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Production planning & control & Forecasting


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Production planning & control & Forecasting in Manufacturing firms

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Production planning & control & Forecasting

  2. 2. CONTENTS ARE…………  Introduction for planning & control. o Production planning o Objectives of production planning o Production control o Objectives of production control o Production planning and control o Characteristics of production planning and control o Characteristics of production planning and control o Need/importance of production planning and control o Limitations of production planning and control  Techniques or Elements of Production Planning and Control
  3. 3. PRODUCTION PLANNING Meaning:- Production planning involves management decisions on the resources that the firm will require for its manufacturing operations and the selection of these resources to produce the desired goods at the appropriate time and at the least possible cost. Definition:- "The planning of industrial operations involves four considerations, namely, what work shall be done, how the work shall be done and lastly, when the work shall be done - kimball and kimball
  4. 4. OBJECTIVES OF PRODUCTION PLANNING 1.To determine the requirements of men, material and equipment. 2.Arranging production schedules according to the needs of marketing demand. 3.Arranging various inputs at a right time and in right quantity. 4.Making most economical use of various inputs. 5.To achieve coordination among various departments relating to production. 6.To make all arrangements to remove possible obstacles in the way of smooth production. 7.To achieve economy in production cost and time. 8.To operate plant at planned level of efficiency. 9.Making efforts to achieve production targets in time. 10.Providing for adequate stocks for meeting contingencies.
  5. 5. PRODUCTION CONTROL Meaning:- Production control guides and directs flow of production so that products are manufactured in a best way and conform to a planned schedule and are of the right quality.Control facilitates the task of manufacturing and see that every theme goes as per the plan. Definition:- "Production control refers to ensuring that all which occurs is in accordance with the rules established and instructions issued.“ -HENRY FAYOL
  6. 6. OBJECTIVES OF PRODUCTION CONTROL 1.To implement production plans by issuing orders to those who are supposed to implement them. 2.To ensure that various inputs like men, machine, materials etc. are available in the required quantity and quality. 3.Making efforts to adhere to the production schedules. 4.To ensure that goods are produced according to the prescribed standards and quality norms. 5.To undertake the best and most economic production policies. 6.To introduce a proper system of quality control. 7.To ensure rapid turnover of production and minimizing of inventories of raw materials and finished products.
  7. 7. PRODUCTION PLANNING AND CONTROL Meaning:- Production planning and control is concerned with directing production along the lines set by the planning department. Definition:- "Production planning and control is the co-ordination of series of functions according to a plan which will economically utilize the plant facilities and regulate the orderly movement of goods through the entire manufacturing cycle from the procurement of all materials to the shipping of finished goods at a predetermined rate." -CHARLES A. KOEPKE
  8. 8. CHARACTERISTICS OF PRODUCTION PLANNING AND CONTROL 1. It is the planning and control of manufacturing process in an enterprise. 2.Questions like-what is to be manufactured? when it is tobe manufactured? etc. 3.All types of inputs like materials, men, machines are efficiently used for maintaining efficiency of manufacturing process. 4.Various factors of production are integrated to use them efficiently and economically. 5.The manufacturing process is organized in such a way that none of the work centers is either overworked or under worked. 6.The work is regulated from the first stage of procuring raw materials to the stage of finished goods.
  9. 9. Need/Importance of Production Planning and Control  For Increasing Production  For Co-coordinating Plant Activity  For Cost Control  For Rationalisation of Production Activities  Consumers
  10. 10. Limitations of production planning and control 1. Based on Assumptions: - Production planning and control is based on certain assumptions. In case the assumptions prove correct then the planning and control will go smoothly, otherwise it may not. The assumptions generally are about plant capacity, orders, availability of raw materials and power etc. if these assumptions go wrong then the process of planning and control will go weak. 2.Rigidity: - Under production planning and control the things are pre- decided and fixed. There is rigidity in the behavior of employees and it may not help in smoothening the flow of work. 3.Difficult for Small Firms: - This process is time consuming and small firms may not be able to make use of production planning and control. 4.Costly: - It is a costly device as its implementation requires separate persons to perform the functions of planning, dispatching, expediting etc. Small firms cannot use the services of specialists due to cost factor.
  11. 11. 5. Dependence on External Factors: - The external factors sometimes reduce the effectiveness of production planning and control. The factors like natural calamities, change in technology, change in fashion, breakdown of power, government controls etc. limit the use of production planning and control. Techniques or Elements of Production Planning and Control The following are the techniques of production planning and control: A. Planning B.Routing C. Scheduling D. Dispatching E. Follow-up and Expediting F. Inspection
  12. 12. Techniques or Elements of Production Planning and Control
  13. 13. Planning  It is the first element of production planning and control. Planning is given an important role in every business. A separate department is set up for this work. Planning is deciding in advance what is to done in future. Control devices are also decided in advance so that all activities are carried on properly. An organizational set up is created to prepare plans and policies. Various charts, manuals and production budgets are also prepared. If production planning is defective then control will also be defective. Planning provides a sound base for control. Routing  It is determining the exact path or routing which will be followed in production. The stages from which goods are to pass are decided after a proper thought. Routing may be compared to a train journey for reaching a particular place. If a passenger is to reach Delhi from Ambala Cantt then he has the option of going via Panipat and via Saharanpur. Both the routes will take him to Delhi. The question is – which route will be economical in time and money? The passenger will decide the route only after taking into consideration various factors affecting his journey. Similar is the case with production routing. It is the selection of the path from where each unit has to pass before reaching the final stage. The path must have the best and cheapest sequence of operations.
  14. 14. Routing Procedure:-  Deciding what part to be made or purchased  Determining Materials Required  Determining Manufacturing Operations and Sequences  Determining of Lot Sizes  Determining of Scrap Factors  Analysis of Cost of the Product  Preparation of Production Control Forms
  15. 15. SCHEDULING Scheduling is the determining of time and date when each operation is to be commenced and completed. it includes the scheduling of materials, machines and all other requisites of production.
  16. 16. Types of schedules  Master scheduling  Operation scheduling  Detail operation scheduling
  17. 17. DESPATCHING  The term dispatching refers to the process of actually ordering the work to be done. It involves putting the plan into effect by issuing orders. it is concerned with starting the process and operation on the basis of route sheets and schedule charts.  "Dispatches put production in effect by releasing and guiding manufacturing order in the sequence previously determined by route sheets and schedule.”
  18. 18. PROCEDURE:  1.Moving of materials from process to process.  2.Assigning of work to machines.  3.Issuing of tools to production departments.  4.Issuing of job orders.  5.Recording of time taken.  6.Ensuring necessary changes.  7.Having proper liaison with routing
  19. 19. IMPORTANT DOCUMENTS 1.Material requisitions order 3.control sheet 4.Internal delivery note 5.Tool and gauge ticket
  20. 20. FOLLOW UP AND EXPDITING Follow up or expediting is that branch of production control procedure which regulates the progress of materials and part through the production process". PROCEDURE: 1.Progress should be checked 2.Causes of differences should be ascertained 3.Helping in removing the deviations 4.Report with departments supplying materials.
  21. 21. INSPECTION  Inspection is also an important function of control. the purpose of inspection is to see whether the products manufactured are of requisite quality or not. It is carried on at various levels of production process so that pre-determined standards of quality are achieved. Inspection is undertaken both of products and inputs.
  22. 22. CONTENTS ARE………… o Introduction for Forecasting o The strategic role of forecasting o Components of forecasting demand o Time series methods Forecasting
  23. 23. FORECASTING  Forecasting is essential for number of planning decisions and often provides a valuable input on which operations of the business enterprises depend.  Forecasting is a process of estimating a future event by casting forward past data. The past data are systematically combined in a predetermined way to obtain the estimate of the future.  Prediction is a process of estimating a future event based on subjective considerations other than just past data; these subjective considerations need not be combined in a predetermined way.
  24. 24. THE STRATEGIC ROLE OF FORECASTING  Supply chain Management:  Quality Management:  Strategic planning:
  25. 25. COMPONENTS OF FORECASTING DEMAND  Time frame  Short range forecasts  Long range forecasts  Demand Behaviour
  26. 26.  Forecasting Methods  Quantitative Methods  Time series  Regression  Qualitative Methods  Delphi method
  27. 27. Forecasting process:
  28. 28. TIME SERIES METHODS  Moving average  Simple moving average  Weighted moving average  Exponential smoothing Method  Liner regression method
  29. 29. Simple Moving Average  Month Orders June 50 July 75 August 130 September 110 October 90  The moving average is computed from the demand for orders for the prior three months in the sequence according to the above formula:  =  = 110 orders for November
  30. 30. Month Orders per Month Three-Month Moving Average January 120 - February 90 - March 100 - April 75 103.3 May 110 88.3 June 50 95 July 75 78.3 August 130 78.3 September 110 85 October 90 105 November - 110 0 20 40 60 80 100 120 140 January February March April May June July August September October November Orders per Month Three-Month Moving Average
  31. 31. Weighted Moving Average  The Heartland Produce Company in Example wants to compute a three-month weighted moving average with a weight of 50% for the October data, a weight of 33% for the September data, and a weight of 17% for the August data. These weights reflect the company’s desire to have the most recent data influence the forecast most strongly.  The weighted moving average is computed as  = (0.50)(90) + (0.33)(110) + (0.17)(130)  = 103.4 orders
  32. 32. Exponential Smoothing Method  The company has accumulated the demand data shown in the accompanying table for repair and service calls for the past 12 months, from which it wants to consider exponential smoothing forecasts using smoothing constants (α) equal to 0.30. Month Demand January 37 February 40 March 41 April 37 May 45 June 50 July 43 August 47 September 56 October 52 November 55 December 54
  33. 33.  The forecast for February is = (0.30)(37) + (0.70)(37) = 37 service calls  The forecast for period 3 is computed similarly: = (0.30)(40) + (0.70)(37) = 37.9 service calls Month Demand Forecast(Ft+1) January 37 - February 40 37 March 41 37.9 April 37 38.83 May 45 38.28 June 50 40.29 July 43 43.2 August 47 43.14 September 56 44.3 October 52 47.81 November 55 49.06 December 54 50.84 January - 51.79
  34. 34. 0 10 20 30 40 50 60 Demand Forecast(Ft+1)
  35. 35. Liner regression method x (period) y (demand) xy x2 1 37 37 1 2 40 80 4 3 41 123 9 4 37 148 16 5 45 225 25 6 50 300 36 7 43 301 49 8 47 376 64 9 56 504 81 10 52 520 100 11 55 605 121 12 54 648 144 78 557 3867 650
  36. 36. y = 35.2 + 1.72x  To calculate a forecast for period 13, let x = 13 in the linear regression line:  y = 35.2 + 1.72(13) = 57.56 service cells 0 10 20 30 40 50 60 70 1 2 3 4 5 6 7 8 9 10 11 12 13 y (demand) Linear (y (demand))
  37. 37. ISSUES ON PRODUCTION PLANNING AND CONTROL  Non-availability of materials (due to shortage, etc.) facing one problem while creating process order when we do batch determination system is showing material is not available in quantity this but when we check stock through MMBE it shows there is sufficient stock in unrestricted use , also there is no safety stock , also there is no open reservation for such quantity but at the time of process order system is showing missing part message  Plant, equipment and machine breakdown Equipment Breakdown Machinery Breakdown, boiler and pressure vessels, spoilage of food and specific computer cover are not automatically included under LCA Property Insurance. Coverage for these incidences is available at an additional cost as requested. Machinery Breakdown Breakdown is defined as the actual breaking, seizing or burning out or explosion of any part of the machine whilst the machine is in use arising from either mechanical or electrical defects in the machine causing sudden stoppage, necessitating repair or replacement before further use.
  38. 38.  Optimum utilization of resources The closest reference to the expression "optimal utilization of resources" is "value-for-money". According to this universally-recognized concept, all business processes are characterized by the use of a group of inputs (resources), which are transformed (activities) into outputs (results). The optimization of resources is based on three characteristics: economy, effectiveness and efficiency. The economy of resources consists of acquiring resources of the required quality, at a reasonable cost and in a timely manner. The effectiveness of resources is aimed at ensuring the adequacy of resources relative to business needs and their appropriate use. The efficiency of resources is measured by the attainment of an organization’s business objectives.  Working capital capacity Working capital is the money needed to fund the normal, day-to-day operations of your business. It ensures you have enough cash to pay your debts and expenses as they fall due, particularly during your start-up period. Very few new businesses are profitable as soon as they open their doors. It takes time to reach your breakeven point and start making a profit.
  39. 39.  Ensure the quality of products In the manufacturing business, organization wants to make sure that their produce a high level of quality in everything that they make! There are many different ways to ensure the quality of products, which range from the physical composition components of the product to the actual product performance itself. Don't get overwhelmed when organization start to think about ensuring quality control - there are a couple of different ways that organization can ensure the quality of products.  How to strike the balance between demand and supply of products  Changes in demand and rush orders
  40. 40.  Absenteeism of workers Employee absenteeism is one of the most common workplace problems facing employers in today’s workplace. Legitimate illnesses still account for the majority of employee absences, but some studies have shown that less than one- third of absences from the workplace are related to poor health. Most employers offer their workers vacation, sick leave, paid time off, or other kinds of paid and unpaid leave  Lack of coordination and communication between various functional Coordination is a managerial function in which different activities of the business are properly adjusted and interlinked. Managers should strengthen communication across all facets of the organization to increase the level of integration between each moving part. If there is a lack of coordination and communication between various functional areas of business, there is a risk that responsibility will become dispersed and tasks will be left unclaimed. Organizing accountability for every task helps to ensure that efforts are tangibly coordinated and communication between various functional areas of business.
  41. 41. References  Operations Management by Russell & Taylor 7th edition: Pages 495- 517  Production and operation management by Dr.K.C.Arora: Pages 393-407  Production & operations management , SNCHARY 2nd edition  Operations Management by R. Dan Reid &R. Nada. Sanders  Operations Management for competitive advantage by Chase – Jacobs - Aquilano 10th edition    and-control/oclc/744532 
  42. 42. Thank you..