The document discusses various production planning techniques used in operations management, including production planning, aggregate production planning, master production scheduling, material requirements planning (MRP), capacity requirements planning (CRP), and distribution requirements planning (DRP). It provides details on the objectives, processes, inputs, and methodologies involved in each of these techniques. The key goal of these techniques is to optimize production levels and resource utilization to meet fluctuating demand over time in the most efficient and cost-effective manner.

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Presented By
Dr. Niraj Chaudahri
Assistant Professor,
Sanjivani College of Engineering ,
Dept.of MBA,
Kopargaon
1
Sanjivani College of Engineering, Kopargaon
Department of MBA
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203- Operation Management
Production Planning

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Production Planning

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Objective of Production Planning

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Steps in Production Planning
• Estimate product demand -- This will a give a rough
outline of how many products should be produced in a
given time period. This estimate is generated by
combining analysis of historical production trends with
new potentially relevant trends in the market.
• Production options -- This involves accounting for the
resources on hand and exploring ways to most
effectively use them based on projected demand
estimates.
• Choose the most efficient option -- The use of
resources that is the least costly and most time-efficient
should be chosen.

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Steps in Production Planning
• Monitoring and evaluation -- As the plan is carried
out, companies monitor what is happening
compared to what should be happening according to
the plan, and evaluate how well those two match up.
• Adjust plan -- This involves altering the plan so that
future production plans meet customer goals more
efficiently and are more successful in their execution

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Aggregate Production Planning
• Aggregate production planning is concerned with the
determination of production, inventory, and work
force levels to meet fluctuating demand
requirements over a planning horizon that ranges
from six months to one year. Typically the planning
horizon incorporate the next seasonal peak in
demand. The planning horizon is often divided into
periods. For example, a one year planning horizon
may be composed of six one-month periods plus two
three-month periods.

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Aggregate Planning Process

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Need of Aggregate Production Planning
• Demand fluctuations
• Capacity fluctuations
• Difficulty level in altering production rates
• Benefits of multi- period planning

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Aggregate Production Planning Functions

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Master Production Schedule (MPS)
• Master Production Scheduling (MPS) is a
process in manufacturing to decide which
products to produce and how much quantity
is required to meet the requirement in a
given interval of time
• Bill of Materials (BOM) and Material
Requirements Planning (MRP) are the two
crucial aspects of the Master Production
Schedule.

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Master Production Schedule (MPS)
• Master Production Schedule is generally
regarded as the heart of manufacturing
Enterprise Resource Planning because it
correlated manufacturing and planning.
• The MPS management system has been
extensively used as a useful tool for the most
precise calculation of resources required to
fulfill production plans.

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Master Production Schedule

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Input of Master Production Schedule

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Methodologies for Master Production Schedule (MPS)

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Material requirements planning (MRP)
• Material requirements planning is a computer-based
inventory management system designed to improve
productivity for businesses.
• Companies use material requirements-
planning systems to estimate quantities of raw
materials and schedule their utility.
• MRP works backward from a production plan for
finished goods to develop inventory requirements for
components and raw materials

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Material requirements planning (MRP)

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Material requirements planning (MRP)
• MRP is designed to answer three questions:
1. What is needed?
2. How much is needed?
3. When is it needed?
• MRP works backward from a production plan for
finished goods, which is converted into a list of
requirements for the subassemblies, component
parts, and raw materials needed to produce the final
product within the established schedule.

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Steps of Material Requirements Planning (MRP)
1. Estimating demand and the materials
required to meet it.
2. Check demand against inventory and
allocate resources.
3. Production scheduling.
4. Monitor the process.

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Capacity Requirements Planning (CRP)

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Capacity requirements planning (CRP)
• Capacity requirements planning (CRP) is the process
of discerning a firm's available capacity and whether
it can meet its production goals. The CRP method
first assesses the company's planned manufacturing
schedule. Then, capacity requirements planning
weighs this schedule against the company's actual
production capabilities to see if the current capacity
can successfully meet the existing production
schedule.

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Capacity requirements planning (CRP)
• Capacity requirements planning (CRP) is the process
of discerning a firm's production capacity and
whether it can meet its production goals.
• Conducting a CRP analysis is a critical management
tool, as it helps a company to know if it can meet the
demand for its product.
• Capacity requirements planning is also the name of
an enterprise application—software that manages
the CRP process for a company.

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Distribution Requirements Planning (DRP)
• Distribution requirements planning (DRP) is a
systematic process to make the delivery of goods
more efficient by determining which goods, in what
quantities, and at what location are required to meet
anticipated demand. The goal is to minimize
shortages and reduce the costs of ordering,
transporting, and holding goods.

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Distribution Requirements Planning (DRP)

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Elements of Distribution Requirements Planning (DRP)
• Forecast demands
• Current inventory levels
• Target safety stock
• Recommended replenishment quantities
• Replenishment lead times

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Manufacturing Resource Planning (MRP II)
• Manufacturing Resource Planning is a computer-
based integrated information system that can devise
the most precise and accurate production schedule
by leveraging the real-time data to create a harmony
between the arrival of raw material components
with the machine and labor availability.
• MRP II is software that can effectively address all the
requirements of manufacturers. For the sake of
maintaining backward compatibility, it contains all
the critical features of MRP I

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Importance of Manufacture Resource Planning (MRP II)
Automated software of MRP II allows the user
to,
• Acquire valuable details about the right time
of ordering.
• How much quantity of raw material he needs
to order from the suppliers.
• Generate orders for raw material input. The
periodic arrangement of all the orders

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Difference between MRP I and MRP II