Unit 7

OPERATIONS MANAGEMENT
CHAPTER 7
PRODUCTION PLANNING & CONTROL
Learning Objectives
After going through this unit, you will be able to:
Arrange for capacity planning
Prepare aggregate plan
Prepare Master production schedule
Prepare production plan
Implement Production control techniques
Structure
7.1 Concept of Planning
7.2 Demand Forecasting
7.3 Capacity Planning
7.4 Aggregate Planning
7.5 Master Production Schedule
7.6 Production Planning and Control
7.7 Manufacturing Planning And Control System
7.8 Operations Scheduling
7.9 Sequencing
7.10 Production Activity Control
7.11 Dispatching
7.12 Progressing
7.13 Key Words
7.14 Summary
7.1 Production Planning
Production is defined as the “manufacturing of goods and services” and

planning is defined as “the series of related and coordinated activities -
materials control, process planning, scheduling etc. designed to systematize
in advance the manufacturing efforts” Production planning, therefore, is the
pre-determination of manufacturing requirements such as men, materials,
machines, manufacturing process, money, order priority etc. for the production
of goods of the right quality, in the right quantities and at the right time.
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Production is defined as the “manufacturing of goods and services” and

planning is defined as “the series of related and coordinated activities -
materials control, process planning, scheduling etc. designed to systematize
in advance the manufacturing efforts”
Production planning, therefore, is the pre-determination of manufacturing
requirements such as men, materials, machines, manufacturing process,
money, order priority etc. for the production of goods of the right quality, in the
right quantities and at the right time. Control is to review the work progress,
make corrections wherever required thereby ensure that programmed
production takes place. Production planning and control thus is the process of
planning production in advance, setting rate of each item, fixing starting and
finishing dates for each item, authorizing shop activity by release of production
orders, follow up the progress of products, and expediting wherever required.
According to Ray Wild, “Production planning is the determination, acquisition
and arrangement of all facilities necessary for future production of items. In
other words production planning is essentially a pre-production activity,
associated with the design of the production system. The production system is
considered to incorporate an organisational element in addition to physical
facilities and production planning is concerned with organising the production
of an item prior to the commencement of production.
Production planning functions are hierarchic and have different time horizons.
It means time period for some of the functions is in years while for some it is in
weeks or days.
Fig. illustrates the Production Planning Hierarchy and time horizon.
LONG-RANGE CAPACITY PLANNING Long range ( 3-5

Years)
AGGREGATE PLANNING Medium Range (6-18 months)
MASTER PRODUCTION SCHEDULING Short Range (in Weeks)
PRODUCTION PLANNING AND CONTROL Short Range (In days/few

weeks)
Long range capacity plan is drawn considering factors like Market demand,
technology and R&D plans. From the capacity plan, aggregate plan is
prepared. Capacity plan may be for a time horizon of 3-5 years while aggregate
plan is normally for a tie period of 6-18 months. Master Production Schedule is
derived from the aggregate plan. Master production Schedule is an outcome of
desegregations. In aggregate planning, quantities to be produced are
expressed at aggregate level i.e. product group/family level. In Master
Production Schedule product wise schedule is prepared for a time horizon on
the basis of aggregate plan and capacity check called Rough cut planning.
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7.2 Demand Forecasting
Demand forecasting is the activity of estimating the quantity of a product or

service that consumers will purchase. Demand forecasting involves
techniques including both informal methods, such as educated guesses, and
quantitative methods, such as the use of historical sales data or current data
from test markets. Demand forecasting may be used in making pricing
decisions, in assessing future capacity requirements, or in making decisions
on whether to enter a new market.
Demand forecasting is the activity of estimating the quantity of a product or
service that consumers will purchase. Demand forecasting involves
techniques including both informal methods, such as educated guesses, and
quantitative methods, such as the use of historical sales data or current data
from test markets. Demand forecasting may be used in making pricing
decisions, in assessing future capacity requirements, or in making decisions
on whether to enter a new market.
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Necessity for forecasting demand

Often forecasting demand is confused with forecasting sales. But, failing to
forecast demand ignores two important phenomena. There is a lot of debate in
demand-planning literature about how to measure and represent historical
demand, since the historical demand forms the basis of forecasting. The main
question is whether we should use the history of outbound shipments or
customer orders or a combination of the two as proxy for the demand.
Stock effects - The effects that inventory levels have on sales. In the extreme
case of stock-outs, demand coming into your store is not converted to sales
due to a lack of availability. Demand is also untapped when sales for an item
are decreased due to a poor display location, or because the desired sizes are
no longer available. For example, when a consumer electronics retailer does
not display a particular flat-screen TV, sales for that model are typically lower
than the sales for models on display. And in fashion retailing, once the stock
level of a particular sweater falls to the point where standard sizes are no
longer available, sales of that item are diminished.
Market response effect - The effect of market events that are within and
beyond a retailer's control. Demand for an item will likely rise if a competitor
increases the price or if you promote the item in your weekly circular. The
resulting sales a change in demand as a result of consumers responding to
stimuli that potentially drive additional sales. Regardless of the stimuli, these
forces need to be factored into planning and managed within the demand
forecast.
In this case demand forecasting uses techniques in causal modeling. Demand
forecast modeling considers the size of the market and the dynamics of market
share versus competitors and its effect on firm demand over a period of time. In
the manufacturer to retailer model, promotional events are an important causal
factor in influencing demand. These promotions can be modeled with
intervention models or use a consensus to aggregate intelligence using
internal collaboration with the Sales and Marketing functions.
Demand forecasting Methods

No demand forecasting method is 100% accurate. Combined forecasts
improve accuracy and reduce the likelihood of large errors. Reference class
forecasting was developed to reduce error and increase accuracy in
forecasting, including in demand forecasting. Other experts have shown that
rule-based forecasts produce more accurate results than combined forecasts.
Methods that rely on qualitative assessment –This includes forecasting
demand based on expert opinion. Some of the types in this method are,
Unaided judgment
Prediction market
Delphi technique
Game theory
Judgmental bootstrapping
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Simulated interaction
Intentions and expectations surveys
Conjoint analysis
Methods that rely on quantitative data – This is a mathematical method
Discrete Event Simulation

Extrapolation
Reference class forecasting
Quantitative analogies
Rule-based forecasting
Neural networks
Data mining
Causal models
Segmentation
Activity A: List different methods of demand forecasting
7.3 Capacity Planning
Potential Capacity The capacity that can be made available to influence

the planning of senior management (e.g. in helping
them to make decisions about overall business
growth, investment etc). This is essentially a long-
term decision that does not influence day-to-day
production management
Immediate Capacity The amount of production capacity that can be made

available in the short-term. This is the maximum
potential capacity - assuming that it is used
productively
Effective Capacity An important concept. Not all productive capacity is

actually used or usable. It is important for production
managers to understand what capacity
is actually achievable.
Measuring capacity
Capacity, being the ability to produce work in a given time, must be measured
in the unit of
work.
For example, consider a factory that has a capacity of 10,000 " machine
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hours" in each 40 hour week. This factory should be capable of producing

10,000 "standard hours of work" during a 40-hour week. The actual volume of
product that the factory can produce will depend on:
-the amount of work involved in production (e.g. does a product require 1, 5, 10
standard hours? -any additional time required in production (e.g. machine set-
up, maintenance) -the productivity or effectiveness of the factory
Constraints on capacity
In capacity management there are usually two potential constraints - Time and
Capacity
Time may be a constraint where a customer has a particular required delivery

date. In this situation, capacity managers often "plan backwards". In other
words, they allocate the final stage (operation) of the production tasks to the
period where delivery is required; the penultimate task one period earlier and
so on. This process helps identify whether there is sufficient time to meet the
production demands and whether capacity needs to be increased, albeit
temporarily.
7.4 Aggregate planning
Aggregate planning is the process of developing, analyzing, and maintaining a

preliminary, approximate schedule of the overall operations of an organization.
The aggregate plan generally contains targeted sales forecasts, production
levels, inventory levels, and customer backlogs. This schedule is intended to
satisfy the demand forecast at a minimum cost. Properly done, aggregate
planning should minimize the effects of shortsighted, day-to-day scheduling, in
which small amounts of material may be ordered one week, with an
accompanying layoff of workers, followed by ordering larger amounts and
rehiring workers the next week. This longer-term perspective on resource use
can help minimize short-term requirements changes with a resulting cost
savings.
Aggregate planning is an operational activity which does an aggregate plan for
the production process, in advance of 3 to 18 months, to give an idea to
management as to what quantity of materials and other resources are to be
procured and when, so that the total cost of operations of the organisation is
kept to the minimum, over that period. In simple terms, aggregate planning is
an attempt to balance capacity and demand in such a way that costs are
minimized. The term “aggregate” is used because planning at this level
includes all resources “in the aggregate;” for example, as a product line or
family. Aggregate resources could be total number of workers, hours of
machine time, or tons of raw materials. Aggregate units of output could include
gallons, feet, pounds of output, as well as aggregate units appearing in service
industries such as hours of service delivered, number of patients seen, etc.
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Aggregate plans can be classified into two types: manufacturing aggregate

plan and service aggregate plan which are elaborated below:
Production Plan (manufacturing aggregate plan): is a managerial statement

of the period-by-period (time-phased) production rates, work-force levels, and
inventory investment, given customer requirements and capacity limitations.
Staffing Plan (service aggregate plan): a managerial statement of the period-
by-period staff sizes and labor-related capacities, given customer
requirements and capacity limitations.
Aggregate planning does not distinguish among sizes, colors, features, and so
forth. For example, with automobile manufacturing, aggregate planning would
consider the total number of cars planned for not the individual models, colors,
or options. When units of aggregation are difficult to determine (for example,
when the variation in output is extreme) equivalent units are usually
determined. These equivalent units could be based on value, cost, worker
hours, or some similar measure. The quantity of outsourcing, subcontracting
of items, overtime of labour, numbers to be hired and fired in each period and
the amount of inventory to be held in stock and to be backlogged for each
period are decided. All of these activities are done within the framework of the
company ethics, policies, and long term commitment to the society, community
and the country of operation.
Aggregate planning is considered to be intermediate-term (as opposed to
long- or short-term) in nature. Hence, most aggregate plans cover a period of
three to 18 months. Aggregate plans serve as a foundation for future short-
range type planning, such as production scheduling, sequencing, and loading.
The master production schedule (MPS) used in material requirements
planning (MRP) has been described as the aggregate plan “disaggregated.”
Objectives of aggregate planning normally are:

to minimize total cost over the planning horizon.
to maximize customer service
to minimize inventory investment
to minimize changes in workforce levels
to minimize changes in production rates
to maximize utilization of plant and equipment
Characteristics of aggregate plan are as under:

Consider a “planning horizon” from about 3 to 18 months, with periodic
updating.
Look at aggregate product demand, stated in common terms.
Look at aggregate resource quantities, stated in common terms.
Influence both supply and demand by adjusting production rates,
workforce levels, inventory levels, etc., but facilities cannot be
expanded.
Options which can be used to increase or decrease capacity to match current

demand include:
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1. Hire/lay off. By hiring additional workers as needed or by laying off workers

not currently required to meet demand, firms can maintain a balance
between capacity and demand.
2. Overtime. By asking or requiring workers to work extra hours a day or an
extra day per week, firms can create a temporary increase in capacity
without the added expense of hiring additional workers.
3. Part-time or casual labour. By utilizing temporary workers or casual
labor (workers who are considered permanent but only work when
needed, on an on-call basis, and typically without the benefits given to full-
time workers).
4. Inventory. Finished-goods inventory can be built up in periods of slack
demand and then used to fill demand during periods of high demand. In
this way no new workers have to be hired, no temporary or casual labor is
needed, and no overtime is incurred.
5. Subcontracting. Frequently firms choose to allow another manufacturer
or service provider to provide the product or service to the subcontracting
firm's customers. By subcontracting work to an alternative source,
additional capacity is temporarily obtained.
6. Cross-training. Cross-trained employees may be able to perform tasks
in several operations, creating some flexibility when scheduling capacity.
7. Other methods. While varying workforce size and utilization, inventory
buildup/backlogging, and subcontracting are well-known alternatives,
there are other, more novel ways that find use in industry. Among these
options are sharing employees with counter-cyclical companies and
attempting to find interesting and meaningful projects for employees to
do during slack times.
Aggregate planning has certain prerequired inputs which are inevitable.
They include:
Information about the resources and the facilities available.
Demand forecast for the period for which the planning has to be done.
Cost of various alternatives and resources. This includes cost of holding
inventory, ordering cost, cost of production through various production
alternatives like subcontracting, backordering and overtime.
Organisational policies regarding the usage of above alternatives.
Aggregate Planning Strategies

1. Active strategy
Attempts to handle fluctuations in demand by focusing on demand
management
Use pricing strategies and/or advertising and promotion
Develop counter-cyclical products
Request customers to backorder or advance-order
Do not meet demand
2. Passive strategy (reactive strategy):
Attempts to handle fluctuations in demand by focusing on supply and
capacity management
Vary size work force size by hiring or layoffs
Vary utilization of labour and equipment through overtime or idle time
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Build or draw from inventory

Subcontract production
Negotiate cooperative arrangements with other firms
Allow backlogs, back orders, and/or stockouts
3. Mixed strategy :
Combines elements of both an active strategy and a passive (reactive)
strategy
Firms will usually use some combination of the two
Passive (Reactive) Strategies in Aggregate Planning: Basic

Approaches
1. Chase Strategy
A chase strategy implies matching demand and capacity period by period.
Capacities (workforce levels, production schedules, output rates, etc.) are
adjusted to match demand requirements over the planning horizon.
This could result in a considerable amount of hiring, firing or laying off of
employees; insecure and unhappy employees; increased inventory carrying
costs; problems with labor unions; and erratic utilization of plant and
equipment. It also implies a great deal of flexibility on the firm's part. The major
advantage of a chase strategy is that it allows inventory to be held to the lowest
level possible, and for some firms this is a considerable savings. Most firms
embracing the just-in-time production concept utilize a chase strategy
approach to aggregate planning.
Advantages :
anticipation inventory is not required, and investment in inventory is low
Labour utilization is kept high
Disadvantages :
expense of adjusting output rates and/or workforce levels
alienation of workforce
2. Level strategy
A level strategy seeks to produce an aggregate plan that maintains a steady
production rate and/or a steady employment level. In order to satisfy changes
in customer demand, the firm must raise or lower inventory levels in
anticipation of increased or decreased levels of forecast demand. The firm
maintains a level workforce and a steady rate of output when demand is
somewhat low. This allows the firm to establish higher inventory levels than are
currently needed. As demand increases, the firm is able to continue a steady
production rate/steady employment level, while allowing the inventory surplus
to absorb the increased demand.
A second alternative would be to use a backlog or backorder. A backorder is
simply a promise to deliver the product at a later date when it is more readily
available, usually when capacity begins to catch up with diminishing demand.
In essence, the backorder is a device for moving demand from one period to
another, preferably one in which demand is lower, thereby smoothing demand
requirements over time.
A level strategy allows a firm to maintain a constant level of output and still
meet demand. This is desirable from an employee relations standpoint.
Negative results of the level strategy would include the cost of excess
inventory, subcontracting or overtime costs, and backorder costs, which
typically are the cost of expediting orders and the loss of customer goodwill.
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Advantages :
stable output rates
stable workforce levels.
Disadvantages :
greater inventory investment is required
increased overtime and idle time
resource utilizations vary over time
Most firms find it advantageous to utilize a combination of the level and chase
strategy. A combination strategy (sometimes called a hybrid or mixed strategy)
can be found to better meet organizational goals and policies and achieve
lower costs than either of the pure strategies used independently.
Techniques For Aggregate Planning
Techniques for aggregate planning range from informal trial-and-error

approaches, which usually utilize simple tables or graphs, to more formalized
and advanced mathematical techniques.
An informal but useful trial-and-error process for aggregate planning
presented in outline form. This general procedure consists of the following
steps:
1. Determine demand for each period.
2. Determine capacity for each period. This capacity should match demand,
which means it may require the inclusion of overtime or subcontracting.
3. Identify company, departmental, or union policies that are pertinent. For

example, maintaining a certain safety stock level, maintaining a reasonably
stable workforce, backorder policies, overtime policies, inventory level
policies, and other less explicit rules such as the nature of employment with the
individual industry, the possibility of a bad image, and the loss of goodwill.
4. Determine unit costs for units produced. These costs typically include the
basic production costs (fixed and variable costs as well as direct and indirect
labor costs). Also included are the costs associated with making changes in
capacity. Inventory holding costs must also be considered, as should storage,
insurance, taxes, spoilage, and obsolescence costs. Finally, backorder costs
must be computed. While difficult to measure, this generally includes
expediting costs, loss of customer goodwill, and revenue loss from cancelled
orders.
5. Develop alternative plans and compute the cost for each.
6. If satisfactory plans emerge, select the one that best satisfies objectives.
Frequently, this is the plan with the least cost. Otherwise, return to step 5.
7.5 Master Production Schedule
A Master Production Schedule is a schedule of planned completions of end

items. Master Production Schedule is an important link of planning process. It
is one of the three inputs of Material Requirement Planning Process. Master
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Production Schedule states requirements for individual end items by date and
quantity.
Companies wish to satisfy market demands expressed in terms of real or
forecast demand. To do this companies in general produce a Master
Production Schedule (MPS) that states the number of each product to be
made over some planning horizon. The MPS states the number of each
product to be produced period by period over some time into the future known
as the planning horizon. The MPS, in conjunction with the sales program, is the
company's planned response to the demands of the market.
A Master Production Schedule is also called the master of all schedules. The
Master Production Schedule gives production, planning, purchasing, and top
management the information needed to plan and control the manufacturing
operation. It sets the quantity of each end item to be completed in each week of
a short-range planning horizon. It is a plan for future production of end items.
The application ties overall business planning and forecasting to detail
operations through the Master Production Schedule.
Master Production Scheduling is balancing demand with supply. It means
satisfying the customers within the constraints of the factory and the supplier
base. It's doing this in the most economical, efficient, productive, and profitable
manner. The master production schedule drives the MRP process. The
schedule of finished products provided by the master schedule is needed
before the MRP system can do its job of generating production schedules for
component items.
In particular, the MPS, company production and inventory policies and
knowledge of inventory levels, are used to determine the number of items to
produce, the planned inventories of raw material, work-in-progress, finished
parts and finished products and the manufacturing resource requirements
such as machines and labour. Plans should be realistic and avoid asking for
the impossible. The master production schedule works within the constraints
of the production plan but produces a more specific schedule by individual
products. The time frame is more specific, too. An MPS is usually expressed in
days or weeks and may extend over several months to cover the complete
manufacture of the items contained in the MPS.
Master Production Scheduling is a part of Manufacturing Planning and Control
System. A Master Production Schedule or MPS is the plan that states:
what is to be produced.
how many are to be completed.
when they are to be completed.
Master Production Schedule is not :

A sales forecast (MPS summarizes production to meet sales forecasts)
A manufacturing schedule (MPS tells when end items are available for
sale, but not when the end items or their component parts will be
manufactured)
A wish list
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A final assembly schedule

MPS is concerned only with the final product, planning the production of parts
and components will be left for detailed plans to follow. In Master Production
Schedule following needs to be clearly understood about the quantities:
The quantities represent production, not demand. As we saw in the

aggregate production planning Unit, production does not necessarily
have to match demand. Strategy decisions made in the production
planning stage filter down to the master production schedule.
The quantities may consist of a combination of customer orders and
demand forecasts. Some figures in the MPS are confirmed, but others are
predictions. As might be expected, the quantities in the more recent time
periods are more firm, whereas the forecasted quantities further in the
future may need to be revised several times before the schedule is
completed. Some companies set a time fence, within which no more
changes to the master schedule are allowed. This helps to stabilize the
production environment.
The quantities represent what needs to be produced, not what can be
produced. Because the MPS is derived from the aggregate production
plan, its requirements are probably “doable,” but until the MRP system
considers the specific resource needs and the timing of those needs, the
feasibility of the MPS cannot be guaranteed. Thus, the MRP system is
often used to simulate production to verify that the MPS is feasible or to
confirm that a particular order can be completed by a certain date before
the quote is given to the customer.
Master Schedule
Master schedule, a result of desegregation, shows quantity and timing of
specific products. It usually covers 6 to 12 weeks. After preparing a tentative
Master Schedule, rough-cut capacity planning can be done. Rough-cut
capacity planning is to check feasibility of master schedule with respect to
available manpower and machinery capacities, storage spaces, and vendor
capabilities. It is just a rough check to ensure that the master schedule is
achievable. The master schedule then is used as the basis for short term
planning.
Master schedule states quantity and delivery time of specific products. If a
company selling electric motors has requirements of 175 motors of a particular
design for a month say January. Master schedule would be 175 motors in
January. But it does not say how we get it, from production or from inventory.
Master Production Schedule (MPS) is developed based on Master schedule.
MPS determines the promised inventory, production requirements, available
to promise inventory for each period.
Objectives of MPS
Following are the objectives of the Master Production Schedule:
To set due dates for the availability of end items.
To provide information regarding resources and materials required to
support the aggregate plan.
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While drawing Master Production Schedule (MPS) following factors must be

considered:
Should be noted that quantities of individual items must equal aggregate
quantities from the Production Plan. In other words, sum of the MPS
quantities must equal those of production plan
Total requirements for a product must be allocated over time in an efficient
manner.
Capacity can not be assumed as infinite. Capacity limitation must be
recognized. If capacity is assumed as infinite the MPS would not be
realistic and feasible. It would lead to delays, high inventory, customer
dissatisfaction and higher costs.
An MPS showing end items available every month (or period) that is feasible
with respect to demand and capacity.
The Table below provides comprehensive list of inputs and outputs of Master
Production Schedule:
Table 1: Inputs and outputs of MPS

MPS INPUTS MPS OUTPUT
Forecast Demand Amounts to be Produced
Production Costs Due dates
Inventory Costs Quantity Available to Promise
Customer Orders Projected Available Balance
Inventory Levels
Supply
Lot Size
Production Lead Time
Capacity
Validating the MPS with respect to capacity has been termed rough cut
capacity planning (RCCP).The master production schedule links the firm's
broad strategies, as expressed in the production plan, to more specific tactical
plans that will enable a firm to achieve its objectives. A master production
schedule (MPS) expresses the operations' plan of production for:
a specific period of time.
is stated in terms of end items, which may be either shippable products or
the highest level assemblies used to make them.
Planning Horizon
The planning horizon is the amount of time the master schedule extends
into the future
This is normally set to cover a minimum of cumulative lead time plus time
for lot sizing low-level components and for capacity changes of primary
work centers.
The master production scheduling process is iterative. The techniques used

for master production scheduling depend on the competitive priorities of the
firm.
MPS for Make to Stock Strategy
Firms using a make-to-stock strategy typically schedule production of end
items, whereas firms using a make -to-order strategy schedule purchased
items.
The MPS is stated in end items (finished products, service and replacement
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parts, components or subassemblies that are sold to customers or shipped to

other plants).It has three parts:
1. Master Schedule—Schedule production of all products for each period.
2. Actual demand (Book orders)- These consume the master schedule.
3. Available to promise—The number of units for which orders still will be
taken,
MPS for 'Assemble-to-Order' Strategy

Firms using an assemble-to-order strategy schedule major components or
assemblies to capitalize on commonality of parts for various end-item parents.
An assemble-to-order firm would master schedule the major subassemblies or
modules that can be assembled to make the particular product options ordered
by customers. A final assembly schedule is developed later when customer
orders are received.
Trial Schedule
The MPS is reviewed (updated) weekly (biweekly) in order to make sure the
proper mix of products are scheduled to be produced, especially for the week
(the period) is about to enter the time fence. A trial MPS is developed within the
overall guidelines of the production plan.
If the resources are available, the trial schedule is authorized for
implementation. If not the trial MPS or the production plan has to be changed. A
typical master production schedule looks like a matrix with a list of end items
down the side and the sequential weeks across the top.
Time Fences
Time Fence is a Series of time intervals that specifies what types of order
changes are allowed.
Demand Time Fence – A designated period during which the MPS is
frozen. The DTF starts with the present period and extends into the future
a relatively few periods. Freezing The MPS means Not allowing changes
of any type to the existing schedule.
Planning Time Fence – A designated period during which the master
scheduler is allowed to make changes, but computer software is not. The
PTF starts at the end of the demand time fence and extends further into
the future. The length of each time fence is unique to each business and is
based on the cost of making changes.
Steps In Master Production Schedule
Make a preliminary MPS.
Perform rough-cut capacity planning.
Resolve differences.
Rough-cut capacity planning checks whether critical resources are available
to support the preliminary master schedule
Activity B: Visit any nearby manufacturing unit and List different inputs that
they are giving to MPS
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7.6 Production Planning and Control
Production planning and control is normally assigned two sets of functions: (i)
Regular functions and (ii) Optional functions.
Regular functions are those which are generally assigned to PPC in
most of the organisations though the importance of the function may vary
from industry to industry.
Optional functions are those which may be assigned to PPC depending
upon policy of the management of the firm.
The details of the both categories of functions are given below:
Common (or Regular) Functions

1. Order preparation includes activities like making of work orders,
converting work orders into shop orders, preparing auxiliary orders, and
releasing such orders to those concerned to authorise their activities.
2. Materials control concerns preparation of materials estimates, indenting
non-stock materials, ascertaining availability of materials purchased to
stock, continual follow-up with purchase and stores for timely receipt of
materials, and advising stores to allocate required quantities or available
materials (alternatively on their receipt) against specific shop orders.
3. Process planning or Routing concerns fixation of method of manufacture:
operations and their sequence, machine tool for each operation, jigs and
fixtures, measuring instruments and gauges etc. to enable shops to
produce goods of the right quality at the lowest cost.
4. Tools control concerns preparation of estimates of cutting tools (standard
as well as non-standard tools), gauges and measuring instruments, jigs
and fixtures etc. indenting non-stick tooling; follow up with tool room for
timely manufacture of jigs and fixtures; periodical replenishment of worn-
out-non consumable tooling (e.g. work arbors, collets, copying masters,
allen keys, spanners, etc).
5. Scheduling concerns preparation of machine loads, fixation of calendar
dates of various operations to be performed on a job, coordination with
sales to confirm delivery dates of new items, and periodical preparation of
despatch schedules of regular items. .
6. Dispatching concerns preparation and distribution of shop orders and
manufacturing instructions to the concerned department as their authority
to perform the work according to the predetermined schedule.
7. Progressing concerns collection of data from manufacturing shops,
recording of progress of work, and comparing progress against the plan.
8. Expediting concerns intensive progress chasing to identify delays and
interruptions which may hold up production, devising cures from time to
time to keep rate of production in line with the schedule, communicating
possible failure in delivery commitments to Sales Department.
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Optional Functions
1. Cost estimation concerns preparation of pre-production cost estimates to
be used by Sales Department for quotation purposes. (Alternatively this
function may be assigned to Costing department, or Industrial.
2. Work measurement concern fixation of time to be allowed to a qualified

workman to carryout a specific task, under specified conditions and at the
defined level of performance. Work measurement employs scientific, well-
known techniques like time study, work sampling, standard data, production
study, analytical estimating etc. (Alternatively, work measurement function
may be Assigned to Industrial Engineering department.)
3. Sub-contract concerns offloading of certain work on outside vendors for

economic reasons or to augument the existing manufacturing facilities. (Sub-
contract work alternatively be handled by Materials/Purchase Department).
4. Capacity planning concerns estimation of requirements of men and

machines as the basis of decision making to meet the firm's increased volume
of business (Some companies prefer to assign this function to
Engineering department).
5. Demand forecasting concerns making projection of company's product

market. Though, long term forecasts are given by Sales Department but short
term forecasts required for materials planning, machine loading,
subcontracting etc.
The functions actually to be assigned depend on the size of the company.

Table2: Production Planning versus Production Control
Production Planning Production Control
Planning involves collection and Control involves dissemination of data,
maintenance of data regarding time preparation of reports regarding output,
standards, materials and their machine and labour efficiency, percentage
specifications, machines and their defectives etc.
quantities, tools and their process
capabilities, drawings and operational
layouts etc.
Planning involves preparation of load Control involves actual seeing that the jobs
charts and fitting various work orders are started and completed as per schedule
into uncommitted time available on the prepared by the scheduling cell of the
company’s facilities (men or machines). PPC.
Planning is seeing that requirements - Control is seeing that the requirements
tools, machines, men, instructions, will be are actually made available at the right
available at the right time and in the right available at the right time and in the right
quantities and are of proper quality. quantities and are of proper quality.
Planning involves preparation of all Control involves actual issue of forms and
necessary forms and paper work. paper work.
Planning involves designing suitable Control involves keeping track of what is
feedback as to what may happen. happening and collecting information as to
what has happened.
Planning involves forward thinking Control involves suggesting remedial
regarding the remedial action to be taken if action when the job is falling behind
the job falls behind schedule. schedule.
Planning includes such functions as Control includes functions such as
materials control, tools control, process dispatching, progressing and expediting.
planning and scheduling.
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Objectives of PPC
The objectives of production planning and control are:
1. To plan systematically production related activities to meet targets of
production with the available resources of the firm.
2. To provide for manufacturing requirements such as men, machines,
materials etc. of the right quality, in the right quantities and at the right
time.
3. To schedule production facilities in the optimum manner.
4. To co-ordinate the activities of different departments relating to production
to achieve regular, steady and balanced flow of production.
5. To ensure conformance to delivery commitments and to inform sales
department regarding difficulties (if any).
5. To inform management beforehand of the difficulties that may crop up
later in achieving production targets.
Activity C: Visit any nearby manufacturing unit and List different activities
performed by PPC department.
7.7 Manufacturing Planning And Control System
A Manufacturing Planning and Control System (MPCS) is a methodology

designed to manage:
Efficiently the flow of material,
The utilization of manpower and equipment, and
To respond to customer requirements.
MPCS is an integrated systems approach to production planning and control. It
integrates activities like
Determining product demand,
Translating product demand into feasible manufacturing plans,
Ensure feasibility of plans,
Identify gaps in current resources,
Prioritise activities,
Establishing detailed planning of material flows, capacity to support the
overall manufacturing plans,
Helping to execute these plans by such actions as
Scheduling
Control facilitate
Facilitate feedback-
Framework of MPCS :
in the framework of MPCS, all the functions have been classified into three
phases-Front End, Engine and Backend, indicating hierarchy of functions. The
meaning of the functions is described in brief below:
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1. Demand Management :
Demand for products is the driving force for any production activity.
Demand management is an important input to production planning.
Demand management includes following activities like
demand forecasting
order transactions
customer-contact activities
physical distribution management
Demand management enable coordination between manufacturing, markets,
other plans and warehouses. It provides input to Master Production Schedule
(MPS) for demand of end items.
2. Resource Planning :
Resource Planning essentially is a long range capacity planning to
produce products. It involves converting aggregate production plans into
resources such as labour hours and machine hours.
3. Master Production Schedule :
Master Production Schedule is a document which specifies for a time
horizon which products to produce, in what quantities and their time of
completion. The MPS represents an agreement between marketing and
manufacturing. Master Production Schedule (MPS) is an anticipated
schedule for finished (end) products considering production capacity
constraints.
4. Material Requirement Planning (MRP) :
Material Requirement Planning is a material plans for dependent demand
items. For a Master Production Schedule, MRP System would provide
details of:
quantity of material required,
when it would be required,
schedule for procurement (date of ordering) for purchased items and
schedule of components/parts (quantities and date of
commencement / completion of production).
7.8 Operations scheduling
Operations scheduling is an essential part of the management of

production/operation systems. It lies at the very heart of the performance of
manufacturing/service organizations. Scheduling pertains to establishing of
two aspects of resources within an organization:
allocation of resources within an organization
the timing of resources ie setting time table
In context of manufacturing scheduling is assignment of people to jobs or jobs
to machines for specified capacities of man and machines.
Every order whether it is from a customer or from the assembly benches must
be completed on or before the contracted date (i.e. promised). To ensure that
the delivery date is met, each component entering the assembly should be
made available on time. Scheduling function of PPC makes it possible by
determining starting and completion data of each of the operations listed on
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the process sheet. Scheduling is the process of fitting a shop order into the
uncommitted time available for a machine or a group of machines required for
the manufacture of the item and within the total time which is not greater than
the promised delivery period.
Scheduling has yet another objective to fulfill: to confirm or revise the tentative
delivery date promised in the original quotation. At times while scheduling a
work order, it may be discovered that delivery date originally and tentatively
promised cannot be met. This may be due to materials not being available
immediately or due to increased plant loading while the customer was deciding
whether or not to award the quoted job to this company. The determination of
the realistic delivery date can only be made after detailed and firm scheduling.
The term production scheduling and operations scheduling is often used
interchangeably. However, conventionally Production Scheduling meant
scheduling jobs/process for manufacturing products while Operations
Scheduling includes scheduling for services.
Operation planning directly influence effectiveness of production function as
stated by Vollman:
“The priority planning and shop floor control and scheduling elements
ultimately determine the performance of the production system.”
Effective scheduling leads to meeting customer requirement through:

improved delivery performance.
meeting the company's customer service goals.
reducing production lead times.
While issues relating to facility location, capacity etc are considered long term
and aggregate planning is considered intermediate term, operations
scheduling is considered to be a short-term issue. As such, in the decision-
making hierarchy, scheduling is usually the last step in the conversion process
before the actual output (e.g., finished goods) is produced. Fig 9.1 below
illustrates the Hierarchy of Decisions. Consequently, scheduling decisions are
made considering constraints/ limitations established by the longer-term
decisions like capacity. Generally, scheduling objectives deals with tradeoffs
among conflicting goals for :
efficient utilization of labor and equipment.
maximizing output.
highest delivery performance and service level.
Following are detailed tasks of scheduling :
Ensure maximum utilisation of the plant at minimum cost.
Ensure that requirements of manpower is optimum and is evenly
distributed, there being no peaks and valleys.
Keep itself abreast of hiring, dismissals, retrenchment, holidays, leaves,
etc. of the work force.
Possess up-to-date information regarding availability of materials,
expected delivery dates, materials rejection, shortages, purchase orders
cancelled etc.
Possess up-to-date data on each machine regarding its breakdown,
availability of spares, average frequency of breakdowns, servicing and
overhauling schedules, replacement schedules etc.
Possess complete information on performance standards and their
revisions, method improvement, changes in materials and machines etc.
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Obtain quick feedback from shops regarding delays and interruptions

which may hold up production activity.
Objectives of Scheduling are as under :
Meeting Delivery Dates
Minimize Inventory
Maximize Resource(Manpower/machines etc) utilization
Reduce manufacturing time /setup times
Minimize production and worker costs
Hence , Scheduling objectives need to be set very carefully fully aligning with
planning and supply chain objectives.
Inputs of Scheduling
The following are the major inputs of the scheduling function :

1. Performance standards is the first and the foremost requirement of
good scheduling. Performance standards enable the scheduler to
determine the machine capacity in order to assign required machine
hours and man-hours for the various operations. Good scheduling is
always possible if the time study or industrial engineering department
exists in the plant. The performance standards for repetitive jobs in such
plants are available and for new jobs they can be estimated from tables of
synthetic standards prepared by the department.
Should this not be the case, the approximate time estimates can be
prepared by breaking the task into elements and then estimating time for
each manual and machine element. Simple arithmetic formulae may be
made use of to compute time for each of the machine elements
considering tool travel, speed and feed per revolution, number of cuts,
etc.
Again if this is not possible, the scheduler can make use of past records of
the same or similar jobs. And even if old records not there, particularly in
jobbing production units, cost estimates prepared for the purpose of
quotations can be obtained from the sales department to be used as basis
of scheduling.
And if neither time study department exists nor historical data is available,
the scheduler can consult concerned production supervisors to obtain
time estimates.
2. Unit of measurement refers to the unit in which the loading and
scheduling is to be extended. Thus unit of measurement is usually
different for different industries. Industries such as sugar, cement,
fertilizers, foundries, steel mill etc. generally use weight (kgs/tonnes) as a
unit of measurement while in textile mills, it is “length” (meters). The most
common unit of measurement in engineering firms is “man-hours” or
“machine-hours”.
3. Unit of loading and scheduling refers to the duration for which loading
and scheduling should be done. The unit of loading and scheduling -
scheduled start and finishing timings - depends on the company's
scheduling needs and the operating cycles. This implies that scheduling
should be done on daily basis if the company makes promises in days and
it should be done on daily or weekly basis if promises are made in weeks.
4. Effective capacity per work centre implies effective hours available for
production on a machine or on a work centre in a week, or in a month.
Theoretical capacity equals number of normal working hours of that
machine. Usually there are interruptions. A few examples of these
interruptions are :
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Power failure.
Preventive maintenance.
Waiting for inspection.
Operators engaged in other than production activities (functions or
celebrations)
Machine engaged for technical studies.
Tool tryout, jigs and fixture tryouts.
Operator left work place for official discussion.
Machine breakdown (electrical or mechanical).
Waiting for transport.
Operator absence.
Tool breakage.
Defective materials (hard material requiring reduced speeds and
feeds) or materials of incorrect specification (e.g. excess stock
removal).
Operator training time.
Rework.
Late start and early close.
Overtime or incentive payment collection.
Operatives' trade test.
On account of the above mentioned interruptions, the job(s) is (are) sure to fall
behind schedule unless the influence of these interruptions is taken into
account.
To arrive at realistic machine capacity, the theoretical capacity is multiplied by

Utilisation Index. The industrial engineering department of the company can
supply PPC department with such indices from their work sampling studies. In
the absence of such an information, the scheduler usually assumes utilisation
of 75% or 80% or a similar figure when preparing job-schedules. This is not at
all a correct approach.
The effective capacity of a work centre is calculated as under :

a) Calculate theoretical capacity per period. Theoretical capacity is
obtained by multiplying number of machines by normal hours
available per machine per period.
b) Establish utilisation index after allowing time for delays and
interruptions which cannot be avoided even by scientific production,
planning and control.
c) Calculate net available capacity per period by multiplying
theoretical capacity by the average utilisation index.
d) Establish average labour efficiency against performance
standards.
e) Calculate effective capacity per period by multiplying net capacity
per period by average labour efficiency.
5. Extent of rush orders: Provision of rush orders is another important

consideration in scheduling. No machine should be scheduled for its cent
percent (100%) effective capacity because if a rush order comes in,
scheduling has to be changed to allow rush order to be put through the shops.
Such rush orders, if received frequently, are bound to put the company's
scheduling out of gear.
The disturbance due to rush orders can be avoided by not scheduling the
machine for 100% effective capacity thereby leaving some un-committed
capacity per period per machine. This un-committed capacity is utilised to
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accommodate rush orders and thereby avoiding the need to alter the
remainder of the scheduling.
There are different methods of accommodating rush orders :
a) The easiest method is to leave some capacity (depending upon the
average time spent on rush orders per period) unscheduled on each machine
per period. This method is useful when semi-centralised system of scheduling
is adopted.
b) Another method of scheduling of rush orders is to leave some in-scheduled
capacity between two scheduled jobs. This method is useful when centralised
system of scheduling is followed. If no-rush-order is received, the
unscheduled capacity may be utilised for the new jobs or for early completion
of the jobs previously scheduled.
6. Overlapping of operations is yet another useful consideration in

scheduling. Overlapping of operations refers to running of a job
simultaneously on more than one machine and it occurs in jobs which involve
two or more operations. Overlapping of operations helps to reduce the
manufacturing cycle time and hence the delivery period to the customer.
7. Loading charts : Rarely a company manufactures one or few jobs at a

time. They manufacture a number of jobs simultaneously. It is therefore,
essential to know machine wise/work centre wise work load on hand and this is
precisely the purpose of load charts. A load chart specifies the work to be
carried out in each section or the department of the company during the period
under review.
Load charts are necessary to know the accumulated load at a given time for a
given machine and to identify periods available for allocation in future to orders
needing this machine. The failure to identify this undoubtedly will lead to
broken promises, foreman shouting at the top of the voice when delivery date
rolls round or entire section working on overtime etc. The correct fitting of the
orders considerably lessens foreman's burden of control.
To prepare a load chart, attention required to be paid to :
jobs on the machines as well jobs on hand.
delivery commitments of jobs on hand.
effective capacities of the various machines/sections/departments.
average (anticipated) sickness, absenteeism.
machines under servicing/overhauling/reconditioning.
holidays during the period under review.
Types of Scheduling
Scheduling has been categorized in various types based on different criterion.
One way to classify scheduling into various types is based on application.
Some of the types of schedules are listed below:
Job shop scheduling
Personnel scheduling
Facilities scheduling
Vehicle scheduling
Vendor scheduling
Project scheduling
On the basis of time, the process of scheduling is classified into two types:
Forward scheduling.
Backward scheduling.
In forward scheduling, all activities are scheduled from the date of planned
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order release. In this type of scheduling, first task of job taken is scheduled. Its
subsequent task is scheduled on scheduled completion of first task.
Accordingly all tasks of the job are scheduled.
Terminology :
Following are some of the common terminology used in scheduling:
Flow shop: In flow shops all the jobs use the machines following same
order.
Job shop: In job shop unlike flow shop ,jobs will have different sequences
of operation.
Flow time: Flow time is the total time required from start of first job until
completion of job.
Makespan: The time required from start of first task of a job to finish of last
activity of the last job.
Tardiness / Lateness: Tardiness is the difference between flow time and
due date.
Scheduling methods are of great interest to practitioners as well as
academicians. Sheer variety and complexities of the problem makes
scheduling daunting as well as challenging task. If a job can be processed on
only one machine, no difficulty is presented. However, if a job can be loaded on
multiple work centers or machines, and there are multiple jobs to process, the
assignment process becomes more complicated. The scheduler needs some
way to assign jobs to the centers in such a way that processing and setups are
minimized along with idle time and throughput time.
1. Johnson's two machine algorithm is a useful concept in scheduling when

the operation sequence involves two machines and the processing time
depends on the sequence in which the jobs are loaded. The effectiveness of
the technique is further increased when the company has a backlog of orders.
It is though possible to select the best sequence by testing each of available
alternative sequences but the time required for such an analysis is
considerable. This is because even if the sequence of operation is fixed, the
total number of possible alternative sequence will be large (n!), where n is the
number of jobs requiring to be processed. Johnson's two machine algorithm
provides a simple time saving device to decide on the optimal job sequence.
2. Index Method is a technique that can be effectively utilised for the

purpose of loading and the allocation of different jobs to different machines.
Normally orders are assigned to the best machine till it is loaded to its full
capacity, remaining orders to the next best machine and so on, more or less on
the principle of “first come first assigned”. This method, however, does not
result in optimum loading. A better method of machine loading, especially
when there are sufficient orders and reasonable choice of machines, is to
assign orders to the machine on the basis of relative effectiveness of the
machines.
Index method is a very simple technique which provides considerable
improvement over the conventional methods of loading.
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3. Critical Path Analysis is another useful technique to determine the

schedule of the activities of projects. Gantt charts are used extensively to plan,
schedule and control many business activities but they, however, have serious
limitations for the one off complex projects. A Gantt Chart does not :
(a) reveal inter-relationships between different activities of the project.
(b) reflect the uncertainty in the durations (time) estimated for various
activities.
Critical path analysis which overcomes these deficiencies of the Gantt chart is
used for scheduling large projects where the relationships between different
activities of the project are more complicated than a production job requiring a
simple chain of activities to be completed one after another. CPA can be used
to schedule the activities of simple projects like overhauling of a machine,
purchase and installation of a new machine, construction of a small shed. And
at the other extreme end, it can be used for large complicated projects like
design, production and testing of prototype of an aircraft requiring co-
ordination, scheduling and control of activities of many different specialist
teams, sub-contractors and purchasing agents.
Critical Ratio Scheduling is a technique for establishing and maintaining

priorities among the jobs in a factory. The technique utilizes the concept of
ratios - called critical ratios - which set the time relationship between when a
product is required and when it can be made available (i.e. supplied). Critical
ratio technique also finds its application in expediting function of PPC.
Priority Sequence Rules

A work center is an area in a business in which productive resources are
organized and work is completed
Can be a single machine, a group of machines, or an area where a
particular type of work is done
Two approaches are used for loading work centers: infinite loading and finite
loading. With infinite loading jobs are assigned to work centers without regard
for capacity of the work center. Priority rules are appropriate for use under the
infinite loading approach. Jobs are loaded at work centers according to the
chosen priority rule. This is known as vertical loading.
Finite loading projects the actual start and stop times of each job at each work
center. Finite loading considers the capacity of each work center and
compares the processing time so that process time does not exceed capacity.
With finite loading the scheduler loads the job that has the highest priority on all
work centers it will require. Then the job with the next highest priority is loaded
on all required work centers, and so on. This process is referred to as
horizontal loading. The scheduler using finite loading can then project the
number of hours each work center will operate. A drawback of horizontal
loading is that jobs may be kept waiting at a work center, even though the work
center is idle. This happens when a higher priority job is expected to arrive
shortly. The work center is kept idle so that it will be ready to process the higher
priority job as soon as it arrives. With vertical loading the work center would be
fully loaded. Of course, this would mean that a higher priority job would then
have to wait to be processed since the work center was already busy. The
scheduler will have to weigh the relative costs of keeping higher priority jobs
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waiting, the cost of idle work centers, the number of jobs and work centers, and
the potential for disruptions, new jobs and cancellations.
If the firm has limited capacity (e.g., already running three shifts), finite loading
would be appropriate since it reflects an upper limit on capacity. If infinite
loading is used, capacity may have to be increased through overtime,
subcontracting, or expansion or work may have to be shifted to other periods or
machines.
7.9 Sequencing
Sequencing is concerned with determining the order in which jobs are

processed. Not only must the order be determined for processing jobs at work
centers but also for work processed at individual work stations. When work
centers are heavily loaded and lengthy jobs are involved, the situation can
become complicated. The order of processing can be crucial when it comes to
the cost of waiting to be processed and the cost of idle time at work centers.
There are a number of priority rules or heuristics that can be used to select the
order of jobs waiting for processing. Some well known ones are presented in a
list adapted from Vollmann, Berry, Whybark, and Jacobs (2005):
Random (R): Pick any job in the queue with equal probability. This rule is
often used as a benchmark for other rules.
First come/first served (FC/FS).:This rule is sometimes deemed to be fair
since jobs are processed in the order in which they arrive.
Shortest processing time (SPT).:The job with the shortest processing
time requirement goes first. This rule tends to reduce work-in-process
inventory, average throughput time, and average job lateness.
Earliest due date (EDD): The job with the earliest due date goes first. This
seems to work well if the firm performance is judged by job lateness.
Critical ratio (CR).:To use this rule one must calculate a priority index
using the formula (due date–now)/(lead time remaining). This rule is
widely used in practice.
Least work remaining (LWR:. An extension of SPT, this rule dictates that
work be scheduled according to the processing time remaining before the
job is considered to be complete. The less work remaining in a job, the
earlier it is in the production schedule.
Fewest operations remaining (FOR): This rule is another variant of SPT; it
sequences jobs based on the number of successive operations remaining
until the job is considered complete. The fewer operations that remain, the
earlier the job is scheduled.
Least setup (LSU).:This rule maximizes utilization. The process calls for
scheduling first the job that minimizes changeover time on a given
machine.
These rules assume that setup time and setup costs are independent of the
processing sequence. However, this is not always the case. Jobs that
require similar setups can reduce setup times if sequenced back to back. In
addition to this assumption, the priority rules also assume that setup time
and processing times are deterministic and not variable, there will be no
interruptions in processing, the set of jobs is known, no new jobs arrive after
processing begins, and no jobs are canceled. While little of this is true in
practice, it does make the scheduling problem manageable.
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Activity D: List different sequencing rules
7.10 Production Activity Control
Production Activity Control (PAC) is the process by which manufacturing

resources are coordinated, scheduled and controlled. Production Activity
Control includes activities related to scheduling, releasing and tracking
production orders and schedules, and reporting the materials and resources
used and the results of the production process.
Production Activity Control is concerned with converting plans into action,
reporting the results achieved, and revising plans and actions as required
achieving desired results. Thus, PAC converts plans into action by providing
the required direction. This requires the appropriate prior planning of orders,
work force personnel, materials, and capacity requirements.
PAC is an essential system for ensuring timely completion of orders by staring
starting activities in time as per plan, identifying and providing necessary
resources like material, manpower, equipment, and control action. Effective
PAC is crucial for meeting delivery commitments. However Pac by itself can
not function effectively unless backed by effective mid and long term planning.
Root causes of many of the failures in meeting planned production can be
attributed to poor medium/long range planning.
Shop Control, Production Control, Shop Floor Control are some of the other
terms which are used for scheduling and control function. Conceptually all the
terms have same meaning but in practices form organization to organization
vary. SFC or PAC are separate modules of MRPII/ERP systems which
generally has four major procedures: releasing, scheduling, monitoring,
and updating.
Functions Of Production Activity Control

Order release, dispatching, and progress reporting are the three primary
functions of PAC. Dispatching is the activation of orders per original plans.
Dispatching decisions are affected by queue management and priority control
principles and techniques that are mutually supportive. They are useful in the
management of lead-time, queue length, work center idle time, and scheduled
order completion. Reports on the status of orders, materials, queues, tooling,
and work center utilization are essential for control. Examining a given
situation will reveal which reports and information are required.
The function of production activity control (PAC) – often called shop floor
control (SFC) is to have activities performed as planned, to report on operating
results, and to revise plans as required to achieve desired results. According to
Bauer et al. production activity control performs three essential functions:
creating a detailed schedule (scheduling)
collection and evaluation of production data with the goal of modifying the
schedule and improving the dispatching function (Monitoring).
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Execution of the current production schedule relative to the current state of

the production system (Dispatching).
Generally, the first section is grouped under the term production scheduling
and the final two sections as production control.
The functions of production activity control can be grouped under three

headings.
Scheduling And Loading Techniques
Scheduling and loading is an important part of Production Activity Control.
Following are the four techniques for loading and scheduling:
Finite Loading - Finite loading considers capacity constraint. It assumes
that capacity is finite at any work centre. In practice capacities are always
limited, hence finite loading is more realistic. Finite loading lets planner
know in advance, the jobs which can be completed and the jobs which can
not be accommodated. This necessitates certain amount of rescheduling
of jobs.
Infinite Loading - Infinite loading assumes that capacity to be infinite at

any work center. In Infinite loading capacity constraints are ignored. Jobs
are loaded on work center without considering adequacy of capacity.
Forward Scheduling - In forward scheduling jobs are scheduled as soon

as an order is received. The completion date is evolved by scheduling the
jobs at work centres. Due date is not considered while scheduling.
Backward Scheduling - In backward scheduling jobs are scheduled from

end to start. Last operation is scheduled first from due date. Scheduling
continued to be done in sequence of operations till all activities of the jobs
are scheduled. This would tell the starting time for each operation so that job
can be completed without delays.
7.11 Dispatching
The principle functions of dispatching are:

I. Release of manufacturing orders :
The primary function of dispatching is to prepare a manufacturing-order-set
which consists of shop orders, operational layouts, pre-filled-stores-issue
orders, tool orders, move orders, inspection orders and the like. These
documents are generally drawn from respective files, collated together and
kept ready for issue at the right time to the concerned persons.
Scheduled start of an operation is authorized by issuing a job-card (time
ticket). The job card is prepared in duplicate. The original is given to the
operator and its copy is retained by the dispatcher. The job-card before issue is
stamped for the start date. On completion of the work, the job card (or time
ticket) is routed through the PPC department where it is again stamped for
completion and is forwarded for costs and payroll work.
II. Store Issues :
Another important function of dispatcher is to withdraw required quantity of
materials from stores and deliver it to the machine where the first operation
is to be performed, well before the scheduled start of the job. The most
common practice is to make use of stores issue order. Stores issue order is
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though prepared for the item as soon as the route sheet is ready yet it is not
describe to issue it too early because :
Material may or may not be available at the time of preparation of stores
issue order.
It will cause congestion on the shop floor if material is moved too early in
advance of the scheduled start of the job.
Stores issue order, therefore, is filed along with other papers of the job and
is handed over to the dispatcher
a day or two before the scheduled start of the first operation. The dispatcher
then passes on this order to the
stores to prepare materials, ready for issue to the shop when authorised.
III. Return of "surplus" or left over material :

At times materials issued against "stores issue orders" are not fully consumed.
There are number of reasons why surplus material is left on the shop floor after
the quantity on the shop order is completed. Return of such surplus materials is
the responsibility of the dispatcher which he does through a stores return note.
IV. Tools issue :

Equally important is the dispatcher's function of movement of tooling to the
work centre where it is
required. Tooling includes:
(i) consumable tools such as drills, reamers, metal cutting saws, inserts,
carbide tools, hobs, gear shaping cutters, broaches, milling cutters, etc.
Consumable tools are stored at the company's subsidiary stores - tool cribs-
and are issued to the workmen against tool vouchers or token numbers.
(ii) Machine aids such as vices, chucks, collets, tool arbors etc. Machine aids
are usually kept in a separate fixture store and require to be issued at the time
of the set-up of the machine tool.
(iii) Work aids such as jigs and fixtures, work arbors, copying templates,
broaching fixtures and broach holders, etc. Work aids are also stored at the
fixture stores and require to be issued at the time of set-up of the machine tool.
(iv) Inspection aids such as verniers, micrometers, gauges, inspection fixtures
etc. Inspection aids are stored at the company's subsidiary stores-tool cribs
and require to be issued to the worken against tool vouchers.
Consumable tools and inspection aids required for a job should be issued to
the workmen directly against
tool vouchers while machine aids and work aids should be withdrawn by
dispatcher and delivered to the
machine an hour or two in advance of the scheduled start of the job. The
purpose of a tool order is to ensure that the tools needed for the job shall be
available in the quantities at the right time. Here also, the tool section should be
informed well in advance so that they can collect the required tools and keep
them ready for issue on due date. The column of 'Return Date' (the date by
which the tools shall be returned after completion of the work) provides
additional control on movement of tools.
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responsibility of the dispatcher which may be organised by the issue of move

order to the shop labourers, truck drivers, or specialist movemen. The
materials movement between workcentres is achieved by fixing responsibility
on the shop supervisors who are expected to inform the movemen when a
particular batch has been completed and it is ready to be moved on. Move
orders are used in big steel plants, power plants, heavy machinery
manufactures and others where transport problem is acute and the use of
written orders is justified. In most of the situations, in small and medium firms
verbal instructions are usually enough.
VI. Inspection
First off and stage inspection is undertaken by the inspection department on
the receipt of "Inspection order" from dispatcher's office. A written inspection
order is necessary to authorise inspection to verify the
correctness of the machine tool set-up. The most common method is produce
one/two pieces on the machine after it has been set up and offer the same to
the inspection together with the inspection order. No inspection order is
needed for simple jobs which can be inspected by the shop inspector with the
tooling available on the shops. An inspection order is necessary when the job
requires detailed verification of one or more of the job characteristics with the
help of special equipment which is not available at the producing company.
VII. Co-ordination with scheduler:

Routing lays down the operations and their sequence while scheduling
assigns timings to be different operations to be performed by different men and
machines. These two activities are co-ordinated on the shop floor by
dispatching cell of the PPC. Rarely, the progress of work is in line with its plan.
It is either ahead of the schedule or it is behind the schedule due to following
reasons :
The operators may be working under an incentive scheme and as a
result jobs get completed ahead of time.
There may be certain inaccuracies in the performance standards and
as a result jobs either run ahead of time or fall behind schedule.
Absenteeism.
Sub-standard performance against pre-fixed production standards.
Machine breakdowns.
The above mentioned causes result in idling of some machines and crowding
of jobs on other machines.
Hence to ensure that whatever has been planned goes on smoothly,
dispatcher must report bottlenecks and
obtain from scheduler alternate route of some of the jobs to avoid congestion.
Similarly, dispatcher also
needs to co-ordinate with the scheduler when progress is ahead of time so that
new jobs can be released to
fill up the capacity created.
168 | Page
VII. Allocation of jobs to machines :

Dispatcher at times in consulation with the shop foreman may also perform the
final stage of planning i.e. allocation of individual operations to individual
machines. This become possible only when scheduling is semi-centralised
wherein weekly or fortnightly work load is given to each shop.
IX. Despatch
Forwarding material to despatch or to finish parts stores constitutes yet
another importatnt function of
dispatching. Goods after final inspection are forwarded to either despatch
section or the finished parts stoes.
They need to be accompanied. by the document called forwarding note to
enable despatch department to
identify the items and draw correct reference.
X. Collection of route sheets and operational layouts at the end of

production run:
Operational layouts, after goods have been manufactured, require to be
collected back from the shops and filed so that they can be re-issued at a later
date. If operation layouts are not collected and are allowed to remain with the
shops, they get dirty or even lost, thus requiring to be replaced at the time of
repeat production run. This adds unnecessary cost to the product.
Activity E: List different activities of dispatching
7.12 Concept Of Progressing
Progressing is the process of checking actual performance against the

production plan and reporting exceptional deviations to the concerned
authorities for the corrective action. Progressing function consists in keeping a
watch on flow of materials, recognition of delay and interruptions, taking steps
to rush up the remaining operations, and communicating possible delay to the
customer.There are usually number of factors which tend to push the
schedules off the mark.
Some of the important ones are as under :
Delay in receipt of materiel from vendor(s)
Excessive absenteeism (more than the normal).
Machine breakdowns.
Excessive spoilage.
Errors in drawings.
Strikes and acts of goods.
The need for progressing is also created when the customers do the follow up
on their own to know the status of their jobs.
169 | Page
Functions of Progressing
Progressing comprises of following four important functions :
1. Collecting information from manufacturing shops.
2. Recording progress of work and comparison of actual progress against
manufacturing plan.
3. Expediting to rush up remaining operations.
4. Communicating anticipated delays in deliveries to sales and customers.
7.13 Keywords
Production Planning: Production planning is the determination, acquisition

and arrangement of all facilities necessary for future production of items.
Capacity Planning: The capacity of a production unit (e.g. machine, factory)
is its ability to produce or do that which the customer requires. Capacity
planning is the process of establishing the total capacity of the plants.
Aggregate planning: Aggregate planning is the process of developing,
analyzing, and maintaining a preliminary, approximate schedule of the overall
operations of an organization.
Production Plan: Production Plan is a managerial statement of the period-by-
period production rates, work-force levels, and inventory investment, given
customer requirements and capacity limitations.
Staffing Plan: This is a managerial statement of the period-by-period staff
sizes and labor-related capacities, given customer requirements and capacity
limitations.
Chase Strategy: A chase strategy implies matching demand and capacity
period by period. Capacities are adjusted to match demand requirements over
the planning horizon.
Level strategy: A level strategy seeks to produce an aggregate plan that
maintains a steady production rate
and/or a steady employment level.
Master Production Schedule: Master Production Schedule is a schedule of
planned completions of end items.
Material Requirement Planning (MRP): Material Requirement Planning is a
material plans for dependent demand items. For a Master Production
Schedule, MRP System would provide details of:
Operations scheduling: Operations scheduling is an essential part of the
management of production / operation systems.
Production Activity Control: Production Activity Control (PAC) is the process
by which manufacturing resources are coordinated, scheduled and controlled.
Dispatching Process: It concerns physical release of manufacturing order
and allocation of jobs to workmen on different machines; withdrawing
materials and tools for such jobs from stores and delivering in advance to
shops; supervising movement of materials from and to the machines and
inspection bays; keeping records of idle time and spoilage of jobs during
manufacturing; co-ordination with scheduler and shops; exercising day to day
control on work-in—progress; and reporting delays and interruptions.
Progressing: Progressing is the process of checking actual performance
against the production plan and reporting exceptional deviations to the
concerned authorities for the corrective action.
170 | Page
7.14 Summary
Production planning, is the pre-determination of manufacturing requirements

such as men, materials, machines, manufacturing process, money, order
priority etc. for the production of goods of the right quality, in the right quantities
and at the right time.
Control is to review the work progress, make corrections wherever required
thereby ensure that programmed production takes place. Production planning
and control thus is the process of planning production in advance, setting rate
of each item, fixing starting and finishing dates for each item, authorizing shop
activity by release of production orders, follow up the progress of products, and
expediting wherever required.
Production planning functions are hierarchic and have different time horizons.
It means time period for some of the functions is in years while for some it is in
weeks or days. It includes - Capacity Planning, Aggregate Planning, Master
Production Scheduling, Production Planning & Control Subsystems
Long range capacity plan is drawn considering factors like Market demand,
technology and R&D plans. From the capacity plan, aggregate plan is
prepared. Capacity plan may be for a time horizon of 3-5 years while aggregate
plan is normally for a tie period of 6-18 months. Master Production Schedule is
derived from the aggregate plan. Master production Schedule is an outcome of
desegregations. In aggregate planning, quantities to be produced are
expressed at aggregate level i.e. product group/family level. In Master
Production Schedule product wise schedule is prepared for a time horizon on
the basis of aggregate plan and capacity check called Rough cut planning.
Aggregate plans can be classified into two types: manufacturing aggregate
plan and service aggregate plan which are elaborated below:
Companies wish to satisfy market demands expressed in terms of real or
forecast demand. To do this companies in general produce a Master
Production Schedule (MPS) that states the number of each product to be
made over some planning horizon. The MPS states the number of each
product to be produced period by period over some time into the future known
as the planning horizon. The MPS, in conjunction with the sales program, is the
company's planned response to the demands of the market.
Master Production Scheduling is balancing demand with supply. It means
satisfying the customers within the constraints of the factory and the supplier
base. It's doing this in the most economical, efficient, productive, and profitable
manner. The master production schedule drives the MRP process. The
schedule of finished products provided by the master schedule is needed
before the MRP system can do its job of generating production schedules for
component items.
Production planning and control is normally assigned two sets of functions:
Regular functions which include - Order preparation, Materials control,
Process planning or Routing, Tools control, Scheduling, Dispatching,
171 | Page
Progressing & Expediting.
Optional Functions which include - Cost estimation, Work measurement,

Sub-contract, Capacity planning, Demand forecasting
172 | Page

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OPERATIONS MANAGEMENT

PRODUCTION PLANNING & CONTROL

7.1 Production Planning

Production is deﬁned as the “manufacturing of goods and services” and

Production is deﬁned as the “manufacturing of goods and services” and

LONG-RANGE CAPACITY PLANNING Long range ( 3-5

PRODUCTION PLANNING AND CONTROL Short Range (In days/few

7.2 Demand Forecasting

Demand forecasting is the activity of estimating the quantity of a product or

Necessity for forecasting demand

Demand forecasting Methods

Methods that rely on quantitative data – This is a mathematical method

Discrete Event Simulation

Activity A: List different methods of demand forecasting

7.3 Capacity Planning

Potential Capacity The capacity that can be made available to inﬂuence

Immediate Capacity The amount of production capacity that can be made

Effective Capacity An important concept. Not all productive capacity is

hours" in each 40 hour week. This factory should be capable of producing

Time may be a constraint where a customer has a particular required delivery

7.4 Aggregate planning

Aggregate planning is the process of developing, analyzing, and maintaining a

Aggregate plans can be classiﬁed into two types: manufacturing aggregate

Production Plan (manufacturing aggregate plan): is a managerial statement

Objectives of aggregate planning normally are:

Characteristics of aggregate plan are as under:

Options which can be used to increase or decrease capacity to match current

1. Hire/lay off. By hiring additional workers as needed or by laying off workers

Aggregate Planning Strategies

Build or draw from inventory

Passive (Reactive) Strategies in Aggregate Planning: Basic

Techniques For Aggregate Planning

Techniques for aggregate planning range from informal trial-and-error

3. Identify company, departmental, or union policies that are pertinent. For

5. Develop alternative plans and compute the cost for each.

7.5 Master Production Schedule

A Master Production Schedule is a schedule of planned completions of end

Master Production Schedule is not :

A ﬁnal assembly schedule

The quantities represent production, not demand. As we saw in the

While drawing Master Production Schedule (MPS) following factors must be

Table 1: Inputs and outputs of MPS

The master production scheduling process is iterative. The techniques used

parts, components or subassemblies that are sold to customers or shipped to

MPS for 'Assemble-to-Order' Strategy

7.6 Production Planning and Control

Common (or Regular) Functions

2. Work measurement concern ﬁxation of time to be allowed to a qualiﬁed

3. Sub-contract concerns ofﬂoading of certain work on outside vendors for

4. Capacity planning concerns estimation of requirements of men and

5. Demand forecasting concerns making projection of company's product

The functions actually to be assigned depend on the size of the company.

7.7 Manufacturing Planning And Control System

A Manufacturing Planning and Control System (MPCS) is a methodology

7.8 Operations scheduling

Operations scheduling is an essential part of the management of

Effective scheduling leads to meeting customer requirement through:

Obtain quick feedback from shops regarding delays and interruptions