the tool room to issue necessary tools as per tooling
requirements of manufacturing the product.

4. Time ticket
It is a card which is designed to note down the actual time taken at
various processes.

5. Inspection order
It instructs the inspection wing for timely testing and inspection so that
the amount of rework is minimized.

6. Move order
Proper instruction is given to the materials handling facilities for major
movements of materials/subassemblies.
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CONTROL PHASE

The control phase has the following two major modules:

1. Progress reporting
In progress reporting, the data regarding what is happening with the job
is collected. It helps to make comparison with the present level of
performance.
The various data collected pertain to materials rejection, process
variations, equipment failures, operator efficiency, operator
absenteeism, tool life, etc. These data are analyzed for variance analysis
which would help to identify critical areas that deserve immediate
attention for corrective actions.

2. Corrective action
The tasks under corrective actions primarily make provisions for an
unexpected event. Some examples are:
- Creating schedule flexibility
Due to machine breakdowns, labor absenteeism, poor
materiasl, too much rejections
- Schedule modifications
Due to machine breakdowns, labor absenteeism, poor
materials, too much rejections
- Capacity modifications
Due to changes in demands product mix may be
reviewed and revised.
- Make or buy decisions
- Expediting the work
Means taking action if the progress reporting indicates
deviations from the originally set targets.
- Pre-planning
Becomes essential if expediting fails to bring the
deviated plan to its right path.

FUNCTIONS OF PRODUCTION PLANNING AND CONTROL

1. Pre-planning function
2. Planning function
3. Control function

PRE-PLANNING FUNCTION:

This stage is concerned with

1. Product design and development- new products and development

2. Process design
3. Flow design – layout design
4. Forecasted demand

PLANNING FUNCTION:

This stage starts once the task to be accomplished is specified:

1. Analysis of the four M’s: Machines, Methods, Materials and Manpower

2. Process planning: Routing
3. Scheduling
4. Estimating
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Standardization, simplification of products and processes are given due consideration.

CONTROL FUNCTION:

Control phase is effected by:

1. Dispatching
2. Inspection
3. Expediting materials control
4. Analysis of work-in-process
5. Evaluation
Corrective actions are taken through a feedback from analysis.

PARAMETERS FOR PPC

1. Materials
Raw materials, finished parts and bought out components should be made available in
required quantities and at required time to ensure the correct start and end for each
operation resulting in uninterrupted production.
Functions includes:
- Specifications of materials as to quality and quantity
- Delivery dates
- Variety reduction (standardization) procurement
- Make or buy decisions

2. Machines and equipment

This function is related with the detailed analysis of available production facilities,
equipment downtime, maintenance policy procedure and schedules. Concerned with
economy of jigs and fixtures, equipment availability.
Duties include
- Analysis of facilities
- Making their availability
- Minimize down time because of breakdowns

3. Methods
This function is concerned with the analysis of alternatives and selection of the best
method with due consideration to constraints imposed.
Functions are
- Developing specifications for processes
- Determination of sequence of operations.

4. Process planning (Routing)

It is concerned with the selection of path or route which the raw material should follow
to get transformed into finished product.
Duties include
- Fixation of path of travel giving due consideration to layout
- Breaking down of operations to define each operation in
detail
- Deciding the set up time and process time for each
operation

5. Estimating
Once the overall method and sequence of operations is fixed and process sheet for each
operation is available, then operations time are estimated.
This function is carried out using extensive analysis of operations along with methods
and routing and a standard time for operation using work measurement technique.
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6. Loading and scheduling

Scheduling is concerned with preparation of machine loads and fixation of starting and
completion dates for each of the operations. Machines have to be loaded according to
their capability of performing the given task and according to their capacity.
Duties are:
- Loading the machines as per their capability and capacity
- Determining the start and completion times for each
operations
- To coordinate with sales department regarding delivery
schedules.

7. Dispatching
This is the execution phase of planning. It is the process of setting production activities
in motion through release of orders and instructions.
Functions are
- To assign definite work to definite machines, work centers
and men
- To issue required materials from store
- To issue jigs, fixtures and make them available at correct
point of use.
- Release necessary work orders, time tickets, etc., to
authorized timely start of operations.
- To record start and finish time of each job on each machine
or by each man.

8. Expediting
This is the control tool that keeps a close observation on the progress of the work. It is a
logical step after dispatching which is called “follow up”. It coordinates extensively to
execute the production plan.
Progressing functions can be divided into three parts:
1. Follow up of materials
2. Follow up of work-in-process
3. Follow up of assembly

Duties are:
- Identification of bottlenecks and delays and interruptions
because of which the production schedule may be
disrupted.
- To devise action plans (remedies) for correcting the errors.
- To see that production rate is in line with schedule.

9. Inspection
It is a major control tool. Though the aspects of quality control are separate function,
this is of very much importance to PPC both for the execution of the current plans and
its scope for future planning.

10. Evaluation
This stage is crucial to the improvement of productive efficiency. A thorough analysis of
all the factors influencing the production planning and control helps to identify the weak
spots and the corrective action with respect to pre-planning and planning will be
effected by a feedback.
The success of this step depends on the communication, data and information gathering
and analysis.
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OPERATIONS PLANNING AND SCHEDULING SYSTEMS

Operations planning and scheduling systems concern with the volume and timing of
outputs, the utilization of operations capacity at desired levels for competitive effectiveness.
These systems must fit together activities at various levels, from top to bottom, in support of
one another.

Components of Operations Planning and Scheduling Systems

1. The Business Plan

The business plan is a statement of the organization’s overall level of business activity
for the coming six to eighteen months, usually expressed in terms of outputs (in volume
of sales) for its various product groups, a set of individual products that share or
consume common blocks of capacity in the manufacturing process.
It also specifies the overall inventory and backlog levels that will be maintained during
the planning period.
The business plan is an agreement between all functional areas- finance, production,
marketing, engineering, research and development, about the level of activity and the
products they are committed to support.

2. Aggregate Production (Output) Planning

The process of determining output levels of product groups over the coming six to
eighteen months on a weekly or monthly basis. It identifies the overall level of outputs
in support of the business plan.
The plan recognizes the division’s existing fixed capacity and the company’s overall
policies for maintaining inventories and backlogs, employment stability, and
subcontracting.

3. Aggregate Capacity Planning

It addresses the supply side of the firm’s ability to meet the aggregate output plans.
Capacity and output must be in balance.
A capacity plan translates an output plan into input terms, approximating how much of
the division’s capacity will be consumed.
Although these basic capacities are fixed, management can manipulate the short-term
capacities by the ways they deploy their work force, by subcontracting, or by using
multiple work shifts to adjust the timing of overall outputs.

4. Master Production Scheduling (MPS)

MPS is a schedule showing week by week how many of each product must be produced
according to customer orders and demand forecasts.
Its purpose is to meet the demand for individual products in the product group.
MPS is an important link between marketing and production.
It shows when incoming sales orders can be scheduled into production and when each
shipment can be scheduled for delivery.
It also takes into account current backlogs so that production and delivery schedules are
realistic.

5. Resource Requirement Planning

It is the process of testing the feasibility of master production schedule in terms of
capacity.
This step ensures that a proposed MPS does not inadvertently overload any key
department, work center, or machine making the MPS unworkable.
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6. Material Requirement Planning (MRP)

It is a system of planning and scheduling the time for releasing materials and receiving
materials that enable the master production schedule to be implemented.
MRP provides information such as due dates for components that are subsequently
used for shop floor control. This enables managers to estimate the detailed
requirements for each work centers.

7. Capacity Requirement Planning

Capacity requirement planning is an iterative process of modifying the MPS or planned
resources to make capacity consistent with the production schedule.

8. Shop Floor Control

Shop floor control involves the activities that execute and control shop operations
namely loading, sequencing, detailed scheduling and expediting jobs in production.
It coordinates the weekly and daily activities that get jobs done.

9. Loading
Loading is assigning or allocating new job orders to the work centers, establishing how
much of a load each work center must carry during the coming planning period.

10. Sequencing
This stage establishes the priorities for jobs in the queues (waiting lines) at the work
centers.

11. Detailed Scheduling

Detailed scheduling determines start times, finish times and work assignments for all
jobs at each work center.
By estimating how long each job will take to complete and when it is due, schedulers
can establish start and finish dates and develop the detailed schedules.

12. Expediting
It is the process of tracking a job’s progress and taking special actions to move it through
the facility.
Manufacturing or service operations disruptions- (equipment breakdowns, unavailable
materials, last-minute priority changes) require managers to deviate from plans and
schedules and expedite an important job on a special handling basis.

13. Input/Output Control

Output plans and schedules call for certain levels of capacity at a work center, but actual
utilization may differ from what was planned.
Actual versus planned utilization of the work center’s capacity can be monitored by
using input-output reports and, when discrepancies exist, adjustments can be made.
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AGGREGATE PLANNING

It is an intermediate term planning decision (3 months to one year).

Aggregate planning seeks the best combination to minimize costs.

Aggregate planning strategies:

1. Vary the size or the workforce
Output is controlled by hiring or laying off workers in proportion to changes in
demand.

2. Vary the hours worked

Maintain stable workforce, but permit idle time when there is a slack and permit
overtime (OT) when demand is peak.

3. Vary inventory levels

Demand fluctuations can be met by large amount of inventory.

4. Subcontract
Upward shift in demand from low level. Constant production rates can be met
by using subcontractors to provide extra capacity.

Aggregate Planning Guidelines

1. Determine corporate policy regarding controllable variables.
2. Use a good forecast as a basis for planning.
3. Plan in proper units of capacity.
4. Maintain the stable workforce.
5. Maintain needed control over inventories.
6. Maintain flexibility to change.
7. Respond to demand in a controlled manner.
8. Evaluate planning on a regular base.

MASTER PRODUCTION SCHEDULE (MPS)

It expresses the overall plans in terms of specific end items or models that can be
assigned priorities. It is useful to plan for the material and capacity requirements.
Time interval used in master scheduling depends upon the type, volume and component
lead times of the products being produced.

Functions of MPS
1. To translate aggregate plants into specific end items.
2. Evaluate alternative schedules./
3. Generate material requirement.
4. Generate capacity requirements.
5. Facilitate information processing.
6. Effective utilization of capacity.

MATERIAL REQUIREMENT PLANNING (MRP)

It is a technique for determining the quantity and timing for the acquisition of
dependent demand items needed to satisfy master production schedule requirements.

Objectives of MRP
1. Inventory reduction
2. Reduction in manufacturing and delivery lead times.
3. Realistic delivery commitments
4. Increased efficiency
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MRP SYSTEM
Inputs to MRP system
1. A master production schedule
It is a series of time phased quantities for each item that a company
produces, indicating how many are to be produced and when.

2. Inventory status file

Every inventory item being planned must have an inventory status file
which gives complete and up to date information on the on-hand
quantities, gross requirements, scheduled receipts and planned order
releases for an item.

3. Bill of materials
BOM identifies how each end product is manufactured, specifying all
subcomponent items, their sequence build up, their quantity in each
finished unit and the work centers performing the build up sequence.

Using these three information sources, the MRP processing logic (computer program)
provides three kinds of information (output) for each product component:
1. Order release requirements
2. Order rescheduling
3. Planned orders.

CAPACITY PLANNING

The objective of capacity management is to match the level of operations to the level of
demand.
Capacity planning is to be carried out keeping in mind future growth and expansion
plans, market trends, sales forecasting, etc.
Capacity is the rate of productive capability of a facility. Capacity is usually expressed as
volume of output per period of time.

Production managers are more concerned about the capacity for the following reasons:

1. Sufficient capacity is required to meet the customers demand in time.

2. Capacity affects the cost efficiency of operations.
3. Capacity affects the scheduling system.
4. Capacity creation requires an investment.

Measurement of Capacity Planning

1. Design capacity
It is the planned or engineered rate of output of goods or services under normal
or full scale operating conditions.

2. System Capacity
It is the maximum output of the specific product or product mix the system of
workers and machines is capable of producing as an integrated whole.

3. Licensed Capacity
Capacity licensed by the various regulatory agencies or government authorities.
This is the limitation on the output exercised by the government.

4. Installed capacity
The capacity provided at the time of installation of the plant .
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5. Rated capacity
Capacity based on the highest production rate established by actual trials is
referred to as rated capacity.

Process of Capacity Planning

A. Long-term capacity strategies

1. Multiple products
2. Phasing in capacity
3. Phasing out capacity

B. Short-term capacity strategies

1. Inventories
2. Backlog
3. Employment level (hiring or firing)
4. Employee training
5. Subcontracting
6. Process design

ROUTING

Routing may be defined as the selection of path which each part of the product will
follow while being transformed from raw materials to finished products. Path of the product will
also give sequence of operation to be adopted while being manufactured.

Steps:
1. Type of work to be done on product or its parts.
2. Operation required to do the work.
3. Sequence of operation required.
4. Where the work will be done
5. Proper classification about the personnel required and the machine for doing the
work.

Techniques for Routing

Routing should be the best and cheapest to have the lowest cost of the final product.

The various routing techniques:

1. Route card
This card accompanies with the job all throughout all operations.
Indicates the material used during manufacturing and their progress
from one operation to another. Details of scrap and good work
produced are also recorded.

2. Work sheet
a. Specifications to be followed while manufacturing.
b. Instructions regarding routing of every part with identification
number of machines and work place of operation.

3. Route sheet
Deals with specific production order.
a. Number and other identification or order.
b. Symbol and identification of part.
c. Number of pieces to be made.
d. Number of pieces in each lot- if put through in lots.
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e. Operation data which includes

1). List of operation on the part
2). Department to be used for each operation
3). Machine to be used for each operation.
4). Fixed sequence of operation, if any.

f. Rate at which job must be completed, determined from the

operation sheet.

4. Move order
Move order is prepared for each operation as per operation sheet. It is
returned to planning office when the operation is completed.

SCHEDULING

Scheduling can be defined as “prescribing of when and where each operation necessary
to manufacture the product is to be performed.” It is also defined as “establishing of times at
which to begin and complete each event or operation comprising a procedure”.

Principles of Scheduling
1. The principle of optimum task size
2. The principle of optimum production plan
3. The principle of optimum sequence

Inputs to Scheduling
1. Performance standards
2. Units in which loading and scheduling is to be expressed.
3. Effective capacity of the work center
4. Demand pattern and extent of flexibility to be provided for rush orders.
5. Overlapping of operations
6. Individual job schedules

Scheduling Strategies
1. Detailed scheduling
2. Cumulative scheduling
3. Cumulative detailed
4. Priority decision rules

Types of Scheduling
1. Forward scheduling
2. Backward scheduling

Scheduling Methodology
1. Charts and boards
2. Priority decision rules
3. Mathematical programming methods

Gantt Charts and Boards:

a). scheduling or progress charts, which depictys the sequential schedule
b). Load charts, which show the work assigned to a group of workers or
machines
c). Record a chart, which are used to record the actual operating times and
delays of workers and machines.
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Priority Decision Rules

Symbol Priority rule

FCFS First come, first served
EDO Earliest due date
LS Least slack (that is, time due less
processing time)
SPT Shortest processing time
LPT Longest processing time
PCO Preferred customer order
RS Random selection

Mathematical Programming Methods

1. Linear programming method

Mathematical technique for optimum allocation of scarce resources.

2. PERT/CPM network model

PERT- Program Evaluation and Review Technique
CPM- Critical Path Method

PERT is based on what is called a Network Pla. A flow chart –the

network- is used to show how the individual parts of a project ( the
activities and the starting and completion events) depend on one
another and which tasks must be finished before others can be started.

CPM goes beyond PERT as it used cost data to assess the financial
effects of setting up crash programs in the network’s critical path
segments to ensure completion on schedule.