PMA

Production Planning and Control

1. What is advantage of Production Planning, Scheduling and Control for an Organization?
What is the disadvantage of not doing Production Planning, Scheduling and Control for
an Organization?

Advantage of Production Planning, Scheduling and Control

 Improved organization for regular and timely delivery
 Better supplier communication for raw materials procurement
 Reduced investment in inventory
 Reduced production cost by increasing efficiency
 Smooth flow of all production processes
 Reduced waste of resources
 Production cost savings that improve the bottom line

Disadvantage of not doing Production Planning, Scheduling and Control for an

Organization

 Uncontrolled Activities
 Uncontrolled of Material Movement
 Availability of Tools is uncontrolled
 Quantity Produced is uncontrolled
 Uncontrolled of Replacement

2. Discuss the various Inputs to the Production Plan?

Aggregate Production Plan

i. Production : Capacity Inventory
ii. Marketing : Customer Demand
iii. Finance : Cash Flow
iv. Human Resource : Manpower Planning
v. Engineering : Design Completion
vi. Management : Return on Investment Capital
vii. Procurement : Supplier Performance

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Production Planning and Control
3. Help Mr. Azman to understand the Planning Process that you know.

Planning Process Flow

4. Explain the key Strategies for Meeting Demand in an organization?

i. Chase strategy
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.

ii. Level
Maintain stable workforce at constant output. Absorb shortages/surpluses by
fluctuating inventory levels, order backlogs, lost sales

iii. Stable workforce / Variable Work Hours

By utilizing temporary workers or casual labour (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).

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.

iv. 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.

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Production Planning and Control
v. 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.

vi. “Mixed Strategies”: Some combination of the above

5. Muthu was hired by AMC Corporation to do production planning, scheduling and control
for his company. What Inputs are required by the Production Planning System?

Inputs that are required by the Production Planning System:

External to firm
i. External capacity
ii. Competitor’s behaviour
iii. Raw material availability
iv. Market demand
v. Economic conditions

Internal to firm
i. Current physical capacity
ii. Current workforce
iii. Inventory levels
iv. Activities required for production

6. Arrow Corporation intended to purchase a MRP system and the CEO wants you to help
list the benefit of using MRP in the organization?

 To minimize inventory level

 To minimize the associated carrying costs
 Track material requirements
 Compute quantities needed as safety stocks
 Allocate production time among various products
 Plan for future capacity needs
 More competitive pricing
 Lower selling price
 Improved customer service
 Faster response to market demands
 Increased flexibility to change the master schedule
 Reduced setup and tear-down costs
 Reduced idle time

7. Explain what JIT and what it does?

JIT : Just-in-Time or JIT is an inventory management system wherein the

material, or the products are produced and acquired just a few hours before they are put
to use. The Just-in-time system is adopted by the firms, to reduce the unnecessary
burden of inventory management, in case the demand is less than the inventory raised.

What Does Just-in-Time Do

i. Attacks waste which anything not adding value to the product from the
customer’s perspective
ii. Exposes problems and bottlenecks caused by variability. Deviation from optimum
iii. Achieves streamlined production by reducing inventory

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Production Planning and Control
8. Explain what is Build to orders and Build to stocks or forecast. List the advantage and
disadvantage of both systems.

Build to Order – BTO is a production approach where products are not built until a
confirmed order for products is received. Thus, the end consumer determines the time
and number of produced products. The ordered product is customized, meeting the
design requirements of an individual, organization or business.

Advantages

i. Minimize waste

Minimizing waste doesn’t just apply to business attempting to reduce

expenses on material that is being disposed or that is unnecessary to
production.

Minimizing waste means that resources are only spent on the product if it
benefits the customers. If a process, action or addition to a product does not
add value to the customer, it is considered waste.

ii. Reduce the risk of inefficiency

All manufacturing takes place on receiving the customer's order, meaning

the company's operations are directed to just focusing on the manufacturing of
products as efficiently as possible.

iii. Customizable products

Customers will come when they want a more personalized shopping experience,
making the products very unique compared to other companies who BTO.

Disadvantages

i. Irregular sale demands

Obviously, businesses usually experience peaks or spikes in sales, for example,

seasonal periods increase in sales since it’s the festive period.

This means that business might notice lulls in sales, or even a massive boom in
demand, both of which can put major strain on business.

ii. Material stock falling behind

The nature of a make to order business means that business must always be
primed and ready for the next customer order to begin manufacturing as soon as
possible.

Although, incorrect stock level readings of materials or a ton of orders can result
in business running out of material at a crucial moment, putting behind orders.

iii. Customer wait times

Make to order, once again, giving the nature of the method, means
customers have to wait a while before receiving their products. And if they
must wait longer than they originally realized, this is going to manifest in
their dissatisfaction toward the business.

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Production Planning and Control
Build to stock – BTS is a build-ahead production approach in which production
plans may be based upon sales forecasts and/or historical demand. BTS is a usually
associated with the industrial mass production techniques, where in anticipation of
demand vast quantities of goods are produced and stocked in warehouses

Advantages

i. Spread resources and production

As you’ll be manufacturing your products ready for the customers demand,

you can properly and carefully organize your resources and the production
which will be carried out to maximize your efficiency.

ii. Make to stock scheduling

Using this method means that employer be able to design a master

production schedule to make sure the workflow is as smooth as can
possibly be.

It allows the employer and employees to know where they need to be and
what is left to do.

iii. Minimize customer wait times

Finally, products will be waiting for the customers – obviously if everything is

completed on time.

As soon as the customers have placed their order, their product can be
shipped out to them, reducing the customers waiting time by a huge
amount.

Disadvantages

i. Unpredictable nature of consumer trends

Forecast by analyzing past sales and seasonal spikes, but even though we’ve
made completely accurate and correct assumptions, the products unfortunately
aren’t selling as well as originally predicted.

Or the other extreme, there's a sudden boom that employer weren’t

prepared for. It’s just the nature of the beast.

ii. Inventory levels

Employer can technically be in a perpetual state of either having too much

or not enough stock.

iii. The difficulty making accurate sales forecasts

The industry can be complex and affected by a ton of variables, so that

already makes it difficult to forecast the sales. However, one little mistake or
miscalculation means could end up with too little or an excess of stock, which is
going to cost business.

9. What are the JIT benefits compared to old method of bulk buying of inventory?

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Production Planning and Control

i. More cost efficient production

ii. Continuous quality improvement
iii. Waste Elimination
iv. Improve productivity
v. Improve supplier relationships
vi. Improve storage space used
vii. Reduce costs associated with storage
viii. Reduce manufacturing time
ix. Reduce work in progress
x. Defect free output

10. What determines capacity in a production plant? How can a Plant match demand with
the capacity? What to do when demand is up trend or down trend to match capacity?

What determines capacity in a production plant?

Changes in:
i. Sales
ii. Cash flow
iii. Quality
iv. Supply chain
v. Human resources
vi. Maintenance

How can a Plant match demand with the capacity?

i. Making staffing changes (increasing or decreasing the number of employees

ii. Adjusting equipment and processes –which might include purchasing additional
machinery or selling or leasing out existing equipment
iii. Improving methods to increase throughput; and/or
iv. Redesigning the process to facilitate more throughput

What to do when demand is up trend or down trend to match capacity?

Suppose the figure to the left
represents forecast demand in
units.

Now suppose this lower figure

represents the aggregate capacity
of the company to meet demand

What we want to do is balance out

the production rate, workforce
levels, and inventory to make
these figures match up

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