Unit III

PRODUCTION PLANNING AND
CONTROL
Module III
AGGREGATE PLANNING
• Aggregate planning is a forecasting technique that businesses
use in an attempt to predict the supply and demand of their
Products and Services.
• The businesses use an aggregate planning model to develop a
game plan that will assist them with determining their staffing
requirements, materials needed, estimated timelines and
budget costs so they can better plan ahead.
• Aggregation typically occurs across three dimensions:
• Products. Rather than dealing with every unique product
produced in a facility, one or more aggregate products are
utilized.
• Labor. Labor is aggregated by specifying a workforce size rather than by
dealing with individual workers or job classifications.
• Time. A typical aggregate plan is based on a planning horizon of 12
months.
Cont…
• Objectives
• Minimize costs/maximize profits
• Maximize customer service
• Minimize inventory investments
• Minimize changes in production rates
• Minimize changes in workforce levels
• Maximize utilization of plant and equipment
Inputs to Aggregate Planning
ADVANTAGES OF AGGREGATE PLANNING
• Minimize Staffing Fluctuations

• Reduce Overhead
• Increase Production Rates
• Accommodate Changes
MASTER PRODUCTION SCHEDULE
• MPS sets the quantity of each finished product to be completed

in each time period(week or month or quarter) of the short
range planning period.
• Master production schedules are developed by reviewing market
forecasts, customer orders, inventory levels, facility loading mainly after
finalising the aggregate plan.
• Aggregate plan is the base for MPS.
• An effective MPS acts as a basis for the utilization of the capacity of the
plant to a good level and also helps in the resolving of the trade – offs
that usually occur in between production and the marketing.
• Objectives of Master Production Scheduling
• To schedule end items to be completed promptly and when promised to
customers.
• To avoid overloading or underloading the production facility so that
production capacity is efficiently utilized and low production costs result.
FUNCTIONS OF MASTER PRODUCTION
SCHEDULE
• The MPS formalizes the production plan and converts it into

specific material and capacity requirements. This leads to the
assessment of labour, material and equipment needs for each
job.
• Key Functions of MPS are
• 1.Translating Aggregate plans - The aggregate is translated into specific number of
end products to be produced in specific time periods.
• 2. Evaluating alternative master schedules - Trial-fitting of alternative MPS can be
done by simulation using computers
• 3. Generating material requirements - The MPS is the prime input to the MRP-1
system
• 4. Generating capacity requirements - Capacity needs arise for manufacturing the
components in the required time schedule to meet the requirements of end
products as per MPS
• 5. Facilitating information processing - It co-ordinates other management
information such as marketing capabilities, financial resources etc
MATERIAL REQUIREMENTS PLANNING
• MRP systems (I and II) help plan and optimize manufacturing production
lines.
• MRP I stands for material requirements planning, while MRP II stands
for manufacturing resource planning.
• MRP is about taking inputs (material cost, material availability, expected
demand, forecasted demand, staffing ability, machinery capacity) all in
order to make sure you have the right amount of materials/labor/
machinery on hand at any given time to satisfy the market or production
goals.
• For a manufacturing company to produce end items to meet demand,the
availability of sufficient production capacity must be co-ordinated with
the availability of all raw materials and purchased items from which the
end items are to be produced
MRP System Inputs
Cont..
• Master Production Schedule : One of the three primary inputs in
MRP, specifies what end products are to be produced, in what
quantities and when.
• Bill of Materials file: Provides the information regarding all the
materials, parts and sub assemblies that go into the end product.
• Inventory Status File: Gives complete and up-to-date information
on the on-hand inventories, gross requirements, scheduled
receipts and planned order releases for the item.
• ISSUES IN MRP
• 1. Lot-sizing
• 2. Safety Stock
• 3. Scrap allowances
• 4. Cycle Counting
• 5. Updating
MRP IN SERVICES
• MRP was originally developed for manufacturing firms; it can

also be applied to service organizations. These applications
may involve materials, goods that form part of the product-
service package or they may involve service components.
• Examples: In an MRP System for services, the MPS can
represent services to be provided. In food-catering service,
preparing and serving meals for a large number of customers.
The bill-of-materials comprises the quantities of the
ingredients for each recipe on the menu, which would then be
multiplied by the number of each meal to be prepared to
obtain a materials requirement plan for the catering service.
• The airlines MPS could be the number of flights from different
cities each week. The materials required for providing the
service would be fuel for airplanes, meals, beverages and
snacks for the passengers
MANUFACTURING RESOURCE PLANNING (MRP
II)
• MRP II is a management process for taking the business plan

and breaking it down into specific,detailed tasks that people
evaluate,agree upon and are held accountable for.
• Manufacturing resource planning(MRP II) is a natural outgrowth of
Materials requirement Planning(MRP I) Whereas MRP I focuses upon
priorities of materials,Capacity Requirement Planning is concerned with
time.
• MRP II has been coined to “ close the loop” by integrated financial,
accounting,personnel,engineering and marketing information along with
the production planning and control activities of basic MRP systems. MRP
II is the heart of corporate management information system for many
manufacturing firms.
• Material requirements planning (MRP) and manufacturing resource
planning (MRPII) are predecessors of enterprise resource planning (ERP)
MRP I and II Comparison
Features MRP I MRP II

Inventory Control X X
Bill of Materials (BOM) X X
Master Production X X
Scheduling (MPS)
Equipment X
Maintenance
Scheduling
Accounting & Financial X
Planning
Forecast Demand X
Shop Floor Planning& Control
• Shop floor planning and control include the principles and techniques that
are necessary to plan, schedule, control and evaluate the effectiveness of
production operations.
• Shop floor activity control helps in the efficient implementation of master
production schedule; control of priorities in processing and ensuring
minimum work-in-progress and finished goods inventories. Ultimately, it
minimizes the manufacturing cycle time and helps in improving customer
service by meeting the promised delivery dates.
• Shop floor control comprises the methods and systems used to
prioritize, track, and report against production orders and
schedules .
• Shop floor control is responsible for the detailed management
of activities and the flow of materials inside the plant,
including employees, materials, machines, and production
time.
Cont..
• Shop floor control attends to the following functions (sequentially):
• Planned orders
• Conversion of planned orders to process/production
• Production and process order scheduling
• Capacity requirements planning
• Material availability assessment
• Release of production/process orders
• Material withdrawals
• Order confirmations
• Goods receipt documentation
• Order settlement
Stages or Steps in Production Planning and
Control
Routing
• Routing may be defined as the selection of path which each

part of the product will follow while being transformed from
raw materials to finished products.
• Path of the product will also give sequence of operation to be adopted
while being manufactured.
• Routing means determination of most advantageous path to be followed
from department to department and machine to machine till raw material
gets its final shape.
• Steps involved in Routing:
• Type of work to be done on product or its parts.
• Operation required to do the work.
• Sequence of operation required.
• Where the work will be done
Techniques of Routing
• While converting raw material into required goods different

operations are to be performed and the selection of a
particular path of operations for each piece is termed as
‘Routing’.
• The various routing techniques are:
• Route card: This card always accompanies with the job throughout all
operations. This indicates the material used during manufacturing and
their progress from one operation to another. In addition to this the
details of scrap and good work produced are also recorded.
• Work sheet: It contains
a. Specifications to be followed while manufacturing.
b .Instructions regarding routing of every part with
identification number of machines and This sheet is made for
manufacturing as well as for maintenance.
Cont…
• Route sheet: It deals with specific production order. Generally
made from operation sheets. One sheet is required for each
part or component of the order.
• List of operation on the part.
• Department in which operations are to be performed.
• Machine to be used for each operation.
• Fixed sequence of operation, if any.
• Move order: Though this is document needed for production control, it is
never used for routing system. Move order is prepared for each operation
as per operation sheet. On this the quantity passed forward, scrapped
and to be rectified are recorded. It is returned to planning office when the
operation is completed.
Scheduling
• Scheduling is the second step in production planning and control.
It comes after routing. Scheduling means to:
• 1.Fix the amount of work to do.
• 2.Arrange the different manufacturing operations in order of
priority.
• 3. Fix the starting and completing, date and time, for each
operation.
• Scheduling is also done for materials, parts, machines, etc. So, it is
like a time-table of production. It is similar to the time-table,
prepared by the railways.
• Time element is given special importance in scheduling. There are
different types of schedules; namely, Master schedule, Operation
schedule and Daily schedule.
• Scheduling helps to make optimum use of time. It sees that each
piece of work is started and completed at a certain predetermined
time. It helps to complete the job systematically and in time.
Dispatching
• Dispatching is the third step in production planning and
control. It is the action, doing or implementation stage. It
comes after routing and scheduling.
• Dispatching means starting the process of production. It
provides the necessary authority to start the work. It is based
on route-sheets and schedule sheets. Dispatching includes the
following :
• Issue of materials, tools, fixtures, etc., which are necessary for
actual production.
• Issue of orders, instructions, drawings, etc. for starting the
work.
• 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.
Follow-up or Expediting
• 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. in the production
process. It measures the actual performance and compares it
to the expected performance. It maintains proper records of
work, delays and bottlenecks. Such records are used in future
to control production.
• Follow-up is necessary when production decreases even when
there is proper routing and scheduling. Production may be
disturbed due to break-downs of machinery, failure of power,
shortage of materials, strikes, absenteeism, etc.
• Follow-up removes these difficulties and allows a smooth
production.

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PRODUCTION PLANNING AND

• Minimize Staffing Fluctuations

• MPS sets the quantity of each ﬁnished product to be completed

• The MPS formalizes the production plan and converts it into

• MRP was originally developed for manufacturing ﬁrms; it can

• MRP II is a management process for taking the business plan

Features MRP I MRP II

Bill of Materials (BOM) X X

• Routing may be deﬁned as the selection of path which each

• While converting raw material into required goods different

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