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Msom 503 - Lecture 1

The document discusses production planning and inventory management. It covers topics such as strategic planning, aggregate planning, inventory cost structures, demand forecasting, just-in-time systems, and planning and control systems. Production planning aims to optimize efficiency and resources to satisfy customer demand. It involves forecasting demand, aggregate planning of products and quantities, material requirements planning, and sequencing and scheduling of machine processes and timelines. Capacity planning identifies necessary resources to support production goals. A carefully developed production plan allows companies to minimize costs, maximize profits and customer service, and optimize plant utilization and workforce levels.

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28 views18 pages

Msom 503 - Lecture 1

The document discusses production planning and inventory management. It covers topics such as strategic planning, aggregate planning, inventory cost structures, demand forecasting, just-in-time systems, and planning and control systems. Production planning aims to optimize efficiency and resources to satisfy customer demand. It involves forecasting demand, aggregate planning of products and quantities, material requirements planning, and sequencing and scheduling of machine processes and timelines. Capacity planning identifies necessary resources to support production goals. A carefully developed production plan allows companies to minimize costs, maximize profits and customer service, and optimize plant utilization and workforce levels.

Uploaded by

tennytace
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 18

PRODUCTION & INVENTORY

MANAGEMENT

Dr I Madanhire
0712 453 451
[email protected]
Course content

1.Strategic planning
2.Aggregate planning
3.Inventory management
4.Inventory cost structures
5.Demand behavior
6.Just-in-time – JIT
7.Planning and Control Systems

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WHAT IS PRODUCTION PLANNING?
Production planning is a process used by
manufacturing companies to optimize the
efficiency of their resources and processes.

To achieve smooth and efficient production


operation. Sales and marketng input is
required

All good plans have an exit strategy


3
Production Planning Purpose
Effectively utilize limited resources in the production
of goods so as to satisfy customer demands and
create a profit for investors.

Resources include the production facilities,


machines, labor, information and materials.

Constraints include the availability of resources,


delivery times for the products, and management
policies.

4
Business planning levels
 Strategic planning (5 yrs or more)
- commitment of resources into the future
 Tactical planning (1-3 yrs)
-implementation of strategy (resources, obstacles,
review alternatives).
 Operational planning (1-12 mnths)
- more detailed level strategic/tactical level with
specific plans

5
Production Planning Main Functions

Forecasting (based on projected sales)

Aggregate planning (product items & qty)

Materials requirement planning (inventory mgt)

Sequencing and scheduling (m/c process, time


scale)
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Forecasting
 Objective: predict demand for
planning purposes.

 Laws of Forecasting:
 1. Forecasts are always wrong!
 2. Forecasts always change!
 3. The further into the future, the
less reliable the forecast will be!

7
Aggregate Planning
 Objective: Generate a long-term
production plan that establishes a
rough product mix, anticipates
bottlenecks, and is consistent with
capacity and workforce plans.

Production Planning 8
Production Planning 9
Material requirement planning
 Objective: Determine all purchase
and production components needed
to satisfy the aggregate/disaggregate
plan.
 Issues:
 Bill of Materials: Determines
components, quantities and lead times.
 Inventory Management: Must be
coordinated with inventory.

10
Sequencing and Scheduling

 Objective: Develop a plan to guide the release


of work into the system and coordination with
needed resources (e.g., machines, staffing,
materials).

 Methods:
 Sequencing:
 Gives order of releases but not times.
 Scheduling:
 Gives detailed release times.

11
CAPACITY PLANNING
It is the process of identifying resources necessary to support the
production planning process

Capacity planning or capacity requirements planning is the function


of establishing, measuring and adjusting limits or levels of
capacity.

Work does not flow through the plant but always gets hung up at
bottlenecks in the system

New production planning simulation would come up with best


alternative production plan that could be implemented with
success
12
The Capacity Planning Decision Hierarchy

13
WHAT IS PRODUCTION PLAN?

 A production plan is the portion of


your intermediate-range business
plan that your manufacturing
operations department is responsible
for developing.

14
Why is it important to have a
carefully developed production plan?

 Firms need to have a production


planning strategy to ensure that there
is sufficient capacity to meet the
demand forecast and to determine the
best plan to meet this demand.

15
A carefully developed production plan will
allow your company to meet the following
objectives :

 Minimize costs/maximize profits

 Maximize customer service

 Minimize inventory investment

16
A carefully developed production plan will
allow your company to meet the following
objectives :

 Minimize changes in production rates

   Minimize changes in work-force


levels

   Maximize the utilization of plant and


equipment

Production Planning 17
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