2. Start of Production Planning Forecasting Decision: Based on Sales Estimates. Management Decision : Based on Demand Estimates, product design, etc. Engineering Decision : Based on manufacturing design, process design, materials required, etc. Capacity Decision : Based on existing resources of plant, machinery, tools, Planning the facility, etc. Financial Decision : Based on funds, profitability. Resource availability :Employee workflow, availability of skilled labour, etc.
3. Activities of Production Planning Sales Order or Stock to order Planning, Routing, Scheduling, Dispatching Men Materials Machines
4. Objectives Maximise utilisation of materials and human resources Minimise costs Timely supply of finished goods Effective control of production process
6. Master Production Schedule Bill of Inventory Materials Status Material Requirements Planning System Purchasing Item Master Data Planned Order & Other Reports Materials Planning
7. Bill of Materials Bill of Materials – Parent-child diagram that shows what goes into what. Bike Wheel Assy Frame Assy Wheel Tires Frame Components Hubs & Rims Spokes
10. One BOM for every end product to arrive at cost per product.
11. Types of BOMSingle Level BOM – One level down Indented BOM – More than one level
12. Inventory Classifications Inventory Process stage Demand Type Number & Value Other Maintenance Dependent Operating Raw Material WIP Finished Goods Independent Dependent A Items B Items C Items
13. Output of Materials Planning Planned Production report Planned Purchases report Master Schedule report Sales Forecasts Listing Materials Handling report
14. Operations Planning Forecast Medium term Long term Short term Lead Time Product : What Master Production Schedule Time: When Production Plan Quantity: How Much Sales Order Capacity Constraints
15. How it is done Cost Time Labour Engineering Diagram Operations Planning Standard Process Sheet PERT CPM Route Sheet
16. Output of Operations Planning Least inventory holding. Lead time report. Capacity utilisation report. Effectively Plan purchases, manufacturing and delivery. Know the optimum manufacturing process.
17. Cost PlanningCost OTHER EXPENSES MATERIALS LABOUR INDIRECT DIRECT DIRECT INDIRECT Direct Di INDIRECT DIRECT OVERHEADS DOH SOH FOH AOH
18. Examples of Indirect material At factory level – lubricants, oil, consumables, etc. At office level – Printing & stationery, Brooms, Dusters, etc. At selling & distribution level – Packing materials, printing & stationery, etc.
19. Examples of Indirect labour At factory level – foremen’s salary, works manager’s salary, gate keeper’s salary,etc. At office level – Accountant’s salary, GM’s salary, Manager’s salary, etc. At selling and distribution level – salesmen salaries, Logistics manager salary, etc.
20. Examples of other expenses At factory level – factory rent, factory insurance, lighting, etc. At office level – office rent, office insurance, office lighting, etc. At sales & distribution level – advertising, show room expenses like rent, insurance, etc.
21. Output of Cost Planning Know the value addition at each stage of production. Break up of material, production and overhead costs. Know the direct / indirect costs. Know the cheapest production line. Analyse the profitability of make / buy decision. Know the reason for rise in costs.
22. Outcome of Production Planning Production Data Inspection Data Pay roll Data Cost Data
23. ERP in Production Planning Master Production Schedule BOM (Bill-of-Material) MRP by period report Lead Times MRP by date report (ItemMaster File) MRP Programs Planned orders report Inventory Data Purchase requirements Purchasing data Cost reports Cost Data
