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Production Planning

Production Planning. Dr. Everette S. Gardner, Jr. Aggregate planning. Definition Choosing production rates, work force levels, and inventory levels Horizon 6-18 months into future Prerequisites Forecasting Company policies on Max./min. inventories Hiring/firing Overtime.

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Production Planning

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  1. Production Planning Dr. Everette S. Gardner, Jr.

  2. Aggregate planning • Definition Choosing production rates, work force levels, and inventory levels • Horizon 6-18 months into future • Prerequisites • Forecasting • Company policies on Max./min. inventories Hiring/firing Overtime Production Planning

  3. Policy considerations in aggregate planning • Flexibility Are work force and inventories maintained at a level sufficient to meet unexpected demand? • Work force stability Improves quality, productivity, union relations • Production rate stability Makes materials planning easier, reduces uncertainty in physical distribution Production Planning APP.xls

  4. Policy considerations in aggregate planning (cont.) • Production capacity Will overtime reduce quality? When will physical capacity (space, machinery, equipment) become inadequate? • Customer service Have lead time and stock availability goals been met? Production Planning

  5. Aggregate planning in services • Definition Balancing service capacity with demand • Tactics • Change operating hours • Change staffing Nbr. of workers Full vs. part-time • Modify type of service • Influence demand Advertising Pricing • Build more service outlets Production Planning

  6. Aggregate planning in services (cont.) • Evaluation • Waiting time • Throughput • Service time • Nbr. of lost customers Production Planning

  7. # # Production – Inventory System Information Flow Material Flow Days for transit time Days to process or to handle and issue orders 25 Day De- 5 Day Delay 25 Day Delay 13 Day Delay lay to sense to sense for Review for Review needs, place needs, place and and and transmit and transmit Transmission Transmission orders M.O.s of orders of orders Demand Raw Factory Factory Distributor Retail Ultimate Material Warehouse Inventory Inventory Customer Vendor 50 Independent 500 Independent Distributors Retailers 35 4 2 1 30 1 10 5 1 Company System Under Managerial Control Production Planning Dynamo.xls

  8. Response of inventories 10 10,000 Retail inventory (units) -4% Factory production output (units/week) +45% 7.5 7500 Distributor inventory (units) +10% +32% +12% Retail sales RRR Weeks 5 5000 (units/week) -10% -3% -15% Factory warehouse inventory (units) 2.5 2500 0 0 Feb Sept Aug Apr Apr May Mar May Mar Dec Oct Jun July Nov Jan Jan Jun J Feb Production Planning

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