Industrial Management

UNIT-II
Production and Productivity
Production Planning
• Production planning is concerned with deciding in advance what
is to be produced, when to be produced, where to be produced
and how to be produced. It involves foreseeing every step in the
process of production so as to avoid all difficulties and inefficiency
in the operation of the plant.
• Production planning has been defined as “the technique of
forecasting or picturing ahead every step in a long series of
separate operations, each step to be taken in the right place, of
the right degree, and at the right time, and each operation to be
done at maximum efficiency”.
Production Planning

• Production planning involves looking ahead, anticipating

bottlenecks and identifying the steps necessary to ensure

smooth and uninterrupted flow of production. It determines the

requirements for materials, machinery and man-power;

establishes the exact sequence of operations for each individual

item and lays down the time schedule for its completion.
Objectives of Production Planning
• Establish Co-ordination between various Production Activities

• The best Utilization of Resources

• To produce best Results

• Control over Market

• Efficiency

• Smoothens Production Management

Importance of Production Planning

• Production Planning sets Objectives

• Facing the Unforeseen Conditions

• Best Utilization of Resources

• Basis for Control

Characteristics of Production of Planning
1. Production planning is a universal production activity.

2. Production planning is the basis and pre-requisite of production control.

3. Production planning includes routing of production activities and layout production facilities such as

building, machines, etc.

4. Production planning is related to planning, directing and controlling of production methods for the

manufacture of product.

5. Production planning may be short-term or medium-term or long-term.

6. Production planning can be done at three levels viz., factory planning, process planning and operations

planning.
Levels of Production Planning

• Production planning occurs at several levels in the organization and

covers different time horizons.

• Planning can be classified as strategic planning, tactical planning

and operational planning according to the hierarchical levels in
which it is done in the organization. Another classification based
on time span of planning is long range, intermediate range and
short range planning.
Levels of Production Planning-Strategic Planning

• Strategic planning is a process of thinking through the organization’s current

mission and environment and then setting forth a guide for future decisions
and results.

• Ex: Technology forecasting and choice of appropriate technology for the long
range time horizon.

• Strategic plans are usually long range plans done at the top management level

• Ex: the vice-president-operations, together with the top executives of the firm
develop long range capacity and facility plans.
 Levels of Production Planning-Strategic Planning
• Objectives laid down by long range planning are:

1. Production levels (Number of units produced).

2. Operating capacities.

3. Inventory policies.

4. Levels of manufacturing costs

Levels of Production Planning-Tactical Planning

• Tactical Planning is done over an intermediate term or medium range

time horizon by the middle level management (Operations at
departmental level). These plans focus on aggregate products rather than
individual specific products. These aggregate plans have a time span of 6
to 18 months. They specify the employment plan; machinery and utility
plans, the sub-contractor and materials supply plans and facility
modification/ expansion plans.
Levels of Production Planning-Operational Planning

• Operational planning is done over a short range time span developed by the junior level
management. It is concerned with the utilization of existing facilities rather than the
creation of new facilities. It involves proper utilization of key resources such as raw
materials, machine capacity, energy etc.

• Short term planning takes into account, current customer orders, priorities, material
availability, absenteeism rate, cash flows, etc., and it is designed to respond quickly to
changes in production levels and market conditions.

• Short range production scheduling and shop floor planning involve the day to day issues
and decisions related to operations planning.
Pre-Requisite for Production Planning
1. Data regarding product-engineering, product design, basic type of process and
operations, assembly and sub-assembly methods.

2. Sequence of operations — What is most advantageous with minimum production

cost.

3. Material specifications and standardization and the quantity of raw materials

required.

4. Economic lots and Economic Order Quantity(EOQ) which will be used in inventory
decisions.

5. Rate of output per hour, per day, per week and per month.
Pre-Requisite for Production Planning
6. Materials cost, labour cost and overhead cost per unit, labour and overhead costs
per hour.

7. Customer’s order on hand and their expected date of delivery.

8. Information regarding fixtures, tools, jigs and dimensional gauging instruments

that are required for production.

9. Normal, maximum and average production capacity of the plant.

10. Quantity required immediately for stock purposes and for delivery purposes.

11. Full particulars regarding operating personnel and personnel policy of the
enterprise.
Pre-Requisite for Production Planning
12. Information regarding job analysis, merit-rating, type of training to workers
for the effective performance of different jobs.

13. Full knowledge about the sources of raw materials, power generation
systems and internal transport system.

14. Information regarding time fixed for each operation, rate of obsolescence of
the plant and loss in storage, etc.

15. Up-to-date knowledge of modern development in the field of production

process and techniques.
Factors determining Production Planning Procedure

• Volume of Production

• Nature of Production Processes

• Nature of Operations
Process of Production Planning

• Determination of Targets

• Collection of Information

• Interpretation of Information

• Development of Action Plans

• Execution Plan or Putting plan into Operation

• Follow up Action
Production Control-Objectives

• Arranging necessary raw materials, machines, equipments, tools and

• workers for production.

• Making necessary arrangement for the production of goods according

to the pre-determined demand.

• Maintaining the inventory of raw materials.

• Utilizing the production facilities at their optimum level.

Production Control-Objectives

• Co-ordination among various departments concerned with production‘

• Arrangements for product development and design process.

• Arrangements for inspection and quality control of production.

• Follow of process flow diagram.

• Arrangements for corrective actions to be taken during production if

any deviation occurs.
Production Control-Characteristics

• Under production control, controls are done over production methods, types of
products, cost of production and quantity of production.

• Under production control, various control techniques are used.

• Under production control, a co-ordination is built up between various

concerned departments.

• Production control is-a technique of production management by which a

smooth production can be done.
Production Control-Benefits
• Improvement in Profits through
• Maintenance of an adequate and balanced inventory of material parts, work-
in-process and finished goods.
• Reduction in indirect costs.
• Optimum utilization of manpower, equipment, tools and storage space.
• Reduction in inventory costs.
• Less capital investment in industry.
• Reduction in set-up costs.
• Elimination in scrap and rework costs.
• Balanced and stabilized production.
Production Control-Benefits
• Competitative advantage

• Lower production costs and greater pricing flexibility.

• Orderly planning and marketing of new and improved products.

• Meeting delivery schedules to customers.

• Reliable delivery to customers.

Elements of Production Control
• Active Control

• Control of Planning

• Control on Materials

• Control on Tools

• Control on Timing of Production

• Control of Manufacturing Capacity

• Quality Control
Elements of Production Control
• Control of Material Handling

• Replacement Control

• Control of the Due Dates

• Labour Efficiency Control

• Control on Machines and Equipment

• Control on Methods

• Control of Information
Production Planning and Control
• Production planning and control is the process of planning
production in advance of operations. This is done by establishing
the exact route of each individual item, part or assembly, setting
starting and finishing dates for each important item or assembly
and the finished products, and releasing and necessary orders. It
also involves initiating the required follow-up to effective the
smooth functioning of the enterprise
Production Planning and Control-Objectives
• To establish production limit and requirements

• To ensure smooth flow of production by removing problems in the production

process

• To co-ordinate machine and labour and other inputs for optimum utilization of
resources

• To help purchase and supply for materials to suit production rate

• To minimize cost of production and ensuring quality of output

• To ensure that jobs are completed in tine and the ndelivery schedule is proper
 Factors affecting Production Planning and
Control
• Type of Product

• Type of Manufacturing

• Market Forecast

• Customer Orders
Process of Production Planning and
Control
• Estimating

• Routing

• Scheduling

• Loading

• Dispatching

• Progressing/Follow up/Expediting