basic theory of operations planning

1. Production/Operations Planning An Overview

2. Operations Planning

3. Introduction Meaning: Organization of an overall manufacturing/operating system to produce a product Objective: to provide a physical system together with a set of operating guidelines for efficient conversion of raw materials, human skills & other inputs into finished products

4. Factors Determining Production Planning Process Main difference between two companies’ planning processes is the differences in the economic & technological conditions of the company’s operations. Volume of production Nature of production processes Nature of operations

5. Variants in Manufacturing Approach Manufacturing to order Manufacturing for stock & sell under repetitive batch Manufacturing for stock & sell under continuous process

6. Production Planning Levels Hierarchical levels Strategic planning Tactical planning Operational Planning Time span Long range Intermediate range Short range

7. Production Planning Functions Estimating Routing Scheduling Loading

8. Master production schedule (MPS)

9. Introduction MPS sets the quantity of each finished product to be completed in each time period of the short range planning horizon. MPS is developed by reviewing market forecasts, customer orders, inventory levels, facility loading & capacity information regularly.

10. MPS Objectives To schedule end items to be completed promptly & when promised to customers To avoid overloading or under loading the production facility so that production capacity is efficiently utilized & incur low production costs

11. MPS Functions Translating aggregate plans Evaluating alternative master schedules Generating material requirements Generating capacity requirements Facilitating information processing Maintaining valid priorities Utilizing capacity effectively

12. Forecasts & customer orders End products & Service parts Domestic & International Aggregate plan Tentative MPS Revise Master Schedule Revise Master Schedule Trial fit on MRP system CRP system Are materials adequate? Are capacities adequate? No No Yes Yes Firm MPS To MRP & CRP systems MPS Flow Chart

13. Capacity requirement planning (crp)

14. CRP Meaning: CRP is a technique to determine the labor & equipment capacities needed to meet the objectives.

15. Aggregate Plan ResourcePlanning Rough-cut Capacity Planning MPS Work center status file Shop routing file CRP Orders converted into load MRP Yes Is capacity modification feasible? No Load projection report(infinite loading) Is capacity adequate? Planned orders & released orders Yes No Yes Workload report (finite loading) Work orders Purchase orders CRP Flow Chart Input/output control

16. Planning Activity Infinite Loading: Process of loading work centers with all the loads when they are required without regard to the actual capacity of work centers. Finite Loading: Done automatically with computerized loading system limiting the load assigned to work centers in each period as per the available capacity at each work center.

17. Material requirement planning (mrp)

18. Material Requirement Planning(MRP) MRP is a computer based information system for ordering & scheduling of dependent demand inventories. The technique to plan for procurement or manufacture of the specific components that will be required to produce the required quantities of end products as per the production schedule indicated by MPS is called MRP technique.

19. Objectives of MRP Improve customer service by meeting delivery schedules promised & shortening delivery lead times Reduce inventory costs by reducing inventory levels Improve plant operating efficiency by better use of productive resources

20. Purpose of MRP Control inventory levels Assign operating priorities Assign capacity to load production systems

21. MRP Advantages Reduced inventory Reduced idle time Reduced setup time Ability to change MPS Ability to price more competitively Better customer service Better response to market demand Reduced sales price

22. MRP System also enables… Aids capacity planning Helps mangers to use the planned schedule before actual release orders Tells when to expedite or de-expedite Delays or cancels orders Changes order quantities Advances or delays order due dates

23. MRP Disadvantages Lack of top management commitment for MRP as a closed-loop, integrated strategic planning tool Presented & perceived as a complete stand-alone system to run a firm, rather than as part of the total system The issue of how MRP can be made to function with just-in-time production system