Part 2: Management of Production System

PRODUCTION PLANNING INTRO

Planning and control of production systems is needed to plan and control the use of resources to use them efficiently and meet customer requirements.

Production Management has to:

1. Identify customer requirements (or estimate them)
2. Aggregate requirements into a production plan
3. Execute the plan
4. Monitor the plan's effectiveness

Production Management is related to these activities:

• Creation and adjustment of production capacity
• Set up of the production system for new productions
• Execution and management of production plans

Production Planning and Control PP&C is based on the order portfolio and sales forecasts and it deals with:

1. Generation of production orders
2. Their assignment to production units (workshop production)
3. Plan the required components (order external) and raw materials
4. Assign jobs to workstations
5. Monitoring and control of production plan progress

So, production planning answers to:

• WHAT which product
• WHEN time horizon
• HOW materials
• WHERE which workcenter
• HOW MUCH quantity, lot size

The problem is highly complex, due to the many variables to take into account, many constraints, internal and external uncertainties and conflicting objectives.

In fact we would like to satisfy each single request and so have product availability but also a regularity in utilization of machines, labour force minimization of shocks and a long term view.

These things are difficult to be obtained all together.

The HIERARCHICAL APPROACH helps to cope with PP complexity.

PRODUCTION PLANNING INTRO

Planning and control of production systems is needed to plan and control the use of resources to use them effectively and meet customer requirements.

Production Management has to:

1. Identify customer requirements (or estimate them)
2. Aggregate requirements into a production plan
3. Execute the plan
4. Monitor the plan's effectiveness

Production Management is applied to these activities:

• Creation and adjustment of production capacity
• Set up of the production system for new productions
• Generation and management of production plans PP&C

Production Planning and Control PP&C is based on the order portfolio and sales forecasts and it deals with:

1. Generation of production orders
2. Their assignment to production units (workshop production)
3. Plan the required components (own external) and raw materials
4. Assign jobs to workstations
5. Monitoring and control of production plan progress

So, production planning answers to:

• WHAT which product
• WHEN time horizon
• HOW materials
• WHERE which workcenter
• HOW MUCH quantity, lot size

The problem is highly complex, due to the many variables to take into account, many constraints, internal and external uncertainties and conflicting objectives.

In fact, we would like to satisfy each single request and so have product availability, but also a regularity in utilization of machines, labour force, minimization of stocks and a long-term view.

The things are difficult to be obtained all together.

The HIERARCHICAL APPROACH helps to cope with PP complexity

HIERARCHICAL APPROACH

The higher the detail, the shorter the time horizon.

PP

STRATEGIC

• 2-5 years horizon
• Production level planned as a whole

MEDIUM TERM

• 1 year horizon
• Fulfill forecasted demand
• Product families are planned

OPERATIVE

• 1 week/day horizon
• Fulfill each production order
• Each part is planned: when, where, how

After production is done:

PRODUCTION CONTROL & PERFORMANCE MEASUREMENTS

Let's see an overview of them:

• AGGREGATE PLANNING

AGGREGATE PLANNING

MPS

• MATERIALS PLANNING

MATERIALS PLANNING

MRP

PRODUCTION BUDGETING

AGGREGATE PLANNING

Master Production Schedule (MPS), plans 1 year, month by month.

MATERIAL PLANNING

All the items required to produce a product are planned

Push vs Pull, material requirements planning

PRODUCTION SCHEDULING

Planning the single operation of the single machine (very high detail)

Master Production Schedule (MPS):

• How many units of finished products are to be manufactured in the medium-long term? (1-5 years)
• Only finished products are considered (not materials), only the most critical resources can be taken into account.

Material Requirements Plan (MRP)

• Which quantity for each item is to be manufactured or purchased in the short-medium term?

MPS is a constraint for materials planning.

PRODUCTION SCHEDULING

Pr