Production planning & control & Forecasting in Manufacturing firms

1. PRODUCTION PLANNING AND
CONTROL

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Techniques or Elements of Production
Planning and Control

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. 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. 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. Types of schedules
 Master scheduling
 Operation scheduling
 Detail operation scheduling

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. 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. IMPORTANT DOCUMENTS
1.Material requisitions
2.work order
3.control sheet
4.Internal delivery note
5.Tool and gauge ticket

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. 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. CONTENTS ARE…………
o Introduction for Forecasting
o The strategic role of forecasting
o Components of forecasting demand
o Time series methods
Forecasting

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. THE STRATEGIC ROLE OF
FORECASTING
 Supply chain Management:
 Quality Management:
 Strategic planning:

25. COMPONENTS OF FORECASTING
DEMAND
 Time frame
 Short range forecasts
 Long range forecasts
 Demand Behaviour

26.  Forecasting Methods
 Quantitative Methods
 Time series
 Regression
 Qualitative Methods
 Delphi method

27. Forecasting process:

28. TIME SERIES METHODS
 Moving average
 Simple moving average
 Weighted moving average
 Exponential smoothing Method
 Liner regression method

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. 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. 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. 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.  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. 0
10
20
30
40
50
60
Demand
Forecast(Ft+1)

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. 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. 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.  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.  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.  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. 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
 http://www.tandfonline.com/toc/tppc20/current#.VTR8ktKqqko
 http://en.wikipedia.org/wiki/Production_planning
 http://www.worldcat.org/title/elements-of-production-planning-
and-control/oclc/744532
 http://www.acsu.buffalo.edu/~nagi/courses/505/ch1.pdf

42. Thank you..