Planning of Operations and
Capacity
 Production planning includes the designing of conversion
system that converts inputs(resources) into desired
outputs (goods and services) and the scheduling of the
same.
 Planning involves consideration of all input variables to
achieve defined output goals. Control involves the
corrective actions taken when the actual output varies
from the desired one by bringing the actual output inline
with planned output.
 In particular, production planning consists mainly of the
evaluation and determination of production inputs such
as labor, plant machinery and equipment, materials and
utilities to achieve the desired goals
Operation planning and scheduling
Production planning is primarily concerned with
 Types of products
 Volume of product
 Timing of output
 Capacity utilization for production
 Balancing the capacity with output
Business plan
operations
Output planning
Capacity planning
Aggregate output planning
Aggregate capacity planning
Master scheduling
Rough cut capacity planning
Material requirement planning
Detailed capacity planning
Loading
Sequencing
Detailed
Scheduling
Expediting
Shop floor
control
Short term capacity (i/o)
control
An overview of operation/production
planning
Business plan:
• Guidelines for the organization taking into account
the organization’s strategies and policies, economic,
competitive and political conditions.
• It is the statement of the organization’s overall level
of business activities for coming 6-12 months.
• Business plan in a sense is an agreement between all
functional areas- finance, production, marketing,
engineering, R&D about the level of activity.
• Planning and scheduling must fit together at various
level for strategic fit.
Planning horizon
Long –range plan
(greater than 1 year in
time horizon)
• Long term capacity
• Location
• Layout
• Product design
• Work system
design
Intermediate plans
(6-12 months horizon)
• Employment
• Output
• Finished goods
inventory
• Backorders
• subcontracting
Short term plans(1
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day to less than 6
months)
Machine loading
Job assignments
Job sequencing
Order quantities
Work schedules
Aggregate output planning
• Concerned with overall level of output for
coming 6-18 months to support the business
plan on a weekly or monthly basis
• Out put is expressed in number of units of its
product group or families
• The plan is concerned with the division’s
existing production capacity and resources
required to carry out production so that the
business plan is best supported.
Aggregate capacity planning
• Capacity and output must be balanced
• A capacity plan translates an output plan into
input terms approximating how much of
division’s capacity will be consumed.
• Management can manipulate the short term
capacities by; workforce management, subcontracting, multiple work shifts etc
• Aggregate capacity plan balances output levels,
capacity constraints and temporary capacity
adjustments to meet demand.
Master production scheduling
• To meet the demand of individual products in
product group.
• More detail level of planning which disaggregates
the product groups into individual products and
indicates when they will be produced.
• It is the link between marketing and production.
• It shows when the incoming sales orders can be
scheduled into production and when each
shipment can be scheduled for delivery
Rough-cut capacity planning
• Process of testing the feasibility of production
schedules in terms of capacity.
• Also called resource requirement planning.
• This step ensures that the proposed MPS doesn’t
overload any key department , work Centre or
machine, making the MPS unworkable.
• Applied to must critical ones that are must likely
to be bottle necks.
• Helps to correct gaps between the capacity
requirement of MPS and available capacity.
Material Requirement Planning
Shows the time-phased requirements for
releasing materials and receiving materials that
enable the MPS to be implemented.
Detailed capacity planning
• Also called capacity requirement planning
• Companion process used with MRP to identify
in detail the capacity required to execute the
MRP.
Shop floor control
• Controlling and coordinating the weekly and
daily activities for the jobs
• It includes;
 loading : assigning of jobs to machines and work centers
Sequencing: the sequence of processing the jobs for
priority
Detailed scheduling: start times and job assignments for
each stage of processing
Expediting: material and work flow from station to
station are monitored and adjusted.
Aggregate planning
Overall level of outputs in support to business
plan. Developing the aggregate plan involves
four basic consideration.
Concept of aggregation
The goals of aggregate planning
The forecast of aggregate demand
Options for adjustment short run capacity.
Concept of Aggregation
 Must identify a meaningful measure of output
 In case of several product measurement of common output is
difficult.
one common convention
Bakery products
Product Type
Biscuits
Salt variety
Cakes
Sweet variety
Items
Sponge
Family
Muffins
Items
 Important variables..
 The amount of aggregate product to be produced during each time
 The amount of direct labour needed.
The goals of aggregate planning
Aggregate plan should satisfy various types of goals
 Should provide overall level of output, inventory..as per
the business plan
 Inventory buildup for promotional campaign
 Seasonal buildup or reduction should be considered by the aggregate
plan.
 Capacity of plan should be used consistently with the
organizational strategy. Aggregate plan must be
developed for the optimum use of existing capacity
 Aggregate plan should be consistent with the company’s
goals and policies regarding the employees..
The forecast of aggregate demand
 For the absolutely stable demand no need of
aggregate planning
 No of external variable affect the demand
 Over the period of time not only demand but
also the wage rates, material price, holding
cost may change
 So, benefits and success of aggregate plan
depends upon the accuracy of demand
forecast
 Different forecasting tools are used.
Options for adjusting short-run capacity
 The workforce size : the workers are either
hired or fired to adjust the workforce size
according to demand.
 The workforce utilization: workforce are
intensely utilized during the high demand
period and under utilized in other months
 Subcontract, rented or leased equipment,
outsourcing etc can be options
Production Planning Strategies
Basically use three main strategy. These strategies
involve tradeoffs among workforce size, work hours,
inventory and backlogs.
 Chase strategy
 Stable workforce- variable work hours
 Level strategy
Master Production Scheduling
 It is the process of schedule, which translate
aggregate plans into production schedules for
individual products..
 It is the plan that specifies what will be
produced? How much will be produced?
When they will be produced???
Scheduling and Control Process
The process of translating MPS into operational
schedules…
 Loading
 Priority sequencing
 Detailed scheduling
 Expediting
 Input /Output control
Loading
Job is assigned to the work centers after the
completion of MPS. Loading is the cumulative amount
of work currently assigned to a work center for future
processing. So, managing work load is the main
concern here. For this two approach are used
commonly..
 Infinite loading system
no consideration of capacity constraints. Assumed that capacity is infinite.
 Finite loading system
finite loading system creates a detailed schedule of each job and each
centers based on the capacity of work centers
work
 Infinite loading system
no consideration of capacity constraints. Assumed that
capacity is infinite
Tools and techniques used for evaluating current loading and assigning the
loads.
 Gantt load chart:
A Gantt chart is a horizontal bar chart developed as a production
control tool in 1917 by Henry L. Gantt, an American engineer and social scientist. Frequently
used in project management, a Gantt chart provides a graphical illustration of a schedule that
helps to plan, coordinate, and track specific tasks in a project.
 Visual load profile: Compares the load and the capacity as infinite loading
ignores the capacity of the work center.
 Assignment algorithms: useful for solving loading problems. Assigns one job to
one machine. Process: row operation, column operation , zero covering, testing
optimality..assigning the load.
Labor hours
Capacity
 Finite loading system: finite loading combines loading,
sequencing and detailed scheduling into a single system
rather than individually like infinite loading system. Job should
be assigned to each work center considering capacity and
specifying starting times and completion times. Jobs are
assigned to work centers according to their capacity hour by
hour, day by day into the future. In finite system job can be
loaded in two ways..
 Forward scheduling: Each job is assigned to each work center
considering the capacity and based on availability of earliest time slot.
Here jobs and orders are completed by due date because jobs start as
early as possible.
 Backward scheduling: jobs are assigned to work centers as late as
possible. Jobs can be completed just when it is due , not before
Priority Sequencing
Process of determining the to start first on machine or work
center. Systematic procedure for assigning priorities to
waiting jobs, there by determining the sequence in which
jobs will be processed.
Factors to be considered:
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Set up cost
In process inventory cost
Ideal time
No or percent of jobs that are late
Average time jobs are late.
Standard deviation of time jobs are late
Average no of jobs waiting in the queue
Average time to complete the job
Standard deviation of time to complete a job
Priority Sequencing Rules
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First come first served(FCFS)
Earliest due date(EDD)
Shortest processing time(STPT)
Truncated shortest processing time(TSPT)
Least slack time(LST)
Detailed Scheduling
Day to day planning of operation. Deals with the
questions like…
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Which work center will do which job?
When should an operation / job be started? When should it end?
On which equipment it should be done and by whom?
What is the sequence in which jobs/ operation need to be handled in a
facility or on equipment?
Involves the following activities
• Assigning the different jobs to different facilities
• Sequencing the jobs and the operation at a facility or on a machine, so as
to achieve the production department objective
• Monitoring the achievements and accordingly revising the schedule or
changing the priorities of jobs/ operations so as to address the deviations.
Expediting
• Implementation phase after loading sequencing and detailed
scheduling. Disruptions may arise in the form of raw material
shortage, labour problem, equipment breakdown etc..which
may force for changes in plans and schedules.
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it is the process of tracking the job progress and taking
special action to move it through facility.
• If the progress of job is not satisfactory , manager should
expedite the jobs paying special attention.
Input Output Control
• Process of comparing actual and planned
capacity utilization of the work centers.
• Adjustments are made in case of differences.
• Actual utilization may be more or less than
planned, therefore the capacity should be
adjusted accordingly.
Thank You