Production Planning and control: Forecasting techniques – causal and time series models, moving average, exponential smoothing, trend and seasonality; aggregate production planning; master production scheduling; materials requirement planning (MRP) and MRP‐II; routing, scheduling and priority dispatching, concept of JIT manufacturing System. Project Management: Project network analysis, CPM, PERT and Project crashing.

1. G L BAJAJ GROUP OF INSTITUTIONS, MATHURA
UNIT 2 : Production Planning and
control, Project Management
By:
Mohammad Mohsin
Assistant Professor
(M.Tech., B.Tech)

2. Syllabus
Production Planning and control: Forecasting techniques – causal and time series models, moving average,
exponential smoothing, trend and seasonality; aggregate production planning; master production scheduling; materials
requirement planning (MRP) and MRP‐II; routing, scheduling and priority dispatching, concept of JIT manufacturing
System.
Project Management: Project network analysis, CPM, PERT and Project crashing.

3. Production, Planning and Control
 Production planning and control may be defined as “the direction and co-ordination of the firm's
material and physical facilities towards the attainment of pre-specified production goals, in
the most efficient and economical manner”.
 Production: Production is the process by which goods or services are created.
 Planning: Planning means preparing the scheme in advance before the actual work is started.
 Control: Control means the supervision of all the relevant operations with the help of control
mechanism that feeds back the progress of the work.

4. Relationship
PRODUCTION
ACTIVITY
CONTROLLER COMPARISON PRODUCTION
PLAN
OBJECTIVES
INPUT
Men
Material
Machines
OUTPUT
Goods and
Services
Planning
Forecast

5. Objectives of PPC:

6. PPC : Process
Production, Planning & Control
Production Planning Production Control
Planning
Routing
Scheduling
Loading Corrective
Inspection
Following Up
Dispatching

7. Comparison
Production Planning Production Control
a preproduction activity.
will be in action when production activity
begins.
decides the operations which are required
for production
regulates and supervises the operations
required for production.
decides who should do work and when
ensures that each department complete its
work on schedule
shows the directions follows these directions
estimates the resources that are required
for production
makes available resources that are required
for prodcution

8. Forecasting
 Forecasting is a statement about the future. It is estimating future event (variable), by casting forward past data.
Past data are systematically combined in predetermined way to obtain the estimate.
Forecasting help managers to:
 Plan the system
 Plan the use of system
Types of Forecasts
 Economic forecasts
 Technological forecasts
 Demand forecasts

9. Forecasting Techniques
 Qualitative methods: These types of forecasting methods are based on judgments, opinions, intuition,
emotions, or personal experiences and are subjective in nature. They do not rely on any rigorous
mathematical computations.
 Quantitative methods: These types of forecasting methods are based on mathematical (quantitative)
models, and are objective in nature. They rely heavily on mathematical computations.

10. Time Series Models
Simple Mean
(Average)
Simple Moving
Average
Weighted Moving
Average
Exponential
Smoothing
Trend Projection Seasonal Indexes
Naïve

11. Naïve Forecast
 Uses last period’s actual value as a forecast.
 Applied to a series that exhibits seasonality or trend
 Example: Forecast the order for the month of November by Naïve approach.
Month Orders Per Month Forecast
Jan 120 -
Feb 90 120
Mar 100 90
Apr 75 100
May 110 75
June 50 110
July 75 50
Aug 130 75
Sept 110 130
Oct 90 110
Nov - 90

12. Simple Moving Average
 Uses an average of all past data as a forecast
 Useful if we can assume that market demands will stay fairly steady over time
 Moving Average = ΣDemand in previous n periods
n
 Where: n = number of periods in the moving average

13. Example
Ques: Compute a three-period moving average forecast given the following demand for cars for the last five periods.
Solution: The forecast for period 6 should be:
Moving Average Forecast = 65 + 90 + 85 = 80 cars
3
If the actual demand in period 6 turns out to be 95, the moving average forecast for the period 7 would be:
Moving Average Forecast = 90 + 85 + 95 = 90 cars
3
Demand Supply
1 70
2 80
3 65
4 90
5 85

14. Weighted Moving Average
 Uses an average of a specified number of the most recent observations, with each observation receiving
a different emphasis (weight).
 Formula used:
Weighted Moving Average = Σ[(Weight for period n) (demand in period n)]
ΣWeights

15. Example
MAD MSE MAPE
Input
Data
Weights Forecast Error Analysis
Period
Actual
Value
w_t w_t-1 w_t-2 Forecast Error
Absolute
error
Squared
error
Absolute
% error
1 10 0.8 0.2 0.1
2 12
3 16
4 13 16.200 -3.200 3.200 10.240 24.61%
5 17 14.800 2.200 2.200 4.840 12.94%
6 19 17.800 1.200 1.200 1.440 6.31%
7 15 19.900 -4.900 4.900 24.010 32.66%
8 20 17.500 2.500 2.500 6.250 12.50%
9 22 20.900 1.100 1.100 1.210 5.00%
10 19 23.100 -4.100 4.100 16.810 21.57%
11 21 21.600 -0.600 0.600 0.360 2.85%
12 19 22.800 -3.800 3.800 14.440 20.00%
13 21.3 2.622 8.844 0.154

16. Exponential Smoothing
 Used to forecast sales when there is no trend in the demand for goods or services.
 Weighted averaging method based on previous forecast plus a percentage (α) of the forecast error.
Next forecast = Previous forecast + α ( Actual – Previous forescast)
Where (Actual – Previous forecast) = forecast error, α is a percentage of the error.

17. Example
Use exponential smoothing model to develop a series of forecast for the following data and compute:
[Actual - Forecast] = Error for each period, Use a smoothing factor of 0.10, Use smoothing factor of 0.40.
Plot the actual data and both sets of forecast on a single graph.
Solution:
Period
Actual
Demand
Forecast
Forecast
Error
Forecast Forecast
Error
1 50
2 52 50 2 50 2
3 48 50.20 -2.2 50.80 -2.8
4 51 49.98 1.02 49.68 1.32
5 50 50.08 -0.80 50.21 -0.21
6 54 50.07 3.93 50.13 3.87
7 52 50.46 1.54 51.68 0.32
8 50 50.61 -0.61 51.81 -1.81
9 55 50.55 4.45 51.09 3.91
10 51 2 52.65 0.35
11 51.20 52.79
= 0.10
= 0.40

18. Trend Line Forecast
Yt = a + bt
*Where:
t = specified number of time periods from t=0
Yt = forecast for period t
a = value of Yt at t=0
b = slope of the line
*The coefficient of line a and b can be computed using two equations:
b = nΣty - Σt Σy OR a = Σy - bΣt
nΣt^2 – (Σt)^2 n
*Where n = number of periods; y = value of the time series

19. Components of Time Series Model
Trend
Component
Seasonal
Component
Irregular
Component
Cyclical
Component

20. Aggregate Production Planning (APP)
Aggregate Production Planning is an operational activity that does an aggregate plan for production process in
advance of 6-18 months to give an idea to the management that what quantity of material and resources are to be
procured and when so that the total cost of oganization is kept minimum of that period.
INPUTS:-
 Information about the resources and facilities available
 Demand and forecats for the period for which the planning has to be done.
 Cost of various alternatives and resources (cost of holding inventory, ordering cos, cost of production)
 Organisational pilicy regrading the usage of all alternatives.

21. Aggregate Production Planning
Production
Planning
External
Capacity
Competition
Raw Material
Supply
Economic
Condition
Demand
Work Force
Capacity
Inventory
Production
EXTERNAL
INTERNAL

22. Why Is Production Planning Necessary
Demand
Fluctuations
Difficulty level in
altering
production rates
Benefits of
multi period
planning
Capacity
Fluctuation

23. Master Production Scheduling (MPS)
 It is is a plan for individual commodities to be produced in each time period such as
production, staffing, inventory, etc.
 It is usually linked to manufacturing where the plan indicates when and how much of
each product will be demanded.
 This plan quantifies significant processes, parts, and other resources in order to
optimize production, to identify bottlenecks, and to anticipate needs and
completed goods.

24. Benefits of MPS
 It provides a solid base to build, improve and track the sales forecast.
 It provides a solid base to determine the desired inventory levels.
 It provides a solid base for calculating the required amount of labor and shifts, as part of the MRP next stage.
 It allows optimizing the installed capacity and balancing the load of the plant.

25. Material Requirement Planning (MRP)
Material Requirements Planning (MRP) is a production planning, scheduling, and inventory control
system used to manage manufacturing processes.
An MRP system objectives:
 Ensure raw materials are available for production and products are available for delivery to customers.
 Maintain the lowest possible material and product levels in store
 Plan manufacturing activities, delivery schedules and purchasing activities.

26. MRP
Material
Requirements
Planning
Purchase
Order
Material
Plan
Work
Orders
Report
OUTPUT
Orders
Forecast
BOM
Inventory
Master
Production
Schedule
INPUT

27. Manufacturing Resource Planning (MRP-II)
Manufacturing Resource Planning is an information system used to plan and control inventories and
capacities in manufacturing companies. MRP II coordinates the sales , purchasing , manufacturing,
finance and engineering functions.
The various modules of MRP II are follows:
 Manufacturing Applications
 Engineering applications.
 Financial Applications.
 Marketing applications

28. Routing
 Routing is determining the exact path which will be followed in production. It is the selection of
the path from where each unit have to pass before reaching the final stage. The stages from
which goods are to pass are decided in this process.
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

29. Scheduling
 Scheduling is the determining of time and date when each operation is to be commenced or
completed. The time and date of manufacturing each component is fixed in such a way that
assembling for final product is not delayed in any way.
TYPES OF SCHEDULES:
 Master Scheduling
 Manufacturing Scheduling
 Detail Operation Scheduling

30. Dispatching
 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.
DISPATCHING PROCEDURES:
 Centralized Dispatching
 Decentralized Dispatching

31. Machine Loading
 Machine load charts show the amount of work (in terms of hours, days, or weeks) that
has been assigned and scheduled to each machine, groups of identical machines or shop
departments.
 Loading provides a complete and correct information about the number of machines
available and their operating characteristics such as speed, capacity, capability etc.
 This information can be used to calculate the difference between work load and actual
capacity and then to determine whether customers order can be completed on due date
or not.

32. Just In Time (JIT) Manufacturing
 Just-in-time (JIT) manufacturing, also known as just-in-time production or the Toyota
Production System (TPS), is a methodology aimed primarily at reducing cycle times of
various activities within production system as well as response times from suppliers and
to customers.
 JIT is seen as a more cost efficient method of maintaining stock levels.
 Its purpose is to minimise the amount of goods you hold at any one time without
compromising the production volumes.

33. contd.

34. Project Management
 Any project involves planning, scheduling and controlling a number of interrelated activities with
use of limited resources, namely, men, machines, materials, money and time.
 It is required that managers must have a dynamic planning and scheduling system to produce the
best possible results and also to react immediately to the changing conditions and make
necessary changes in the plan and schedule.

35. Contd....
Initiate
Plan
Execute
Monitor
and
Control
Close
Project
Management

36. Phases of Project Management
 Planning: Planning involves setting the objectives of the project. Identifying various activities to be
performed and determining the requirement of resources such as men, materials, machines, etc.
 Scheduling: Based on the time estimates, the start and finish times for each activity are worked
out by applying forward and backward pass techniques, critical path is identified, along with the
slack and float for the non-critical paths.
 Controlling: Controlling refers to analyzing and evaluating the actual progress against the plan.
Reallocation of resources, crashing and review of projects with periodical reports are carried out.

37. Project Network Analysis
 Network Analysis is a system which plans the projects by analyzing the project activities.
 Projects are broken down into individual tasks or activities, which are arranged in logical sequence.
 A network diagram is prepared, which presents visually the relationship between all the activities
involved and the cost for different activities.
 Network analysis helps designing, planning, coordinating, controlling and in decision-making in order
to accomplish the project economically in the minimum available time with the limited available
resources.
 The network analysis fulfils the objectives of reducing total time, cost, idle resources, interruptions and
conflicts.

38. Critical Path Method (CPM)
In CPM activities are shown as a network of precedence relationships using activity-on- node network construction
 Single estimate of activity time
 Deterministic activity times
USED IN:
 Production management - for the jobs of repetitive in nature where the activity time estimates can be predicted
with considerable certainty due to the existence of past experience.

39. CPM calculation
 Path : A connected sequence of activities leading from the starting event to the ending event
 Critical Path : The longest path (time); determines the project duration
 Critical Activities : All of the activities that make up the critical path

40. Example
 Draw a network for house construction project. The sequence of activities with their predecessors are given in table
below.
Activity
Starting & Finishing
Event
Description of Activity Predecessor
Time Duration
(days)
A (1,2) Prepare the house plan - 4
B (2,3) Cobstruct the house A 58
C (3,4) Fix the door / windows B 2
D (3,5) Wiring the house B 2
E (4,6) Paint the house C 1
F (5,6) Polish the doors / windows D 1
1 2 3
4
5
6
A
E
C
D
B
F

41. Programme Evaluation Review Technique (PERT)
In PERT activities are shown as a network of precedence relationships using activity-on- arrow network construction
 Multiple time estimates
 Probabilistic activity times
USED IN:
 Project management - for non-repetitive jobs (research and development work), where the time and cost
estimates tend to be quite uncertain. This technique uses probabilistic time estimates.

42. Project Crashing
 The process of shortening the time to complete a project is called crashing and is usually achieved by
putting into service additional labour or machines to one activity or more activities.
 Crashing involves more costs.
 A project manager would like to speed up a project by spending as minimum extra cost as possible.
 Project crashing seeks to minimize the extra cost for completion of a project before the stipulated time.

43. Procedure for Crashing
Step1: Draw the network diagram and mark the Normal time and Crash time.
Step2: Calculate TE and TL for all the activities.
Step3: Find the critical path and other paths.
Step 4: Find the slope for all activities and rank them in ascending order.
Step 5: Establish a tabular column with required field.
Step 6: Select the lowest ranked activity; check whether it is a critical activity. If so,crash
the activity, else go to the next highest ranked activity.
Note: The critical path must remain critical while crashing.
Step 7: Calculate the total cost of project for each crashing
Step 8: Repeat Step 6 until all the activities in the critical path are fully crashed.