Chapter Three

PRODUCTION PLANNING AND CONTROL

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 Overview
 Production planning and control(PPC) is a
function to coordinate all manufacturing and
processing activities in a production system.
 Production planning and control is also a
work process which seeks to allocate human
resources, raw materials, and
equipment/machines in a way that optimizes
efficiency.
 It enables efficiency, coordination, and the
leveraging of production-related data to drive
improvement.

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 Objectives of ppc
 One of the main goals of the production plan and
control is to use all available resources and materials
efficiently. Specifically:
◦ to deliver required goods in required quantities to the customer
in the required delivery schedule to achieve maximum
customer satisfaction
◦ to ensure maximum utilization of the available resources and to
ensure production of quality products
◦ to maintain optimum inventory levels and to maintain
flexibility in manufacturing operation
◦ to coordinate between labor and machines and various
supporting documents
◦ to plan for plant capacities for future requirements and to
remove bottle neck at all stages of production and to solve
problems related to production
◦ to ensure effective cost reduction and cost control

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 Phases of PPC
PLANNING PHASE CONTROL PHASE
ACTION PHASE
ACTIVE
PRIOR
PLANNING
PLANNING
PROGRESS
CORRECTIVE ACTION
PROCESS REPORTING
PLANNING
AND
FORECASTING ROUTING
EXPEDITING
DATA
MATERIAL
PROCESSING
ORDER WRITING CONTROL

REPLANNING
TOOL
CONTROL
PRODUCT DESIGN
DISPATCHING
LOADING

SCHEDULING

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 Activities in ppc
ROUTING

Related to production planning

SEQUENCING

Related to production planning

SCHEDULING

Related to production control

DISPATCHING

Related to production control

FOLLOW UP

Related to production control

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 1. Routing
 Routing is the process of deciding the
path (route) of work and the sequence
of operations.
 In short, routing determines the
productions’
◦ What?
◦ How much?
◦ With which?
◦ How?
◦ Where?

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 Advantages of routing
 Routing gives a very systematic method of
converting raw-materials into finished goods.
 It leads to smooth and efficient work,
optimum utilization of resources, division
of labor, and it results in saving time and
space.
 It ensures a continuous flow of materials
without any backtracking.
 It makes the work easy for the production
engineers and foremen.
 It has a great influence on design of factory's
building and installed machines.

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 Procedure of routing
Product analysis to determine what to manufacture

Product analysis to determine materials required for production

Fix the manufacturing operations and their sequences

Decide the number of units to be manufactured in each lot of
production
Estimate the margin of scrap in each lot of production

Analyse the production cost

Prepare the production control forms for effective routing

Prepare a separate route sheet for each order

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TECHNIQUES OF ROUTING
a) Route card
b) Route sheet
c) Work sheet

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 a) Route card

 Route card always accompanies

with the job throughout all
operations. It indicates
◦ the material used during manufacturing
◦ the progress from one operation to another
◦ the details of scrap and good work produced.

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 b) Route sheet

 It lists the manufacturing operations in

the decided sequence along with the
machines associated with each
operation. It:
indicates the department in which the
operation is to be done and the part will go
for the next operation
consists of the information such as part
name, part number and product number
gives information about the material
specification and cutting tools, jigs, fixtures
and necessary devices for each operation.

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 c) Worksheet

◦ This sheet is made for

manufacturing as well as for
maintenance. It contains:
 Specifications to be followed while
manufacturing.
 Instructions regarding routing of every part
with identification number of machines.

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 2. Sequencing
 Defined as the order in which jobs pass
through machines or work stations for
processing
 The main aim is to find out such sequence
out of the possible sequence that will
complete the work in shortest time
 Sequencing problems becomes tedious as
the number of jobs and machines
increases
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 3. Scheduling
1. Scheduling means setting of starting and
finishing dates for each operation, assembly
and the finished product.
2. It also means to :
◦ fix the amount of work to do.
◦ arrange the different manufacturing operations in
order of priority.
◦ fix the starting and completing, date and time, for each
operation

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 4. Dispatching
 It’s the next step after scheduling
 It means starting the actual production of
a particular work which has been
planned in routing schedule.
 It provides the necessary authority to
start the work.
 It is based on route-sheets and schedule
sheets.

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 Dispatching includes the following:
 Issue of orders, instructions, drawings, etc.
for starting the work.
 Issue of materials, tools, fixtures, etc which
are necessary for actual production.
 Maintaining proper records of the starting
and completing each job on time.
 Moving the work from one process to
another as per the schedule.
 Starting the control procedure.
 Recording the idle time of machines.

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 5. Follow up
 Follow-up or Expediting is the last step in
production planning and control.
 It is a controlling device. It is concerned
with evaluation of the results.
 Follow-up finds out and removes the defects,
delays, limitations, bottlenecks, loopholes,…
etc.
 It measures the actual performance and
compares it to the expected performance.
 It maintains proper records of work, delays
and bottlenecks.

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 Aggregate Planning
 Aggregate planning is essentially a “big-picture”
approach to planning.
◦ Planners usually try to avoid focusing on individual
products or services, rather they focus on a group of similar
products which is called aggregate planning
 The goal of aggregate planning is to achieve a
production plan that will effectively utilize the
organization’s resources to match expected demand.
 Step wise:
◦ Aggregate planning begins with a forecast of aggregate
demand for the intermediate range, followed by
◦ This is followed by a general plan to meet demand
requirements by setting output, employment, and finished-
goods inventory levels or service capacities.

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 Aggregate Planning Procedure
 A general procedure for aggregate planning consists of the
following steps:
1. Determine demand for each period.
2. Determine capacities for each period. (regular time,
overtime, subcontracting)
3. Identify company or departmental policies that are
pertinent (e.g., maintain a safety stock of 5 percent of
demand, maintain a reasonably stable workforce).
4. Determine unit costs for regular time, overtime,
subcontracting, holding inventories back orders, layoffs,
and other relevant costs.
5. Develop alternative plans and compute the cost for each.
6. If satisfactory plans emerge, select the one that best
satisfies objectives. Otherwise, return to step 5.

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 Aggregate Plan Options
 Aggregate planning strategies can pertain to
demand, supply, and capacity options.
◦ Demand-based options include pricing, promotions,
using back orders (delaying order filling), and
creating new demand.
 Demand options are intended to alter demand so that it
matches capacity.
◦ Supply or capacity-based Options include
hiring/laying off workers, overtime/slack time, part-
time or temporary workers, inventories, and
subcontractors.
 Supply or capacity options are intended to alter supply so
that it matches demand.

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 Aggregate Plan Strategies
 Aggregate planners might adopt a number of strategies
to achieve a balance of demand and capacity in
aggregate planning.
 The most common strategies are:
◦ Level strategy plan:
 With the level strategy, production remains at a constant level
in spite of demand variations.
 Level plan with back orders: rate = average demand over the planning
horizon
 Level plan without back orders: rate is set to meet all demand on time
◦ Chase strategy plan:
 Under the chase strategy, production is varied as demand
varies.
 Assign regular production, amount of overtime &
subcontracted work to meet demand
◦ Use a combination of the two

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Financial Criteria
Level Strategy

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Financial Criteria
Chase Strategy

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 Non-Financial Criteria
Level Strategy
 Operations perspective:
◦ Smooth & even flow is easy to manage
 Human resources perspective:
◦ Nobody hired or fired, no overtime or furloughs, so
employee morale should be fine
 Marketing perspective:
◦ All demand met, so no customer service issues

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 Non-Financial Criteria
Chase Strategy
 Operations perspective:
◦ Can operations ramp up & back down quickly?
◦ Much more difficult to accomplish
 Human resources perspective:
◦ Will employees tolerate being hired & fired so
rapidly?
◦ What about training & learning curve issues?
 Marketing perspective:
◦ All demand is met (assuming no strikes)

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 Aggregate plan and MPS
Aggregate plan
 Aggregate plan determines level of operations that
tentatively balances the market demands with the
material, labor and equipment capabilities of the
company.
 Specifies the resources available (e.g.: regular
workforce, overtime, subcontracting, allowable
inventory levels & shortages)
Master production schedule
• A master schedule translates this plan into specific number of
end items to be produced in specific time period.
• Specifies the number & when to produce each end item (the
anticipated build schedule)
• Disaggregates the aggregate plan

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Page 26 Abiot Tsegaye(BA, MBA, PhD)
 Aggregate plan and MPS
Items Production Planning Capacity Planning Resource level
Product lines Aggregate Resource
or families Production Plan Requirements Plan Plants

Individual Master Production Rough-Cut Critical work

products Schedule Capacity Plan centers

Material Capacity All work

Components Requirements Plan Requirements Plan centers

Manufacturing Shop Floor Input/Output Individual

operations Schedule Control machines

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Rough-cut capacity planning
 After preparing a tentative Master Production
Schedule, rough-cut capacity planning can be
done.
 Rough-cut capacity planning is to check
feasibility of master production schedule
with respect to available manpower and
machinery capacities, storage space and
vendor capabilities.
 It is just a rough check to ensure that the
master production schedule is achievable.
 The master production schedule then is used
as the basis for short term planning.
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 Master Production Schedule (MPS)
 Master Production Schedule (MPS), a result of
desegregation, shows quantity and timing of specific
products.
 Master Production Scheduling expresses the overall
plans in terms of specific end items or models that
can be assigned priorities.
 It represents what the company plans to produce
expressed in specific configurations, quantities, and
dates.
 Master Production Scheduling balances demand with
supply to satisfy the customers within the constraints
of the factory and the supplier base.
 Master Production Schedule (MPS) gives a formal
details of the production plan and converts this plan
into specific material and capacity requirements.

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 Master Production Schedule (MPS)

 It sets the quantity of each end item to be

completed in each week of a short-range
planning horizon.
 Master production schedule states quantity
and delivery time of specific products.
◦ If a company selling electric motors has
requirements of 175 motors of a particular
design for a month say January.
◦ Master production schedule would be 175
motors in January. But it does not say how we
get it, from production or from inventory.

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 Master Production Schedule (MPS)
 MPS determines the promised inventory,
production requirements, available to
promise inventory for each period.
 Master Production Schedule is useful to
plan for the material and capacity
requirements.
 The master production schedule drives the
MRP process.
 The schedule of finished products provided
by the master schedule is needed before the
MRP system can do its job of generating
production schedules for component items.

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 Objectives of MPS
 Following are the objectives of the Master
Production Schedule:
◦ To set due dates for the availability of end items.
◦ To provide information regarding resources and
materials required to support the
aggregate plan.
◦ To Set specific production schedules for parts and
components used in end items as an input to Materials
Requirements Planning.
◦ Maintain desired level of customer service.
◦ Make best use of resources.
◦ Keep inventories at desired level,

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 Functions of MPS
 The main functions of MPS are:
◦ To translate aggregate plans into specific end items
◦ Evaluate alternative schedules
◦ Generate material requirement: It forms the basic
input for material requirement planning (MRP).
◦ Generate capacity requirements: Capacity
requirements are directly derived from MPS. Master
scheduling is thus a prerequisite for capacity planning.
◦ Facilitate information processing: It coordinates
with other management information systems such as,
marketing, finance and personnel.
◦ Effective utilization of capacity: By specifying end
item requirements schedule establishes the load and
utilization requirements for machines and equipment

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 Time horizon of MPS
 Time interval used in master scheduling
depends upon the type, volume, and
component lead times of the products
being produced.
 The time horizon covered by the master
schedule also depends upon product
characteristics and lead times.
 Some master schedules cover a period as
short as few weeks and for some products
it is more than a year.
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 REFERENCES
 Chase, R.B., Jacobs, F.R. and Aquilano, N.J. (2006) Operations
Management for Competitive Advantage with Global Cases.
McGraw-Hill/Irwin, Boston.
 Gaither & Frazier, Operations Management, Cengage, New Delhi
 Panner Selvem, Production and Operation Management, Prentice
Hall of India.
 Chunnawals, Production & 9*/89Operation Management Himalaya,
Mumbai
 Kanishka Bedi, Production & Operation Management, University
Press.
 Upendra Kachru: Operation Management, Excel Publications.
 Adam, E.E& Ebert; R.J. Production and Operation Management, 6th
Ed., Prentice Hall
 Chary , S.N.Production and Operation Management, New Delhi,
Tata McGraw Hill

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