Production Planning and Control (ME-802 (D)) - Unit 1 Short Notes

UNIT 1: Fundamentals of Production Planning and Control

1.1 Introduction to Production Systems

Job Production

• Definition: Manufacturing a single unit or a small batch of custom products to meet a specific customer order.

• Characteristics:

  • High variety, low volume.

  • General-purpose machines & flexible workforce.

  • High setup/changeover times.

  • Continuous flow of materials is not fixed.

  • Detailed planning & routing for each job.

• Examples: Shipbuilding, special machine tools, construction projects, custom furniture.

Batch Production

• Definition: Manufacturing a group of identical items (a batch) that pass through the production process together.

• Characteristics:

  • Moderate variety, moderate volume.

  • Some specialization of machines & labor.

  • Setup required between batches.

  • Materials handled in lots.

  • Planning done for each batch.

• Examples: Bakeries (loaves), clothing batches, machine tool manufacturing (batches of 10-50), pharmaceutical batches.

Comparison: Job vs. Batch Production

[!TIP] Exam Focus: Be prepared to cite specific Indian industry examples (e.g., Job: BHEL custom turbine, Batch: Tata Motors vehicle variants).

1.2 Role and Significance of PPC

Need for PPC in Developing Economies (India's Context)

• Resource Optimization: Scarce capital & raw materials must be used efficiently.

• Industrial Growth: Systematic planning coordinates demand, capacity, and inventory, reducing bottlenecks.

• Competitiveness: Lowers production costs, improves delivery reliability, and enhances quality—key for competing globally.

• MSME Sector: Provides structured frameworks for small units to scale and manage operations.

• Post-Liberalization (1991): With increased competition, PPC shifted from optional to mandatory for survival.

• Infrastructure Link: Effective PPC requires and drives better infrastructure (logistics, power, skills).

[!TIP] Common Pitfall: Don't just state "PPC is good." Link each point to India's specific challenges: fragmented supply chains, variable power, skill gaps, and informal sector integration.

1.3 Forecasting

Sales Forecasting

• Definition: Estimating future sales volume or value for a product over a specified period.

• Purpose: Basis for production, inventory, procurement, and financial planning.

• Importance: Reduces uncertainty, aligns resources with market demand, aids budgeting.

• Fields of Application:

  • Production Planning: Setting MPS.

  • Inventory Management: Determining stock levels.

  • Financial Planning: Revenue & cash flow projections.

  • Manpower Planning: Hiring & training schedules.

  • Marketing: Budget allocation & campaign evaluation.

Market Analysis

• Components:

  1. Market Size & Growth: Historical trends, future projections.

  2. Customer Analysis: Needs, buying behavior, segmentation.

  3. Competitor Analysis: Market share, strategies, strengths/weaknesses.

  4. Environmental Scan: PESTEL factors (Political, Economic, Social, Technological, Environmental, Legal).

  5. Product Analysis: Life cycle stage, substitutes.

• Role in Forecasting: Provides the qualitative input and context for quantitative forecasting models. Helps adjust statistical forecasts for market realities (e.g., a new competitor entry).

1.4 Method Study

Definition & Differentiation from Work Measurement

Procedure of Method Study (SERIAC)

1. Select: Identify the job/process to study (high cost, frequent problems).

2. Record: Collect all facts using charts/ diagrams (e.g., process chart, flow diagram).

3. Examine: Critically question every detail (purpose, sequence, location, etc.). Use "5W1H" (What, Why, Where, When, Who, How).

4. Develop: Create and evaluate alternative methods. Select the best one.

5. Install: Implement the new method. Train personnel, change layouts, update documents.

6. Maintain: Ensure the new method is followed through audits and supervision.

Principles of Motion Economy (Gilbreth)

These are rules to design efficient, less-fatiguing workplace layouts and methods.

1. Symmetrical motions are preferable to twisting/turning.

2. Continuous, curved motions are faster than straight-line, start-stop motions.

3. Use lowest possible classification of motion (finger > wrist > arm > body).

4. Momentum should be used to assist the worker.

5. Ballistic movements (free swing) are faster than restricted or controlled.

6. Work should be arranged so that eyes focus on definite objects, not searching.

7. Two or more motions should be combined if possible.

8. Tools, materials, controls should be located for minimum reach/travel.

9. Proper heights for benches/chairs to allow good posture.

10. Mechanical devices should be used to relieve muscular effort.

Relation to Workplace Layout: These principles directly dictate workstation design—tool placement (minimize reach), sequence of parts (continuous flow), height adjustment (posture), and fixture design (symmetry, momentum). A layout violating these principles causes fatigue and inefficiency.

1.5 Work Measurement

Predetermined Motion Time Systems (PMTS)

• Overview: Systems that assign standard times to basic human motions (e.g., reach, grasp, move, release) based on extensive laboratory studies. Sum of times for all motions in a task gives the basic time.

• Examples: MTM (Methods-Time Measurement), MODAPTS (Modular Arrangement of Predetermined Time Standards).

• Critical Analysis:

Synthesis from Standard Data

• Concept: Using pre-determined standard times for standardized elements of work (e.g., "drill 10mm hole in mild steel," "tighten nut & bolt") to build up the standard time for a new, similar job.

• Procedure:

  1. Break the new job into standard elements (from a standard data bank).

  2. Identify the standard time for each element from the database.

  3. Add allowances (personal, fatigue, delay) to the sum of element times.

  4. Formula: Standard Time = Σ(Standard Element Times) × (1 + Allowance Fraction)

Standard Data Development

• Creation: Through time study or PMTS analysis of a range of jobs to establish reliable times for recurring work elements. Data is categorized by parameters (material, tool, size, etc.).

• Use: Provides a quick, consistent, and objective basis for estimating, planning, and costing new jobs without conducting a full time study each time. Essential for estimating departments and MPS in job/batch shops.

1.6 Production Planning

Information Required for Effective Planning

1. Forecast/Demand: Expected sales volume & pattern.

2. Inventory Status: Current stock of finished goods, WIP, raw materials.

3. Capacity: Available machine hours, labor hours, shifts.

4. Lead Times: Procurement, manufacturing, delivery times.

5. Bill of Materials (BOM): Exact components & quantities needed per finished product.

6. Routing: Sequence of operations & work centers.

7. Work-in-Progress (WIP): Current pipeline status.

8. Supplier Reliability: Lead time variability, quality history.

9. Policies: Lot sizing rules, safety stock levels.

10. Constraints: Cash flow, storage space, skilled labor availability.

Master Production Schedule (MPS)

• Definition: A time-phased plan stating what end items are to be produced, in what quantities, and when (typically weekly).

• Role: The primary link between overall business planning (forecast) and detailed shop floor scheduling. Drives MRP calculations.

• Components:

  • Item: Specific finished product/SKU.

  • Time Period: Weeks or days.

  • Projected On-Hand: Inventory expected at period start.

  • Net Requirements: Calculated by MRP from BOM & inventory.

  • Planned Order Receipts: When orders are expected to arrive.

  • Planned Order Releases: When orders should be released to production/procurement.

  • Available-to-Promise (ATP): Quantity available for new customer orders.

1.7 Scheduling

Types of Scheduling Situations

• Forward Scheduling: Scheduling from current date forward. Determines earliest completion date. Used for make-to-order.

• Backward Scheduling: Scheduling from due date backward. Determines latest start date. Used for make-to-stock or meeting firm deadlines.

• Finite Loading: Scheduling considering actual available capacity at each work center. Realistic, avoids overload.

• Infinite Loading: Scheduling assuming infinite capacity at each work center. Creates theoretical plans, highlights capacity bottlenecks.

Scheduling Methodologies

• Gantt Charts: Visual bar charts showing job assignments vs. time on resources.

• Priority Rules: Simple heuristics for job sequencing (e.g., FCFS, SPT, EDD, LPT, LCS).

• Johnson's Rule: For two-machine flow shops to minimize makespan.

• Heuristic Methods: For complex problems (e.g., line balancing, job shop).

• Mathematical Programming: Linear/Integer programming for optimal solutions (often for transportation, assignment).

Detailed Explanation: Gantt Charts

• Construction: Time on X-axis, work centers/machines on Y-axis. Horizontal bars represent job duration on a machine.

• Use:

  • Visual monitoring of progress vs. plan.

  • Identifying idle time and bottlenecks.

  • Loading charts show planned vs. actual load.

• Advantages: Simple, intuitive, excellent for communication.

• Disadvantages: Static, difficult to update manually for complex jobs, doesn't optimize—only displays plan.

1.8 Inventory Management

Economic Order Quantity (EOQ)

• Assumptions:

  1. Demand is steady & known (D units/year).

  2. Lead time is constant & known.

  3. No quantity discounts (unit price constant).

  4. Replenishment is instantaneous (entire lot arrives at once).

  5. No stockouts allowed.

  6. Carrying cost is a fixed percentage of inventory value.

• Derivation (Conceptual): Total Cost (TC) = Ordering Cost + Carrying Cost.

  • Ordering Cost = (D/Q) × S (S = cost per order)

  • Carrying Cost = (Q/2) × C × i (C = unit cost, i = carrying cost rate)

  • Minimize TC by differentiating w.r.t Q and setting d(TC)/dQ = 0.

• Formula:

$$\boxed{EOQ = Q^* = \sqrt{\frac{2DS}{Ci}}$$

*   D = Annual demand (units)

*   S = Ordering cost per order (Rs.)

*   C = Unit cost (Rs./unit)

*   i = Carrying cost rate (fraction/year)

• Total Minimum Cost (excluding material cost):

$$TC_{min} = \sqrt{2DSiC}$$

• Impact of Quantity Discounts: If supplier offers lower price for larger Q, calculate EOQ at each price break. Compute Total Cost (including material cost) for EOQ at that price and for the minimum quantity required for that price break. Choose the Q with lowest total cost.

Inventory Parameters

• Reorder Point (ROP): Inventory level at which a new order is placed.

$$\boxed{ROP = \text{Demand during Lead Time} + \text{Safety Stock}}$$

*   If demand & lead time constant: ROP = d × L (d = daily demand, L = lead time in days)

• Safety Stock (SS): Extra stock held to protect against uncertainty in demand or lead time.

• Minimum Inventory: Safety Stock level.

• Maximum Inventory: Order quantity (Q) + Safety Stock.

• Average Inventory: (Q/2) + Safety Stock.

Inventory Classification (ABC Analysis)

• Principle: Focus managerial effort on the most important items (Pareto's 80/20 rule).

• Procedure:

  1. Calculate annual usage value (unit cost × annual consumption) for each item.

  2. Rank items in descending order of usage value.

  3. Calculate cumulative percentage of total usage value.

  4. Classify:

     • A-Class: ~70-80% of total value, ~10-20% of items. Tight control, frequent review.

     • B-Class: ~15-25% of value, ~20-30% of items. Normal control.

     • C-Class: ~5-10% of value, ~50-60% of items. Simple controls, bulk ordering.

• Other Methods: VED (Vital, Essential, Desirable), FSN (Fast, Slow, Non-moving), SDE (Scarce, Difficult, Easily available).

Transportation Problem

• Formulation as LP:

  • Objective: Minimize Total Transportation Cost.

  • Constraints: Supply at each source ≤ capacity; Demand at each destination ≥ requirement.

  • Variables: x_ij = units shipped from source i to destination j.

  • Model:

    Min ΣΣ c_ij x_ij

    s.t. Σ_j x_ij ≤ Supply_i (for all i)

    Σ_i x_ij ≥ Demand_j (for all j)

    x_ij ≥ 0

• Optimal Distribution Methods:

  1. Northwest Corner Rule: Start top-left cell, allocate as much as possible (min of supply/demand), move right or down. Gives initial feasible solution.

  2. Least Cost Method (Matrix Minima): Allocate to cell with lowest cost in entire matrix. More efficient initial solution than NWC.

  3. Optimality Test (MODI / Stepping Stone): Check if current solution is optimal. If not, adjust allocations to reduce cost.

• Goal: Find allocation (x_ij) that satisfies all supply/demand and minimizes Σ(c_ij × x_ij).

1.9 Advanced Planning Systems

Manufacturing Resources Planning (MRP II)

• Definition: An evolution of MRP that integrates all manufacturing resources (materials, labor, machines, finance) into a single, closed-loop system. It links production planning, master production schedule, material requirements planning, capacity requirements planning, and shop floor control with financial data.

• Surrounding Failures/Limitations of MRP II:

  1. Assumes Infinite Capacity: Core MRP logic doesn't consider real capacity constraints until CRP stage, leading to infeasible plans.

  2. Data Integrity Dependency: "Garbage in, garbage out." Requires accurate BOM, inventory, and lead times.

  3. Rigid Lead Times: Assumes fixed, deterministic lead times, ignoring variability.

  4. Poor at Finite Scheduling: Basic MRP II is not a detailed finite scheduler; needs separate module.

  5. Implementation Complexity & Cost: Very high, especially for customizing to specific processes.

  6. Lack of Integration with Other Functions: Initially weak on linking to sales, engineering, and finance seamlessly.

Enterprise Resource Planning (ERP)

• Definition: A cross-functional, integrated software suite that automates and manages core business processes (finance, HR, procurement, manufacturing, supply chain, services, projects) across an entire enterprise using a centralized database.

• Advantages:

  • Single Source of Truth: Integrated data, eliminates silos.

  • Improved Efficiency: Automation of workflows.

  • Better Decision Making: Real-time information & reporting.

  • Standardized Processes: Enforces best practices.

  • Scalability & Flexibility: Can support growth and mergers.

  • Regulatory Compliance: Built-in controls and audit trails.

• Disadvantages:

  • Very High Cost: Licensing, implementation, customization, training.

  • Complex Implementation: Long duration (1-3 years), high risk of failure.

  • Business Process Re-engineering (BPR) Required: Often forces company to change processes to fit software.

  • Resistance to Change: Major organizational disruption.

  • Customization Dilemma: Customization increases cost/risk; "vanilla" may not fit.

• Implementation Phases (Typical):

  1. Project Preparation: Define scope, objectives, team, budget.

  2. Business Blueprint: Document current ("as-is") and future ("to-be") processes.

  3. Implementation/Realization: Configure system, develop customizations, migrate data.

  4. Final Preparation: Testing (unit, integration, UAT), training, cutover planning.

  5. Go-Live & Support: System goes live, hypercare support, transition to steady state.

• Key Challenges: Top management commitment, change management, data migration, user training, managing scope creep.

1.10 Line Balancing

Heuristic Methods for Line Balancing

• Goal: Assign tasks (with precedence relationships) to workstations so that cycle time (C) is met and number of stations (N) or efficiency is optimized.

• Types & Rules:

  1. Ranked Positional Weight (RPW) Method:

     • Rule: Assign tasks to stations in descending order of their positional weight (sum of task time + times of all immediate successors).

     • Procedure: List tasks by RPW. For each station, starting from first, assign highest RPW task that fits (time ≤ remaining cycle time) and whose predecessors are already assigned.

  2. Kilbridge & Wester Method:

     • Rule: Assign tasks based on "positional weight of the remaining network". At each step, calculate RPW for the remaining unassigned tasks in the network and pick the highest.

     • More dynamic than simple RPW as it recalculates weights after each assignment.

  3. Largest Candidate Rule (LCR):

     • Rule: At each step, identify all tasks that are eligible (predecessors assigned, fits in time). Choose the one with largest task time.

  4. Shortest Processing Time (SPT):

     • Rule: Among eligible tasks, choose the one with smallest task time. Tends to balance load but may violate precedence later.

• General Steps in Heuristic Line Balancing:

  1. Draw precedence diagram.

  2. Calculate cycle time (C) = Available Time / Desired Output Rate.

  3. Calculate theoretical minimum stations: N_min = Σt_i / C.

  4. Choose a heuristic rule.

  5. Scheduling: For each station, assign tasks one by one according to rule, respecting precedence & cycle time.

  6. Calculate Line Efficiency = (Σt_i / (N × C)) × 100%.

  7. Balance Delay = 100% - Line Efficiency.

  8. If efficiency low, try different heuristic or adjust cycle time.

1.11 Productivity Management

Role of Factory Executives and Workers

• Executives (Management):

  • Policy & Strategy: Set productivity goals, provide resources.

  • Methodology: Implement PPC, method study, work measurement.

  • Technology: Invest in modern equipment & automation.

  • Training: Develop skills matrix, provide training.

  • Motivation: Design incentive schemes, recognition programs.

  • Environment: Improve working conditions, safety, ergonomics.

  • Communication: Create feedback mechanisms, involve workers.

• Workers:

  • Implementation: Follow standard methods, suggest improvements (Kaizen).

  • Skill Development: Acquire and upgrade skills.

  • Attendance & Punctuality: Reduce idle time.

  • Quality Focus: Reduce rework & scrap.

  • Teamwork: Collaborate, share knowledge.

  • Ownership: Take pride in work, maintain equipment.

Productivity Improvement Techniques (Overview)

1. Technological: Automation, CNC machines, robotics, CAD/CAM, better tools.

2. Methodological: Method study, work measurement, value engineering, JIT, TQM.

3. Human Resource: Training, job enrichment, suggestion schemes, quality circles, ergonomic improvements.

4. Material Management: Better inventory control (EOQ, ABC), vendor development, waste reduction.

5. Layout & Flow: Cellular manufacturing, line balancing, improved material handling.

6. Financial: Incentive schemes, profit sharing.

7. Managerial: Better planning & scheduling (MPS, MRP), effective supervision, participative management.

[!TIP] Exam Link: For "Role of Executives & Workers," structure answer as two parallel columns listing specific actions for each. Link techniques to PPC tools (e.g., "Method Study" under methodological, "MPS" under managerial).