Unit-1

INTRODUCTION
TO
PRODUCTION PLANNING AND CONTROL
Production Planning team in Action
 Introduction to PPC

• Basics production planning and control

– objectives and benefits of planning and control-functions of
production control
– Production system -types of production job- batch and
continuous
• Product development and design
– Marketing aspect - functional aspects- operational aspect-
durability &dependability aspect -aesthetic aspect.
– profit consideration- standardization, simplification &
specialization- break even analysis-economics of a new
design.
 The Production System
• Production
– Process by which goods or services are created
– A means of converting the raw material into finished products by
performing a set of manufacturing operations in a pre-defined
sequence that transforms material from a given to a desired form
• Input
– A resource required for the manufacture of a product or service.
• Conversion System
– A production system that converts inputs (material and human
resources) into outputs (products or services); also the production
process or technology.
• Output
– A direct outcome (actual product or service) or indirect outcome
(taxes, wages, salaries) of a production system.

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 Transformations/Conversions

• Physical--manufacturing
• Locational--transportation
• Exchange--retailing
• Storage--warehousing
• Physiological--health care
• Informational--telecommunications

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The Basic Production System

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 Position of PPC in Decision Making

Marketplace

Corporate Strategy

Finance Strategy Operations Strategy Marketing Strategy

Operations Management

People Plants Parts Processes

Materials & Products &
Customers Services
Planning and Control

Input Output

The Transformation Process (value adding) 4

 Why PPC?

• Efficiency - Doing something at the lowest

possible cost
• Effectiveness - Doing the right things to
create the most value for the organization
• Value - Quality divided by price

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 Competitive Dimensions
• Cost
• Quality and Reliability
• Delivery
– Flexibility
– Speed
– Reliability
• Coping with Changes in Demand
• New Product Introduction
– Speed
– Flexibility
 Production Planning & Control

• Production planning and control (PPC) can be defined as the process of

planning or deciding on the resources the firm will require for its future
manufacturing operations and of allocating and time scheduling these
resources to produce the desired products on time at the least total cost.
• Production planning and control is most essential for any organization.
Planning process within an organization is dynamic and continuous. PPC
involves:
– the planning of production
– a decision on the sequence of operations to achieve what has been planned
– the setting of starting and finishing time for production
– proper dispatching of the material and
– follow up action to check the progress of operations.

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 Production Planning and Control

• Production planning and control may be defined as the coordination of

the series of functions according to a plan which will economically
utilize the plant facilities and regulate the orderly moment of goods
during the entire manufacturing cycle, from the procurement of all
materials to the shipping of finished goods at a predetermined rate.

• Production planning and control comprise the planning, routing,

scheduling, dispatching and follow up functions in the productive
process, so organized that the movement of material, performance of
machines and operations of labour, however sub divided, are directed
and coordinated as to quantity, quality, time and place.

• It is based on the principle plan your work and work your plan.
 Need for Production Planning & Control
Production Planning and Control is needed to achieve:
– Effective utilization of firms resources
– To achieve the production objectives with respect to quality,
quantity, cost and timeliness of delivery
– To obtain the uninterrupted production flow in order to meet
customers varied demand with respect to quality and committed
delivery schedule.
– To help the company to supply a good quality products to the
customer on the continuous basis at competitive rates.
– For Increasing Production: Main purpose of production planning is
to arrange inputs. Production control programme minimizes
idleness of men and machines. It thus helps in raising industrial
output.
– For coordinating plant activity: In planning production is carried
out in a number of processes and thus activities are synchronized
for smooth working.
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 Production planning
• Production planning means Preparing the (production)
scheme in advance before the actual work is stated.
• It is a plan for the future production, in which the facilities
needed are determined and arranged.
• It is made periodically for a specific time period, called the
planning horizon.
• It can comprise the following activities:
– Determination of the required product mix and factory load to satisfy
customers needs.
– Matching the required level of production to the existing resources.
– Scheduling and choosing the actual work to be started in the manufacturing
facility"
– Setting up and delivering production orders to production facilities.
 Elements of Production Planning

• Planning: It is the first element of production planning and control. Planning

is deciding in advance what is to be done in future. An organizational set up
is created to prepare plans and policies. Various charts, manuals and
production budgets are also prepared. Planning provides a sound base for
control. A separate department is set up for this work.
• Routing: Routing is determining the exact path which will be followed in
production. It is the selection of the path from where each unit have to pass
before reaching the final stage. The stages from which goods are to pass are
decided in this process. The following steps are taken for completing a
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

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• Loading :
– Loading provides information about the number of machines available and their
operating characteristics such as speed, capacity, capability etc..
– Used to calculate the difference between work load and actual capacity and then to
determine whether customers order can be completed on due date or not.
• Scheduling: Scheduling is the determining of time and date when each operation is to be
commenced or completed. The time and date of manufacturing each component is fixed in
such a way that assembling for final product is not delayed in any way. Different types of
scheduling is given below:
– Master (Production) Scheduling: It is the breakup of production requirements. It is the
start of scheduling. It is prepared by keeping in view the order or likely sales order in
near future.
– Manufacturing (Part) Scheduling: It is used where production process is continuous. The
order of preference for manufacture is also mentioned in the schedule for a systematic
production planning.
– Detail Operation Scheduling: It indicates the time required to perform each and every
detailed operations of a given process

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 Production control
• Production control follows up the scheduled plans,
compares the actual output with the planned one, and
point out deviations, if any, so that the same can be
corrected through the adjustments of men, materials and
machines.
• A production control system:
– Receives work progress reports.
– Compares them with the scheduled plans,
– Removes causes of delays in production,
– Modifies the schedules or plant capacities, and
– Expedites the work.
 Objectives of production control
– To organize production schedule in conformity with the
demand forecast.
– To have optimum utilization of resources in such a way that
the cost of production is minimized and delivery date is
maintained.
– Determination of economic production runs with a view to
reduce setup costs.
– Proper Co-ordination of the operations of various sections/
departments responsible for production.
– To ensure regular and timely supply of raw material at the
desired place and of prescribed quality and quantity to avoid
delays in production.
– Perform inspection of semi-finished and finished goods and
use quality control techniques to as certain that the produced
items are of required quality.
 Elements of Production Control
• Dispatching: Dispatching is the transition from planning phase to action
phase. In this phase, the worker is ordered to start manufacturing the
product. Dispatching involves the actual granting of permission to proceed
according to plans already laid down. In dispatching, orders are issued in
terms of their priority. The dispatch section of the PPC is responsible for the
following task:
– Checking the availability of material and then taking appropriate action to have it
transferred from the main stores to the point at which it is needed.
– Ensuring that all production aid is ready when needed and then having them
issued to manufacturing departments.
– Obtaining specific drawings from the drawing office.
– Informing the process section that production is commencing.
– At the conclusion of the manufacturing, ensure that all the drawings, layout and
tools are withdrawn and returned to their correct location.

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 Elements of Production Control
• Following two procedures may be used for dispatching:
– Centralized Dispatching: Under this, orders are directly issued to workmen and
machines. It helps in exercising effective control.
– Decentralized Dispatching: Under this procedure all work orders are issued to the
foreman or dispatch clerk of the department or section. It suffers from difficulties in
achieving co-ordination among different departments.
• Follow Up & Expediting: Follow up or expediting is that branch of production
control procedure which regulates the progress of materials and part through the
production process. Progress may be assessed with the help of routine reports or
communication with operating departments. The follow up procedure is used for
expediting and checking the progress.
• Inspection: Inspection is the process of ensuring whether the products
manufactured are of requisite quality or not. Inspection is undertaken both of
products and inputs. It is carried on at various levels of production process so that
pre-determined standards of quality are achieved. Inspection ensures the
maintenance of pre-determined quality of products.

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 Major objectives of PPC

• To design a system and plan, by which production

may be carried out with a view to meet promised
delivery date consistent with minimum cost and
quality standard.
• To ensure efficient utilization of production facilities.
• To coordinate the production activities of different
departments.
• To maintain adequate but not excessive stock of raw
materials, work in progress and of finished goods to
meet production requirements and delivery
schedules at the most economical level.
 Major objectives of PPC
• To ensure production of right product in right quality
at the right time.
• To maintain flexibility in manufacturing operations, to
accommodate rush jobs or to meet contingencies.
• To coordinate labor, machines and equipment in the
most effective and economic manner.
• Ensuring smooth flow of materials by eliminating
bottlenecks if any, in production.
• Establishing targets and checking it against
performance.
 Major objectives of PPC
• To provide alternative production strategies in
case of emergencies.
• To determine the nature and magnitude of
various input factors to manufacture the desired
output.
• The PPC department guides production by
preparing and issuing manufacturing orders which
direct the use of facilities and material and
allocate labour to the output of the required
quantity of products of the required quality.
• In short PPC regulates and controls “How”,
“Where” and “when” work is to be done.
Functions of PPC

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Functions of PPC
 Planning phase

• Prior Planning
– Fore-casting
• Estimation of future activities
• establishment of future
requirements of men, machine,
material, money, and time
– Order writing
• Providing authority to peoples
to do a particular job
– Product design
• Collect the information
necessary to describe the work
in detail
• Drawings, bill-of-materials,
specification
 Planning phase
• Action planning
– Process planning: The determination of most economical
method of performing an activity all factors being
considered.
– Routing- The arrangement of work stations is determined by
the route.
– Material control: Determination of material requirements
and control of material (Inventory Control).
– Tool Control : Tool control may be sub divided into two
categories
• Design and procurement of new tools.
• Control storage and maintenance of tools after procurement.
– Loading: Determination and control of equipment and man
power requirements. Loading may be defined as the
assignment of work to be facility. The facility may be
equipment, manpower or both.
– Scheduling: Determination when the work is to be done.
Scheduling consists of time phasing of loading (Work load)
i.e., setting both, starting and ending time for the work to be
done.
– The common practice dictates that routing, loading and
scheduling be performed simultaneously.
 Action Phase

• Work start
– Dispatching- only one production
planning activity
– Dispatching is the transition from the
planning phase to action phase.
– It consists of actual release of detailed
work authorization to the work centers.
 Control phase

• Progress reporting
– Once the work is started in an activity it is necessary to evaluate continuously the
progress in terms of plan so that deviations can be detected and corrected as quick as
possible. The control phase accordingly consists of two parts:
– Progress reporting: (Data collection). The first step in progress reporting is to collect data
for what is actually happening in the activity (Progress of work)
– Data interpretation: After the data has been collected, then it is necessary to interpret it
by comparing the actual performance against the plan.
• Corrective action
– Expediting: If the data collected from the production unit indicates that there is significant
deviation from the plan and the plan cannot be changed, then some action must be taken
to get back on plan.
– Re-planning: It should be emphasized that the plan is not to be changed but to be
followed, however, if after expediting to correct deviation it is found that, it is impossible
to perform according to plan. It would be necessary to re plan the whole affair. It may also
be found that there were errors made while developing the original plan. In all such cases
re planning is necessary.
 Benefits of PPC
• Benefits to customer
– Adequate production supply at reasonable prices
– In-time delivery of good

• Benefits to the producer

• More profit and better dividend to stockholders
• Sustained market and employment
• Effective use of material and resources
• A stand in competitive market
• Improved efficiency of the production system
 Other Benefits of PPC
– Higher quality
– Better resource utilization and reduced inventory
– Reduced manufacturing cycle time
– Faster delivery
– Better customer services
– Lower production costs and Lower capital investment
– Higher customer service
– Improved sales turnover
– Improved market share
– Improved profitability
– Flexibility
– Dependability
– Lower prices

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 Limitations of PPC
– Based on Assumptions: Production planning and control is based on certain
assumptions. In case the assumptions prove correct, the planning and control
will go smoothly. But if they go wrong, process of planning and control will go
weak.
– Rigidity: Under production planning and control, there is rigidity in the
behavior of employees and it may not help in smoothening flow of work.
– Difficult for small firms: This process is time consuming and therefore not
affordable for small firms
– Costly: It is a costly device as its implementation requires separate persons to
perform functions of planning, expediting, dispatching etc.
– Dependence on External Factors: External factors like natural calamities,
change in technology, government controls etc reduce effectiveness of
production planning.

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 TYPES OF PRODUCTION

• Job or unit production

• Intermittent production (Batch)
• Continuous production (Mass, flow)
Matching Process Choice with Strategy:
Product-Process Matrix
Process
Flexibility A similar graph can
be prepared to
High
Jumbled Flow.
JOB SHOP show the
Process segments
loosely linked. (Commercial Printer, relationship
Architecture firm)
between process
Disconnected Line BATCH flexibility and cost,
Flow/Jumbled Flow
but a dominant flow
or process
(Heavy Equipment,
exists.
Auto Repair) flexibility and
response time, but
FLOW SHOP
Connected Line
not for quality.
Flow (assembly line) (Auto Assembly,
Car lubrication shop)

Continuous, automated,
rigid line flow. CONTINUOUS
Process segments tightly FLOW
linked.
Low (Oil Refinery)

Low High Product

Low Standardization
High Standardization
Commodity Products Few Major Products Many Products One of a kind
Variety
High volume Low Volume
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Characteristics of job order production
SMALL PRODUCTION RUNS: The manufacture of one or few numbers of
single product designed and manufactured strictly to customers
specification.
The flow of materials: the flow of materials and components between
different stages of manufacture is highly discontinuous due to imbalanced
operation wise work content
MANUFACTURING CYCLE TIME: Long delays occurs at the assembly as well as
the material processing stages due to lack of materials or components,
design changes ,design errors detected during manufacturing etc.
The time needed to design the special project undertaken exceeds its
manufacturing time.
All the factors tend to lengthen the manufacturing cycle time.
LAYOUT OF PLANT AND EQUIPMENT: The machines are arranged according
to process layout, because of , the operations and their sequence change
from product to product.
SKILL REQUIRED: Highly skilled workers are necessary
.they are expected to do the work independently and a
great deal of initiative and judgement.
QUALITY OF SUPERVISION: General engineers are usually
engaged as supervisors, practical men with through
training, capable of taking independent change of each
contract are employed to work at site.
COST OF PRODUCTION: The unit cost of production is
high.
 Batch production
• Batch production is the manufacture of a
number of identical articles either to meet a
specific order or to meet a continuous
demand. Batch can be manufactured either-
– only once
– or repeatedly at irregular time intervals as and
when demand arise
– or repeatedly at regular time intervals to satisfy a
continuous demand
 Characteristics of batch production

• Short runs: short production runs and frequent changes

in set ups
• Investment: needs high investment, the production is
generally made to stock.
• Planning: planning ,routing and scheduling changes
with fresh batch of orders.
• Skill of labour: skilled labour capable of handling
variety of jobs is required
• Quality of supervision: need considerable knowledge
of specific process. less amount of supervision needed.
Characteristics of batch production
• Plant layout: plant and equipment are procured and
arranged to obtain flexibility. general purpose machines
are performing variety of operations with minimum
setup times are installed according to process layout.
• Material handling:
• Material handling is less compared to job order
production.
• Flexibility in production schedule: machine
breakdown or absenteeism do not seriously affected
production as another machine can be used.
Continuous (mass/flow) production

• It refers to the production of standardized products

with a standard set of process and operation
sequence in anticipation of demand.
• It is also known as mass flow production or assembly
line production.
• This system ensures less work in process inventory
and high product quality but involves large
investment in machinery and equipment.
Continuous (mass/flow) production
- Product layout or line layout: Resources are
arranged according to the sequence of the
operations. Usually requires duplication ( and
investment) of a resource pool; dedication of
resources.
- Discrete flow shop: assembly line
- Continuous flow shop: beverage, chemical plant, process
plant.
- High standardization, high speed
- low material handling
- short flow time
- low unit-processing costs
- high investment cost; needs mass production.
- special purpose equipment, and low skilled labor prevent
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flexibility
Continuous (mass/flow) production
• As same product is manufactured for sufficiently long time, machines can be laid
down in order of processing sequence. Product type layout is most appropriate for
mass production system.
• Standard methods and machines are used during part manufacture.
• Most of the equipments are semi automatic or automatic in nature.
• Material handling is also automatic (such as conveyors).
• Semi skilled workers are normally employed as most of the facilities are automatic.
• As product flows along a pre defined line, planning and control of the system is
much easier.
• Cost of production is low owing to the high rate of production.
• In process inventories are low as production scheduling is simple and can be
implemented with ease.
 Characterises of mass and flow
production
• Flow of material: it is continuous and there is no queuing at any stage of
processing.
• Machines and plant layout. special purpose machines are used and plant and
assembly stages are laid out on the basis of product layout.
• Material handling: materials move through a short distance between the stages.
material handling activity is mostly mechanised by conveyors and transfer
machines.
• Skill of labour: low skill labour is necessary
• Manufacturing cycle time: cycle time is very short .the machine capacities are
balanced by line balancing.
• Quality of supervision: only few instructions are necessary only at the starting of
the job.
• Flexibility in production schedules: breakdowns and absenteeism seriously affect
production as stoppage of one machine in the line usually disturb the working of
other machines.
Product development
 Product development

• It is specialised activity which may result in creation of new

products or modification in the production process to produce
the same product.
• It involves design redesign and fabrication of new or modified
product and then testing it to find its usefulness.

PRODUCT DEVELOPMENT IS ESSENTIAL IN ORDER TO:

Meet changing needs of the customers
Manufacture improved and low cost products
Maintain sales position and net profit.
Mouse trap market
Product development procedure
 Product development procedure
1. Venture new product ideas
2. Screening of ideas
3. Concept development Electronic mice trap

4. Product analysis
5. Product design and development programme
6. Test marketing
7. Commercialisation
 Product analysis
1.Marketing aspects
2.Product characteristics
a)Functional aspects,
b)Operational aspects,
c)Durability and dependability,
accessibility
d)Aesthetic aspects
3.Economic analysis
a)Profit consideration
b)The effect of standardization,
simplification and specialization
c)The break even analysis
4.Production aspects
 Functional
Marketing
Analysis
Aspects Economic
Analysis Durability &
Dependability
Research
Product Operational
Development Considerations

Production
Aspects Product Aesthetic
design Aspects

Material & Advertisement

Equipment Production Sales
availability
Further Market
development research

Design
modification
 Marketing aspects
• The proposed product will satisfy a demand in the market,
that what it is supposed to do and the services it can offer are
both desirable and acceptable.
• Demand can also be created with the introduction of a new
product, either by filling in a gap in the market or by offering
new properties such as novelty, appearance or by
incorporating additional features or some other specific
merits.
• Market Competition – market share, market attraction
features, etc
 Functional aspect
• Functional scope expected in a product.
• Sometimes, functional aspects are detachable and usage, can
be left to the customer decision.
• There is a trend to offer functional versatility of the product
increasing the range of application and sometimes combining
number of attachments to be added for a variety of functions.
 Operational aspect
• The product should function properly at the same time it
must be easy to handle and simple to operate.
• The designers problem becomes all the more critical with the
trend for increased versatility.
• Because the increased versatility increase the complexity of
the product or a machine and requires certain amount of the
skill and intelligence to operate.
• The scarcity of skill is a prohibitive limitation in this respect on
the product designer.
 Durability and Reliability
• These two factors are closely related to the selection of
materials and class of workmanship and hence to the design
of the product and the economical analysis of its cost.
• Durability is defined as the length of active life of active life of
the product under given working condition. but measure of
the product capability to lie idle or withstand storage is also
often considered in assessing durability.
• Reliability is the probability of the product to perform its
intended function satisfactorily for a specified period of time
under the given environment.
 Aesthetic aspect
Aesthetic aspect are the governing factors in the design and completely
dominate. it is often used as a means to create demand.
Many techniques can be used by the designer to create aesthetic
characteristics in the product
1. Use of special materials ,either for the parts of the housing or as
additional decorations
2. Use of colour either natural colour of the material concerned or by
use of paints.
3. Shapes denoted by outer contours and similarity to familiar objects.
4. Line is used to break the form ,also for the purpose of emphasizing
parts of it or to give a sense of continuity.
5. Scaling the product ,either to a blown up size or to a small size.
 AESTHETIC ASPECT

Difference between
aesthetic and non aesthetic effect
 Production aspect
• The practical problems should also be considered in the design.
(a)selection of processes
• Volume of production
• Utilization of existing equipment
• Limitation of skill
• Application of new production processes
• Sequence of operations and methods or sub assembling and
assembling
(b)utilization of materials and components with the view :
• Selection of materials having appropriate specifications
• Selection of method or design to reduce waste and scrap
• Using standard components and assemblies
 Economic analysis
• Key to management decision in product design
– evaluation of capital expenditure
– estimation of production cost per piece
– Reasonable margin of profit
– Measure of competiveness: value-to-price
• Profit consideration
• The effect of standardization, simplification and
specialization
• The break even analysis
Profit consideration
 Product development tools

• Standardization
• Simplification
• Specialization
• Cost Reduction • Purchasing costs reduced
through purchasing leverage • Inventory cost
reduction • Floor space reduction •
BOM/MRP/ordering expense avoided when
common parts are simply drawn as needed
from spontaneous resupply • Overhead cost
reduction • Quality: • Product quality
 Tools for product development
• Standardization is the process of defining and applying the
conditions necessary to ensure that a given range of
requirements can normally be met with a minimum variety
and in a reproducible and economic manner on the basis of
the best current technique.
• Simplification is the process of reducing the number of types
of products within a define range.
• Specialization is the process whereby a particular firm
concentrates on the manufacture of a limited number of
product or types of products.
 Standardization
• The concept is applicable to all factors of production namely
men machines materials methods and finished goods.
Standardization covers a wide field of activity:
• Physical dimensions and tolerances of components within a
defined range
• Rating of machines or equipment
• Specification of physical and chemical properties of materials
• Methods of testing characteristics or performance
• Methods of installation to comply with minimum
precautionary measure and convenience of use.
 Standardization
ADVANTAGES :
• Less skill is required in manufacturing and assembly
• Reduction in book keeping and other paper work
• Better inspection and quality control is possible
• Reduction in repair and maintenance cost and marketing expenses
DISADVANTAGES:
• Change in public taste or liking may seriously affect a company producing only
standardized product range.
• For small scale enterprises standardization may not be advantageous.
• Standards once set,resist change and thus standardization may become obstacle to
progress.
• Too much standardization has an adverse effect on the efficiency and morale of the
workers.
 Simplification

Simplification as the elimination of super focus varieties, sizes,

dimensions etc ., simplification makes the product, assembly or
design simpler, less complex or less difficult. simplification should
be done before standardization.
Advantage:
• Simplification reduces inventories and thus results in better
inventory control.
• Simplification provides quick delivery and better after sales service
• Simplifies inspection and control
• Reduction of storage space
• Less overheads and handling expenditures
• It simplifies planning and production methods
Simplification
 Specialization
Specialization is the natural outcome of the application of
standardization and simplification
• Specialization implies expertise in some particular area or field. A
worker is said to be specialized in a work when he acquires skill and
proficiency in it by concentrating solely on it.
Advantage:
• Specialization and standardization lead to higher productivity
• Increase in output and reduction in per unit cost if production
• Saving in purchase of raw material and improvement in the quality of
the finished product
• The firm can afford to carry out research and development for
further improvement
• Disadvantage:
• Less flexibility in adjustment to changed situation
• Monotony and boredom may adversely affect the efficiency
 Break Even Analysis
BEP
Effect of quantity on profit
Margin of Safety

Desirable level of Quantity in

terms of Margin of safety or profit
Economics of new product design-Samuel-
Eilon Model
Case studies