Production Planning Control

Production Planning Control (PPC)

Supply Chain Management

Production Planning Control (PPC) : Production Planning Control purchasing and inventory management operations depend upon timing and volume requirements for various materials used during manufacturing process. Hence, proper coordination between purchase department and production planning staff is essential.

Production Planning Control; Activities

Following activities are generally covered under production planning and control operation.

1.Operation Preliminary Planning

During this step identification of materials, labor, machine and tooling required to produce the desired product is done.

2.Aggregate Scheduling

aggregate scheduling determined that the necessary equipment, labor and materials can be made available at desired time to produce desired product. In short, it is overall capability assessment.

3.Production Scheduling

aggregate scheduling is further find tuned to define detailed manufacturing steps with schedule for specific machines. Production properties are set by assigning start and completion dates for each operation. This phase also identified specific materials and tooling required along with specific shop routing for the product designs to be produced.

4.Release And Dispatch Of Orders

operation plan prepared during production scheduling is released and dispatched various operating units. Orders are released along with necessary drawings, list of materials and tooling required, routing sheet and necessary instruction for the production staff.

5.Monitoring Of Progress

During this step progress at each stage of operation is monitored and sent to the production scheduler. If actual performance is not as per plan then rescheduling, rerouting and provision of overtime is necessary.

Severe competition in market place and availability of modern computing tools has changed the face of production planning system.

Development Of Aggregate Plan

the basis of aggregate plan is estimate of orders likely to be received for a given basket of products during the planning period. This is based on present number of orders in hand and the reading of the business environment for the planning period in future. These demand estimates are based on the future forecast made by the planning stuff in company.

Aggregate planning plan is generally developed in company by the top management comprising representative from administration, marketing and production department. The plan may be for 6-12 months.


forecasting is essential to identify the requirements of various materials in future as well as their prices. These forecasts can be used for formulating materials budget, cash flows, inventory levels, etc. Collection, evaluation and reliability of basic data would decide quality and correctness of forecast made.

Though many techniques are available for forecasting, every company will have to select the method best suitable to them depending upon its data processing facilities, skill of manpower available with them and operating environment. Some of the factors like number of items involved, the nature of their markets and data handling system etc. Decide the forecasting of inventory systems.

Various forecasting techniques used by the planner as under,

1.Bottom Up Analysis

hear the feedback given by field sales personnel based on their market surveys, opinions and hunch is utilized today’s forecast to base forecast.

2.Time Series Analysis

this technique can be applied by using two methods

  • Moving average method
  • Exponential smoothing method

Moving average method: here the weightage is given is 1/n where ‘n’ is the number of months over which the average is taken. The average maybe for say last six months i.e. January-June sale figure of price of raw materials etc. The sale figure for 7th month is obtained by adding sales figures for 6 months divided by 6.

Forecasted July sales= (January + February+ march + April + may+ June sales) / 6

Hence, in above example weightage given to each of the last 6-month sales figure was 1 / 6

the drawback of this method is that it required lot of data storage. Secondly, the method is cumbersome as the number of months over which average is taken become becomes large.

Exponential smoothing method: in this method, the forecast for the next month is based on the forecast for the previous month and the actual sales value of the previous months. For example, refer example is moving average method.

Forecasted July sales = 1 / 6 (actual sales in June) + (1 – 1 /6) (forecast for the month of June)

3.Regression And Correlation Analysis

in this method forecast of one commodity is linked to the forecast of another commodity with whom there exist direct relationship.

For example: price forecast of mango juice is based on the price forecast of mango. There is linear relationship between mango price and mango juice price.

Forecast is a specified job, which required different skills. Hence, this responsibility entrusted to a separate group other than computerized planning system group.

Master Production Schedule (MPS)

MPS is developed directly from aggregate plan. The aggregate plan outlines the overall level of production taking into consideration the demand for the product and capacity of plant. MPS translates the aggregate plan into specified number of specific type of products to be produced in the given time period.

After the MPS is evaluated for its feasibility by simulation, against available and required resources in terms of materials, machine and labor. The time interval used in MPS can be weekly, fortnightly or monthly depending upon type of products, volume of production, and lead time and materials used. MPS can be updated weekly taking into consideration feedback received from sales personnel about demand and other changes in organization.

Material Requirement Planning (MRP)

material requirements planning is used to determine the quantity and time at which various materials are required in manufacturing operations.

These materials can be procured from outside are produced in house in the organization. MRP activity involve uses of MPS to study the output of given product. Based on MPS requirements of specific components and parts to produced given output in specific time frame are calculated.

MRP is based on three concepts as follows.

  • Demand linked to anticipated production.
  • Efficient use of inventory.
  • Time phasing.

1.Demand Linked To Anticipated Production

the decisions with regard to purchase materials are linked to anticipated production plan. The decisions are in context of quantities to be purchased and the timing for such purchases. Here projected requirements for each item is based on the production of all products where these items are used.

2.Efficient Use Of Inventory

this means that a new inventory would be acquired only when current stock is almost over. In other words, this indicates planning of order and time for arrival of materials

3.Time Phasing

this is based on lead time information and the dates on which item is needed. Each order is expected to arrive exactly at the time it is needed according to production stage pre-determined.

Thus, MRP system helps to create a set of planned orders for all manufactured parts and purchased materials based on necessary information of inputs.

Bill Of Material Explosion Exercise

We have seen earlier that material requirement planning enable to determine the requirements of raw materials, components, spares etc. Which are needed for planned production in given time frame. Future demand is arrived at by using forecasting techniques. By using these demand forecast requirements of various materials is arrived at through explosion charts. Computers are used to “explode”, bill of materials with demand forecast. Bill of materials show for a given product, the list of material, components, spares required along with their quantities and location code. It also indicates whether it is made in house or brought from outside. An explosion chart is a series of bill of materials group together in a matrix form so that combining the requirements for different products can be made. Generally, the material, planning is done on quarterly basis to rectify errors in forecasting. This also has to make realistic ordering to the supplies.

Capacity Requirement Planning (CRP)

This is another important step in the production planning process of the organization. CRP aims to convert the shop orders produced by the MRP systems into scheduled workloads for the various factory work centers. CRP utilizes output of MRP systems along with shop routing data and work center status data. The shop routing data file contains physical routing plans along with standard processing time requirements. WorkCentre data files indicates machine and manpower capacity available and already booked in each of the factory’s work centers.

MRP gives position of current and planned shop orders release for given time frame. CRP utilizes routing and timing data for each schedule order and checks the work centers files to determine whether the required capacity is available or not. Thus, CRP activities work hand in hand with MRP to plan the appropriate production.

Just In Time Planning (JIT)

The core aim of JIT is reducing inventories. However, it also aims at reducing waste and increasing productivity. This concept was pioneered by henry ford but was put to use extensively and developed by Japanese industries.

JIT enables to minimize production inventories and work in process industries. This is accomplished by providing each work center with just the quantity of materials and components needed to do a given job at the exact time when they are needed.

Production Planning Control (PPC)