Production planning

Production planning and control systems refer to the backbone architecture, concept and main driver to plan, schedule and control production activities for a manufacturing enterprise. Effective production planning is of the topmost priority for organizations to surge ahead in this highly competitive environment. Production planning is very complicated procedure and is time consuming.

 A good planning system must answer four important questions :

1. What to make (Say item XYZ)
2. What is required to make XYZ ( resources & raw materials)
3. What do we have ?
4. What & how much we need

These questions are answered by priority and capacity

Priority as established by the marketplace, relates to What products are needed, How Many are needed, and When they are needed. Priorities will change according to the business conditions. For example, a toy company that is preparing goods for the Christmas season will assign a priority to production of products that are projected to be its highest sellers. These products will take priority over other products that sell more steadily throughout the year.

Capacity is the Capability of manufacturing to produce goods and services (deliverables).  It depends on company Resources and the Availability of Material from suppliers.
Capacity can be expressed as the time available or as the number of units or dollars produced in a given period.  The demand for goods must be translated into the demand for capacity.  This requires identifying product groups, or families, of individual products based on the similarity of manufacturing process.

Usually the following can be varied to adjust capacity:

1. People can be hired and laid off, overtime and short time can be worked, and shifts can be added or removed.
2. Inventory can be built up in slack periods and sold or consumed during high demand.
3. Work can be subcontracted or extra equipment leased.
4. Manufacturing management is responsible for determining the least-cost alternative consistent with the goals and objectives of the business

In the long and short run, manufacturing must make plans to balance the demands with its resources and capacity. For long-range decisions, such as the building of new plants or the purchase of new equipment, the plans must be made for several years. For planning production over the next few weeks, the time span will be days or weeks.