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PRODUCTION PLANNINGIntroduction

ActivitiesProcessOutcome

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Start of Production Planning• Forecasting Decision: Based on Sales Estimates.• Management Decision : Based on Demand

Estimates, product design, etc.•

Engineering Decision : Based on manufacturingdesign, process design, materials required, etc.• Capacity Decision : Based on existing resources of

plant, machinery, tools, Planning the facility, etc.•

Financial Decision : Based on funds, profitability.• Resource availability :Employee workflow,

availability of skilled labour, etc.

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ACTIVITIES OF PRODUCTION PLANNING

Materials Machines Men

Planning, Routing, Scheduling, Dispatching

Sales Order orStock to order

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OBJECTIVES

• Maximise utilisation of materials andhuman resources

• Minimise costs• Timely supply of finished goods•

Effective control of productionprocess

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PROCESS OF PRODUCTION PLANNING

• Materials Planning

• Operations Planning

• Cost Planning

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MATERIALS PLANNINGMaster

Production Schedule Bill of

Materials Material

Requirements Planning System

Inventory Status

Planned Order & Other Reports

Item Master Purchasing

Data

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Bill of Materials

• Bill of Materials – Parent-child diagram thatshows what goes into what.

Frame Assy

Wheel Assy

Wheel Tires

Hubs &Rims

Spokes

Frame

Bike

Components

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BOM (contd.)

Used to make sure enough parts are availablethroughout production plan.Each part has Lead Time and ordering process.One BOM for every end product to arrive atcost per product.

Types of BOMSingle Level BOM – One level downIndented BOM – More than one level

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Inventory Classifications

Inventory

Processstage

DemandType

Number& Value Other

Raw MaterialWIP Finished

Goods

IndependentDependent

A ItemsB ItemsC Items

MaintenanceDependentOperating

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Output of Materials Planning

• Planned Production report• Planned Purchases report•

Master Schedule report• Sales Forecasts Listing• Materials Handling report

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OPERATIONS PLANNING

MasterProductionSchedule

ForecastMedium term

Long termShort term

Sales OrderCapacity

Constraints

Production Plan

Lead TimeProduct :

What

Time:When

Quantity:

HowMuch

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How it is done

EngineeringDiagram

StandardProcessSheet

Route Sheet

CostTime

Labour

PERTCPM

OperationsPlanning

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COST PLANNINGCost

MATERIALS LABOUROTHER EXPENSES

DIRECTDIRECTINDIRECT INDIRECTDIRECT INDIRECT

OVERHEADS

FOH AOH SOH DOH

DirectDi

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Examples of Indirect material

• At factory level – lubricants, oil, consumables,etc.

• At office level – Printing & stationery, Brooms,Dusters, etc.

• At selling & distribution level – Packingmaterials, printing & stationery, etc.

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Examples of Indirect labour

• At factory level – foremen’s salary, worksmanager’s salary, gate keeper’s salary,etc.

• At office level – Accountant’s salary, GM’s

salary, Manager’s salary, etc. • At selling and distribution level – salesmen

salaries, Logistics manager salary, etc.

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Examples of other expenses

• At factory level – factory rent, factoryinsurance, lighting, etc.

• At office level – office rent, office insurance,office lighting, etc.

• At sales & distribution level – advertising,show room expenses like rent, insurance, etc.

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Output of Cost Planning

• Know the value addition at each stage ofproduction.

• Break up of material, production andoverhead costs. Know the direct / indirectcosts.

• Know the cheapest production line.•

Analyse the profitability of make / buydecision.• Know the reason for rise in costs.

OUTCOME OF PRODUCTION

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OUTCOME OF PRODUCTIONPLANNING

• Production Data• Inspection Data• Pay roll Data• Cost Data

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ERP inProduction Planning

MRP by period report

MRP by date report

Planned orders report

Purchase requirements

Cost reports

MRPPrograms

Master ProductionScheduleBOM

Lead Times

(Item Master File )

(Bill-of-Material )

Inventory Data

Purchasing data CostData