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Production Planning and Control

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Types of productionsProduction cycleProcess planningForecastingLoadingSchedulingDispatchingRouting- Simple problemsMaterials PlanningABC analysisIncoming materials controlKanban systemJust in timeMRP systemsMaster Production ScheduleBill of MaterialsMRP calculationsMRP II

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3

Transformation(Conversion)process

MaterialsMan

MachinesMoney

Goods or Services

Feedback information

Environment

Inputs Outputs

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Types of productions Job Production:

The manufacture of products to meet specificcustomer requirements of special order.The quantity involved is small and is normallyconcerned with special projects, models, prototypes,special machinery or equipment to performspecialized and specific tasks, etc.Ex. Turbo-generators, large engines, high-capacityboilers, ship building and processing equipment.

Production control is complicated.This production requires highly flexible generalpurpose machines, skilled workers, process layout.

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Batch ProductionThe manufacture of a number of identical articles, either tomeet a specific order or to satisfy continuous demand.It is necessary when the production capacity of the plant is veryhigh in comparison with the demand.The product is manufactured periodically in a quantity that willbe sufficient to meet the demand for some time until the

manufacture of this product is resumed.Planning and control become more simplified as quantitiesincrease and manufacture becomes more regular.Two major problems: the size of the batch and the scheduling

of production.It requires process layout, semi-skilled labour and a mixture of general purpose and some special purpose machines.

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Continuous ProductionIt is the specialized manufacture of identical products onwhich the equipment is fully engaged.It is associated with the large quantities and with a highrate of demand.

Full advantage of repetitive operations in the design of production auxiliary aids such as tools, fixtures, materialhandling systems etc

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Mass production : A large number of identical product is produced,but inspite of advanced mechanization and tooling, the equipmentneed not be specially designed for this type of part alone.

Both plant and equipment are flexible enough to deal with other partsinvolving the same production processes.

Ex. Highly mechanized press shop for the production of differentproducts made of sheet metal without major changes in shop layout.

Flow production : the plant, its equipment and layout have been

primarily designed to manufacture the product in question.Flexibility in the selection of products for manufacture is confined tominor modification in the layout or design of models.

Ex. Automobile industry, engines, chemical plants etc.

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increasing variety of products made

Increasing quantity of product

Degrees of repetitiveness of operations

U n

i q u e ,

i n t e r m

i t t e n

t p r o

d u c t

i o n

P u r e , c

o n

t i n u o u s p r o

d u c t

i o n

Job production

Batch production

Mass production

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Production cycle:The Production Cycle is a recurring set of business activities and relateddata processing operations associated with the manufacture of products

The basic activities of the production cycle are product design, planningand scheduling, production operations, and cost accounting.

Information flows to the production cycle from othercycles, e.g.:The revenue cycle provides information on customer orders andsales forecasts for use in planning production and inventorylevels.

The expenditure cycle provides information about raw materialsacquisitions and overhead costs.The human resources/payroll cycle provides information aboutlabor costs .

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Information also flows from the expenditure cycle:The revenue cycle receives information from the productioncycle about finished goods available for sale.

The expenditure cycle receives information about raw materialneeds.The human resources/payroll cycle receives information aboutlabor needs.The general ledger and reporting system receives informationabout cost of goods manufactured.

Decisions that must be made in the production cycleinclude:

What mix of products should be produced?How should products be priced?

How should resources be allocated?How should costs be managed and performance evaluated?

These decisions require cost data well beyond thatrequired for external financial statements.

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Process planningProcess planning is a key element that focuseson selecting resources for use in the executionand completion of a project.In a manufacturing setting, it includesestablishing the general sequence of steps thatbegin with the acquisition of materials and endwith the creation of a finished product.Process planning consists of preparing a set of

instructions that describe how to manufacture apart which will satisfy engineering designspecifications.

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operation sequence,machines,tools,materials,tolerances,cutting parameters,

processes (such as how to heat-treat),jigs,fixtures,time standards,setup details,inspection criteria,gauges,graphical representations of the part in various stages of completion.

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Analysis of part requirementSelection of raw work pieceDetermining manufacturing operations

and their sequencesSelection of machine toolsSelection of tools, work holding devices,and inspection equipmentDetermining machining conditions andmanufacturing time

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50% increase in process planner productivity40% increase in capacity of existing

equipment

25% reduction in setup costs12% reduction in tooling10% reduction in scrap and rework10% reduction in shop labor6% reduction in work in process4% reduction in material

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LoadingExecution of the schedule plan as per the route chalked out

It includes the assignment of the work to the operators at theirmachines.

Machine loading is carried out in conjunction with routing, toensure smooth work flow and with estimating, to ensure thatthe prescribed methods, feeds and speeds are best utilized.Loading who will do the work

Routing whereScheduling when it shall be doneGantt Charts are most commonly used to determine the existingload and also to foresee how fast a job can be done.

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SchedulingIt concerns with time element and priorities of a job.

Production Schedule: To schedule that amount of work which can

easily be handled by plant and equipment without interference.Following factors consider:1. Physical plant facilities2. Personnel3. Necessary materials and purchased parts

Master Schedule: It is weekly or monthly break-down of theproduction requirement for each product for a definite timeperiod.This forms a base for all subsequent scheduling activities.

Manufacturing schedule: It is prepared on the basis of type of manufacturing process involved. It would show the requiredquality of each product and sequence in which the same to beoperated.

Scheduling of job order manufacturing: Scheduling acquiresgreater importance in job order manufacturing.

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DispatchingIt is the routine of setting production activities in motion in

accordance with previously planned time and sequences asembodied in route sheets and loading schedules.

It involves issue of production orders for starting the operations.

Necessary authority and conformation is given for:

1. Movement of materials to different workstations.2. Movement of tools and fixtures necessary for each

operation.3. Beginning of work on each operation.

4. Recording of time and cost involved in each operation.5. Movement of work from one operation to another inaccordance with the route sheet.

6. Inspecting or supervision of work.

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Routing

It prescribes the flow of work in the plant and is related to considerations of layout, of temporary storage locations for raw material and components,and of material handling systems.

Operations path and sequence are established.To determine the best and cheapest sequence of operations and to ensure that

this sequence is strictly followed.

Its procedure involves:1. An analysis of the article to determine what to make and what to buy2. To determine the quality and type of material3. Determining the manufacturing operations and their sequence

4. A determination of lot sizes5. Determination of scrap factors6. An analysis of cost the article7. Organization of production control forms

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ABC method of classifying materials which is based on the idea thatonly a small percentage of materials represents the majority of

inventory value

Total percent of materials in inventory

P e r c e n

t o

f t o t a l

v a l u e

i n i n v e n

t o r y

A

B

C

Class-A: 70% - 80% of total inventory cost10% -15% of total items

Class-B: 20% - 15% of total inventory cost15% -20% of total items

Class-C: 10% - 5% of total inventory cost75% -65% of total items

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Interpretation of the graph

The A class materials represent only 20% of the materials ininventory and 75% of the inventory valueThe B class materials represent 30% of the materials in inventoryand 20% of the inventory valueThe C class materials represent 50% of the materials in inventoryand only 5% of the inventory value

This classification suggests that the higher theinventory value of a material, more the analysisthat should be applied to the material

Ordinarily, class A materials would be analyzedextensively and class C materials would beanalyzed little.

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System of planning and controlling productionKanban means card Signaling to the upstream workstation that thedownstream workstation is ready for the upstream stationto produce another batch of partsTwo types of kanban cards: Conveyance card (C-Kanban)and Production card (P-Kanban)Shop-floor planning and control are reduced to planningand controlling the movement of orders among workcenters with stable and level production schedules,priority decisions are routineNo parts can be produced or moved without a kanban (orcard)

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Full containerand C-Kanban

C-Kaban andempty container

Full containerand P-Kanban

P-Kaban and

empty container

Upstreamwork center #1

Downstreamwork center #2

In-processstorage

Parts flow

Kanban is based on the simple idea of replacement of containers of parts, one at a timeA container is not moved to downstream production operation until itis needed, and a container of parts is not produced until it is needed

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Production control gives a final production schedule to finalassembly

Final assembly withdraws parts in small quantities at the timerequired from the work centers which feed final assemblyThe work centers feeding final assembly then manufacture parts toreplace those withdrawn by final assemblyIn order to do this, these work centers withdraw small quantities of parts as required from the upstream work centers which feed themContinuing in this manner, each work center withdraws parts at thetime needed and in the quantities required from the work centersfeeding them; the entire network is engaged in productionsynchronized to final assembly

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Workers must have cooperative attitudes for them to work

Programs to achieve excellence in preventive maintenance, product

quality and mutual trust with suppliers are musts

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Kawasaki in Japan , workers communicate by means of painted golf

balls that roll down plastic pipes Japanese plants , workers communicate with flashing lights, a systemcalled andon

Kanban provides JIT production without the use of work ordersfor parts

Not every part can be controlled by Kanban. Large components andirregular optional parts require special attention, but repetitively usedparts are regulated by Kanban

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Just in time (JIT)

Just-in-time (JIT) philosophy developed by the Japanese

A philosophy of manufacturing based on planned elimination of allwaste and continuous improvement of productivity. It encompassesthe successful execution of all manufacturing activities required toproduce a final product, from design engineering to delivery andincluding all states of conversion from raw material onward -APICSIBM continuous flow manufacture, HP - Stockless production &repetitive manufacturing system, GE Management by sight,Motorola short cycle manufacturing and Japanese firms TheToyota SystemRequires the production of precisely the necessary units in thenecessary quantities at the necessary time with the objective of plus or minus performance to schedule

Anything over the minimum amount necessary is viewed as wasteIdeal lot size is oneWorker completes his task on an item and pass it directly to thenext worker just as that person is ready for it

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Drive all queues toward zero in order to Minimize inventory investment Shortenproduction lead times

React faster to demand changes Uncover any qualityproblems

System must allow for transit time between workcentersJIT disallows the value of inventory

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Every item is expected tobe correct when received

Every machine is expected to be availablewhen needed to produce the item

Every delivery commitment isexpected to be honored at theprecise time it is scheduled

Quality, preventive maintenance andmutual trust between all participants

Inventory is waste

Efficient layoutand material flow

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Basic idea of JIT is drastically reduce WIP inventories

Concepts and techniques

Uniform plant loadingGroup technologyQuality control at the sourceMinimized setup times

Kanban type production control system

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Conventional Large lots are efficient

(more is better)Faster production is more

efficient

Scheduling and queues arenecessary tradeoffs to

maximize output fromequipment and manpower Inventory provides safetyInventory smoothes production

Just-in-timeIdeal lot size is one unit

(less is better)Faster production than necessary

is a waste (balanced productionis more efficient)

Tradeoffs are bad; they trade onewaste for another and prevent

the proper solution of problems

Safety stock is a wasteInventory is undesirable

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Eliminating Waste Shigeo Shingo, a JIT authority at Toyota identified seven wastesin production: Overproduction, Waiting, Transportation, Unneededproduction, WIP inventories, Motion and effort, Defective productsEnforced Problem Solving and Continuous ImprovementReduce in-process inventories incrementally in small steps;Continuous improvement(Kaizen) is central to the philosophy of JIT

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Machinebreakdowns

QualityproblemsMaterialstock outs

Workloadimbalances

Worke rabsenteeism

Out-of-Specificationmaterials

Production

problems

In-process

inventory

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People make JIT workTraining and involvement of workers, culture of mutual trustand teamwork, empowerment of workersTotal Quality ManagementTotal commitment to producing products of perfect qualityevery time and for fast delivery to customersParallel Processing

Simultaneous engineering ( time-based competition throughJIT) to reduce manufacturing lead timeKanban Production ControlPull system of production planning and control; batches of products go directly from upstream stages of production to

downstream stages without being stored in inventory JIT PurchasingPull-type approach is applied to purchasing shipments of parts from suppliers

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E-Commerce and JIT PurchasingInternet-based information systems allow companies to

quickly place orders for materials with their suppliersReducing Inventories through Setup ReductionIt is continuous process and important to involve the workersat each work station in this process, Engineers study thesetups, automatic devices are attached to the machines,

workers are trained in more efficient work methods and theresult is very short setup times; Japanese firms use SMEDWorking toward Repetitive ManufacturingProponents of JIT would argue that even job shops can bemade to behave more like repetitive manufacturing, at least

some sections of the system can be repetitive

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Factory operations changes for successful JIT

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Stabilize production scheduleIncrease production capacities of manufacturing work centersImprove product qualityCross-train workersReduce equipment breakdowns through preventive maintenanceDevelop long-term supplier relations that avoid interruptions tomaterial flows

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Factory operations changes for successful JITapplications

Most successful JIT applications have been in repetitive manufacturing,

operations where batches of standard products are produced at highspeeds and hive volumes with materials moving in a continuous flow.

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Drastic reduction in inventory levelsTime-based competitionImproved product quality and reduced cost of scrapPromotes teamwork among workers and flexibility in workassignmentsManufacturing operations are streamlines and problem free

Economies of reduced setup timesJob securing programs for their workersSubcontractor networks built on trust relationships (long-term) between customers and suppliersParticipative management styles

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Master Production ScheduleThe planning for production must be translatedinto a schedule called the Master Schedule Plan

or Master Production Schedule.This specifies how many units of each productare to be delivered and when they have to bedelivered.

Hence MPS is a listing of the products to beproduced, when they are to be delivered and inwhat quantitiesThe MPS must be consistent with the plantsproduction capacity.It must be based on an accurate estimate of demand for the firms products, together with arealistic assessment of its production capacity.

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MRP systems

(Material Requirements Planning)

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MRP is a computer-based production planning and inventory control system,comprising of a set of techniques that uses bill of material data,inventory data, and the master production schedule to calculaterequirements for materials and make recommendations to reordermaterials.

Objectives of MRP Ensure the availability of materials, components, & products

for planned production and for customer delivery. Maintain the lowest possible level of inventory. Plan manufacturing activities, delivery schedules and

purchasing activities.

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The concept is straight forwardThe large volume of data to be processed makes it

complicatedMRP is a sub set of inventory controlIt is an effective system for minimizing unnecessaryinvestment on inventoryThe sheer volume of data to be processed makes itimpossible to carry out processing without a digitalcomputer

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MRP converts MPS into a detailed schedulefor raw materials and componentsMRP operates on data contained in the MPS

which is the basic inputFurther there are two more inputsThe BOM which defines product structureThe inventory record file

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Customer orders

Salesforecasts

Service partsrequirements

Inventorytransactions

Enggchanges

MPS

BOM file MRPprocessor Inventoryrecord file

Outputreports

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The MRP processor operates on the datacontained in the MPS, BOM and Inventory recordfile (IRF).MPS specifies a period-by-period list of final

products requiredBOM specifies what component and materials areneeded for each productIRF specifies the current and future status of inventory for each componentThe MRP program calculates how many of eachcomponent and raw materials are need byexploding the end product requirements intosuccessively lower levels in the product structure

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A variety of reports are generated that canbe used in planning and plant operationswhich include

Order release notice

Reports showing planned orders to be released infuture periodsRescheduling notices, indicating due dates for openordersCancellation notices

The above are called primary outputs

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In addition secondary outputs are generated at theusers option comprising of

Performance reportsCost indicatorsItem usageActual vs planned lead timesPerformance measures

Schedule deviationsOrder overdueScrapInventory forecasts

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Reduction in inventory- 30% to 50%reduction in WIPImproved customer service- late ordersreduced by 90%

Quicker response to changes in demandImproved productivity- 5 % to 30 %increase in productivityReduced labour requirement

Reduced setup and product changeovercostsBetter machine utilizationIncreased sales and reduced sale price

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MRP IIManufacturing Resource Planning (MRP II) is

defined as a method for the effective planningof all resources of a manufacturing company.Ideally, it addresses operational planning inunits, financial planning in cash, and has a

simulation capability to answer "what-if"questions and extension of closed-loop MRP.This is a combination of people skills,dedication to data base accuracy, and computer

resources. It is a total company managementconcept for using human resources moreproductively.

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http://en.wikipedia.org/wiki/Material_requirements_planninghttp://en.wikipedia.org/wiki/Material_requirements_planning

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MRP II is not a proprietary software system and can thustake many forms. It is almost impossible to visualize anMRP II system that does not use a computer, but an MRP IIsystem can be based on either purchased licensed or in-house software.Almost every MRP II system is modular in construction.

Characteristic basic modules in an MRP II system are:Master Production Schedule (MPS)Item Master Data (Technical Data)Bill of materials (BOM) (Technical Data)Production Resources Data (Manufacturing Technical Data)Inventories and Orders (Inventory Control)Purchasing management

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http://en.wikipedia.org/wiki/Master_Production_Schedulehttp://en.wikipedia.org/wiki/Bill_of_materialshttp://en.wikipedia.org/wiki/Purchasing_managementhttp://en.wikipedia.org/wiki/Purchasing_managementhttp://en.wikipedia.org/wiki/Bill_of_materialshttp://en.wikipedia.org/wiki/Master_Production_Schedule

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Material Requirements Planning (MRP)Shop Floor Control (SFC)Capacity planning or Capacity Requirements Planning(CRP)Standard Costing (Cost Control)Cost Reporting / Management (Cost Control)

together with auxiliary systems such as:Business PlanningLot TraceabilityContract ManagementTool ManagementEngineering Change ControlConfiguration Management

47

http://en.wikipedia.org/wiki/Material_Requirements_Planninghttp://en.wikipedia.org/wiki/Capacity_planninghttp://en.wikipedia.org/wiki/Capacity_planninghttp://en.wikipedia.org/wiki/Material_Requirements_Planning

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Shop Floor Data CollectionSales Analysis and ForecastingFinite Capacity Scheduling (FCS)

and related systems such as:General Ledger Accounts Payable (Purchase Ledger)Accounts Receivable (Sales Ledger)Sales Order ManagementDistribution Requirements Planning (DRP)[Automated] Warehouse ManagementProject ManagementTechnical RecordsEstimatingComputer-aided design / Computer-aided manufacturing (CAD/CAM)CAPP

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http://en.wikipedia.org/wiki/General_Ledgerhttp://en.wikipedia.org/wiki/Computer-aided_designhttp://en.wikipedia.org/wiki/Computer-aided_manufacturinghttp://en.wikipedia.org/wiki/Computer-aided_manufacturinghttp://en.wikipedia.org/wiki/Computer-aided_manufacturinghttp://en.wikipedia.org/wiki/Computer-aided_manufacturinghttp://en.wikipedia.org/wiki/Computer-aided_designhttp://en.wikipedia.org/wiki/Computer-aided_designhttp://en.wikipedia.org/wiki/Computer-aided_designhttp://en.wikipedia.org/wiki/General_Ledger

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The MRP II system integrates thesemodules together so that they usecommon data and freely exchangeinformation, in a model of how a

manufacturing enterprise should and canoperate.The MRP II approach is therefore verydifferent from the point solutionapproach, where individual systems aredeployed to help a company plan, controlor manage a specific activity.MRP II is by definition fully integrated orat least fully interfaced.

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MRP II systems can provide:Better control of inventoriesImproved schedulingProductive relationships with suppliers

For Design / Engineering:Improved design controlBetter quality and quality control

For Financial and Costing:Reduced working capital for inventoryImproved cash flow through quicker deliveriesAccurate inventory records

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End of Unit-5