Ppc & aggregate planning

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UNIT IIIUNIT IIIUNIT IIIUNIT III

Production Planning & Control (PPC)Production Planning & Control (PPC)

Aggregate PlanningAggregate Planning

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OverviewOverviewOverviewOverview

Production-Planning HierarchyProduction-Planning Hierarchy Aggregate PlanningAggregate Planning Master Production SchedulingMaster Production Scheduling Types of Production-Planning and Control SystemsTypes of Production-Planning and Control Systems Wrap-Up: What World-Class Producers DoWrap-Up: What World-Class Producers Do

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Production Planning and ControlProduction Planning and ControlIntroductionIntroduction

Production Planning and ControlProduction Planning and ControlIntroductionIntroduction

Coordination of materials with suppliersCoordination of materials with suppliers Efficient utilization of people and machinesEfficient utilization of people and machines Efficient flow of materialsEfficient flow of materials Communication with customersCommunication with customers

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PRODUCTION PLANNING & CONTROLPRODUCTION PLANNING & CONTROLPRODUCTION PLANNING & CONTROLPRODUCTION PLANNING & CONTROL

Aspects of Production Planning & Control:Aspects of Production Planning & Control:

** Design determines physical form & structure of operations Design determines physical form & structure of operations process.process.

** Aim of planning and control – to meet customer’s needs and Aim of planning and control – to meet customer’s needs and expectations on continuous basisexpectations on continuous basis

** Ensures that operational objectives of quality, cost, lead time, Ensures that operational objectives of quality, cost, lead time, adaptability, variability & services are met.adaptability, variability & services are met.

** Demand is reconciled with supply, in terms of:Demand is reconciled with supply, in terms of:

-- VolumeVolume-- QualityQuality-- Timing Timing

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Demand vs. SupplyDemand vs. SupplyDemand vs. SupplyDemand vs. Supply

3 Factors To Consider When Reconciling Demand And Supply:3 Factors To Consider When Reconciling Demand And Supply:

** Loading of work center – available capacity of the one coffee Loading of work center – available capacity of the one coffee

machine. machine.

** Sequence of work;Sequence of work;

- First come first serve- First come first serve

- Earliest due date - Earliest due date

- Shortest processing time- Shortest processing time

- Other more completed sequencing rules are not covered - Other more completed sequencing rules are not covered herehere

** Scheduling of tasks – specifies start and completion times for Scheduling of tasks – specifies start and completion times for

various tasksvarious tasks

- Gantt charts are often used - Gantt charts are often used

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Capacity Planning, Aggregate Planning, Master Schedule, and Short-Term Capacity Planning, Aggregate Planning, Master Schedule, and Short-Term SchedulingScheduling

Capacity Planning1. Facility Size2. Equipment Procurement

Aggregate Planning1. Facility Utilization2. Personnel needs3. Subcontracting

Master Schedule1. MRP2. Disaggregation of master plan

Short-term Scheduling1. Work center loading2. Job sequencing

Long-term

Intermediate-term

Intermediate-term

Short-term

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Production Planning HorizonsProduction Planning HorizonsProduction Planning HorizonsProduction Planning Horizons

Master Production Scheduling Master Production Scheduling

Production Planning and Control SystemsProduction Planning and Control Systems

Pond DrainingPond DrainingSystemsSystems


PushPushSystems Systems

PullPullSystemsSystems

Focusing onFocusing onBottlenecksBottlenecks

Long-Range Capacity PlanningLong-Range Capacity PlanningLong-RangeLong-Range

(years)(years)

Medium-RangeMedium-Range(6-18 months)(6-18 months)

Short-RangeShort-Range(weeks)(weeks)

Very-Short-RangeVery-Short-Range(hours - days)(hours - days)

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Production Planning: Units of MeasureProduction Planning: Units of MeasureProduction Planning: Units of MeasureProduction Planning: Units of Measure

Master Production SchedulingMaster Production Scheduling

Production Planning and Control SystemsProduction Planning and Control Systems

Pond DrainingPond DrainingSystemsSystems


PushPushSystems Systems

PullPullSystemsSystems

Focusing onFocusing onBottlenecksBottlenecks

Long-Range Capacity PlanningLong-Range Capacity PlanningEntire Entire

Product LineProduct Line

ProductProductFamilyFamily

SpecificSpecificProduct ModelProduct Model

Labor, Materials,Labor, Materials,MachinesMachines

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Hierarchical Production PlanningHierarchical Production Planning

Annual demand byitem and by region

Monthly demandfor 15 months by

product type

Monthly demandfor 5 months by

item

Forecasts needed

Allocatesproduction

among plants

Determinesseasonal plan by

product type

Determines monthlyitem production

schedules

Decision ProcessDecision Level

Corporate

Plant manager

Shopsuperintendent

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Repetitive

Matching PPC with the Needs of the FirmMatching PPC with the Needs of the FirmMatching PPC with the Needs of the FirmMatching PPC with the Needs of the Firm

Flow

Number ofNumber of

SubpartsSubparts

Seconds Minutes Days Weeks Months Seconds Minutes Days Weeks Months

Time between successive units Time between successive units

Examples: Oil, food, drugs, watches, TV, trucks, planes, houses, shipsExamples: Oil, food, drugs, watches, TV, trucks, planes, houses, ships

Just-in-TimeMRP CPM/PERT

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Matching PPC with the Needs of the FirmMatching PPC with the Needs of the FirmMatching PPC with the Needs of the FirmMatching PPC with the Needs of the Firm

1.1. Flow-Oriented Manufacturing SystemsFlow-Oriented Manufacturing Systems

Very short time between successive unitsVery short time between successive units

A few components neededA few components needed

Flow rate is the measureFlow rate is the measure

Ex: Chemical, food, petroleumEx: Chemical, food, petroleum

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Matching PPC with the Needs of the Firm (Cont’d)Matching PPC with the Needs of the Firm (Cont’d)Matching PPC with the Needs of the Firm (Cont’d)Matching PPC with the Needs of the Firm (Cont’d)

2. Repetitive-Nature Manufacturing Systems2. Repetitive-Nature Manufacturing Systems

Short time between successive unitsShort time between successive units

Assemble similar productsAssemble similar products

Flow Rate or Assembly Rate is the measureFlow Rate or Assembly Rate is the measure

Ex: Televisions, Radios, Watches, CarsEx: Televisions, Radios, Watches, Cars

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3. Just-in-Time3. Just-in-Time

High production volumeHigh production volume

Low Product VarietyLow Product Variety

Reduced Inventory and LeadtimeReduced Inventory and Leadtime

Ex: Cars, Computers, Jewelry, Copy MachinesEx: Cars, Computers, Jewelry, Copy Machines

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4. Materials Requirements Planning (MRP)4. Materials Requirements Planning (MRP)

Batch production Batch production

High product varietyHigh product variety

Low production quantity Low production quantity

Ex: Electric Motors, Fans Ex: Electric Motors, Fans

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5. CPM/PERT5. CPM/PERT

Long leadtimes Long leadtimes

Low production quantity Low production quantity

Ex: Airplanes, ships Ex: Airplanes, ships

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Why Aggregate Planning Is NecessaryWhy Aggregate Planning Is NecessaryWhy Aggregate Planning Is NecessaryWhy Aggregate Planning Is Necessary

Fully load facilities and minimize overloading and Fully load facilities and minimize overloading and underloadingunderloading

Make sure enough capacity available to satisfy Make sure enough capacity available to satisfy expected demandexpected demand

Plan for the orderly and systematic change of Plan for the orderly and systematic change of production capacity to meet the peaks and valleys of production capacity to meet the peaks and valleys of expected customer demandexpected customer demand

Get the most output for the amount of resources Get the most output for the amount of resources availableavailable

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Goal: Specify the optimal combination ofGoal: Specify the optimal combination of production rateproduction rate workforce levelworkforce level inventory on handinventory on hand

Product group or broad category (Aggregation)Product group or broad category (Aggregation)

Medium-Range: 6-18 months Medium-Range: 6-18 months

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Aggregate Plans for ServicesAggregate Plans for ServicesAggregate Plans for ServicesAggregate Plans for Services

For standardized services, aggregate planning may be For standardized services, aggregate planning may be simpler than in systems that produce productssimpler than in systems that produce products

For customized services,For customized services, there may be difficulty in specifying the nature and there may be difficulty in specifying the nature and

extent of services to be performed for each extent of services to be performed for each customercustomer

customer may be an integral part of the production customer may be an integral part of the production systemsystem

Absence of finished-goods inventories as a buffer Absence of finished-goods inventories as a buffer between system capacity and customer demandbetween system capacity and customer demand

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Preemptive TacticsPreemptive TacticsPreemptive TacticsPreemptive Tactics

There may be ways to manage the extremes of There may be ways to manage the extremes of demand:demand: Discount prices during the valleys.... have a saleDiscount prices during the valleys.... have a sale Peak-load pricing during the highs .... electric Peak-load pricing during the highs .... electric

utilitiesutilities

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Master Production Scheduling (MPS)

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Objectives of MPSObjectives of MPSObjectives of MPSObjectives of MPS

Determine the quantity and timing of completion of Determine the quantity and timing of completion of end items over a short-range planning horizon.end items over a short-range planning horizon.

Schedule end items (finished goods and parts shipped Schedule end items (finished goods and parts shipped as end items) to be completed promptly and when as end items) to be completed promptly and when promised to the customer.promised to the customer.

Avoid overloading or underloading the production Avoid overloading or underloading the production facility so that production capacity is efficiently facility so that production capacity is efficiently utilized and low production costs result. utilized and low production costs result.

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The rules for schedulingThe rules for scheduling

No ChangeNo Change+/- 5%+/- 5%

ChangeChange

+/- 10%+/- 10%

ChangeChange

+/- 20%+/- 20%

ChangeChange

+/- 20%+/- 20%

ChangeChangeFrozenFrozen

FirmFirm

FullFullOpenOpen

1-21-2 weeksweeks

2-42-4weeksweeks

4-64-6weeksweeks

6+ 6+ weeksweeks

Time FencesTime FencesTime FencesTime Fences

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Time FencesTime FencesTime FencesTime Fences

The rules for scheduling:The rules for scheduling: Do not change orders in the frozen zoneDo not change orders in the frozen zone Do not exceed the agreed upon percentage changes Do not exceed the agreed upon percentage changes

when modifying orders in the other zoneswhen modifying orders in the other zones Try to level load as much as possibleTry to level load as much as possible Do not exceed the capacity of the system when Do not exceed the capacity of the system when

promising orders.promising orders. If an order must be pulled in to level load, pull it If an order must be pulled in to level load, pull it

into the earliest possible week without missing the into the earliest possible week without missing the promise.promise.

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Developing an MPSDeveloping an MPSDeveloping an MPSDeveloping an MPS

Using input informationUsing input information Customer orders (end items quantity, due dates)Customer orders (end items quantity, due dates) Forecasts (end items quantity, due dates)Forecasts (end items quantity, due dates) Inventory status (balances, planned receipts)Inventory status (balances, planned receipts) Production capacity (output rates, planned Production capacity (output rates, planned

downtime)downtime) Schedulers place orders in the earliest available open Schedulers place orders in the earliest available open

slot of the MPSslot of the MPS . . . more. . . more

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Developing an MPSDeveloping an MPSDeveloping an MPSDeveloping an MPS

Schedulers must:Schedulers must: estimate the total demand for products from all estimate the total demand for products from all

sourcessources assign orders to production slotsassign orders to production slots make delivery promises to customers, andmake delivery promises to customers, and make the detailed calculations for the MPSmake the detailed calculations for the MPS

As orders are slotted in the MPS, the effects on the As orders are slotted in the MPS, the effects on the production work centers are checkedproduction work centers are checked Rough cut planning - identify underloading or Rough cut planning - identify underloading or

overloading of capacityoverloading of capacity

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Types ofTypes ofProduction-PlanningProduction-Planningand Control Systemsand Control Systems

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Types of Production-PlanningTypes of Production-Planningand Control Systemsand Control Systems

Pond-Draining SystemsPond-Draining Systems Push SystemsPush Systems Pull SystemsPull Systems Focusing on BottlenecksFocusing on Bottlenecks

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Pond-Draining Systems Pond-Draining Systems Pond-Draining Systems Pond-Draining Systems

Emphasis on holding inventories (reservoirs) of Emphasis on holding inventories (reservoirs) of materials to support productionmaterials to support production

Little information passes through the systemLittle information passes through the system As the level of inventory is drawn down, orders are As the level of inventory is drawn down, orders are

placed with the supplying operation to replenish placed with the supplying operation to replenish inventoryinventory

May lead to excessive inventories and is rather May lead to excessive inventories and is rather inflexible in its ability to respond to customer needsinflexible in its ability to respond to customer needs

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Push Systems Push Systems Push Systems Push Systems

Use information about customers, suppliers, and Use information about customers, suppliers, and production to manage material flowsproduction to manage material flows

Flows of materials are planned and controlled by a Flows of materials are planned and controlled by a series of production schedules that state when batches series of production schedules that state when batches of each particular item should come out of each stage of each particular item should come out of each stage of productionof production

Can result in great reductions of raw-materials Can result in great reductions of raw-materials inventories and in greater worker and process inventories and in greater worker and process utilization than pond-draining systemsutilization than pond-draining systems

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Pull Systems Pull Systems Pull Systems Pull Systems

Look only at the next stage of production and Look only at the next stage of production and determine what is needed there, and produce only thatdetermine what is needed there, and produce only that

Raw materials and parts are pulled from the back of Raw materials and parts are pulled from the back of the system toward the front where they become the system toward the front where they become finished goodsfinished goods

Raw-material and in-process inventories approach Raw-material and in-process inventories approach zerozero

Successful implementation requires much preparationSuccessful implementation requires much preparation

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Focusing on BottlenecksFocusing on BottlenecksFocusing on BottlenecksFocusing on Bottlenecks

Bottleneck OperationsBottleneck Operations Impede production because they have less capacity Impede production because they have less capacity

than upstream or downstream stagesthan upstream or downstream stages Work arrives faster than it can be completedWork arrives faster than it can be completed Binding capacity constraints that control the Binding capacity constraints that control the

capacity of the systemcapacity of the system Optimized Production Technology (OPT)Optimized Production Technology (OPT) Synchronous ManufacturingSynchronous Manufacturing

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Synchronous ManufacturingSynchronous ManufacturingSynchronous ManufacturingSynchronous Manufacturing

Operations performance measured byOperations performance measured by throughput (the rate cash is generated by sales)throughput (the rate cash is generated by sales) inventory (money invested in inventory), andinventory (money invested in inventory), and operating expenses (money spent in converting operating expenses (money spent in converting

inventory into throughput)inventory into throughput)

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Wrap-Up: World-Class PracticeWrap-Up: World-Class PracticeWrap-Up: World-Class PracticeWrap-Up: World-Class Practice

Push systems dominate and can be applied to almost Push systems dominate and can be applied to almost any type of productionany type of production

Pull systems are growing in use. Most often applied Pull systems are growing in use. Most often applied in repetitive manufacturingin repetitive manufacturing

Few companies focusing on bottlenecks to plan and Few companies focusing on bottlenecks to plan and control production. control production.

Ppc & aggregate planning

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