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PRODUCTION PLANNING

PROF.A.K.CHATTERJEE

PRODUCTION PLANNING
Planning implies looking ahead into the future.
Based on how far ahead into the future one is
looking at, we have the following classification
CLASSIFICATION OF PLANNING
Long Range Planning : Planning Horizon 5-10
years.
Medium Range Planning : Planning Horizon 1
year.
Short Range Planning : Planning Horizon less
than 1yr.

PRODUCTION PLANNING
PRODUCTION PLANNING by definition would constitute
planning for production /operations for the upcoming year
(medium and short range). The medium range planning may
be further classified based on the demand.
The medium range planning problem is termed as Aggregate
Production Planning in the literature. In such cases the
demand
Is assumed to be Dynamic and Deterministic in nature.

AGGREGATE PRODUCTION
PLANNING PROBLEM
EXAMPLE 1: Determine the minimum cost
production plan. Reqd. data is given below:
Jan
Feb
Mar
Demand 100
75
125
RT Cap 100
100
100
OT Cap 25
25
25
Relevant cost: RT cost/unit Rs.100
OT cost/unit Rs.125
ICC/unit/period Rs. 5

AGGREGATE PRODUCTION
PLANNING PROBLEM cont.
PLAN 1:
RT
OT
PLAN 2:

Jan
100
0

Feb
100
0

Mar
100
0

Jan
Feb
Mar
RT
100
75
100
OT
0
0
25
Tradeoff: Produce an unit in RT and carry it over as
inventory for T periods as against producing the
same unit in OT

AGGREGATE PRODUCTION
PLANNING PROBLEM cont.
FORMULATION:
Decision variables:
X1= no. of units to be produced in Jan RT
Y1 = no. of units to be produced in Jan OT
X2= no. of units to be produced in Feb RT
Y2 = no. of units to be produced in Feb OT
X3= no. of units to be produced in Mar RT
Y3 = no. of units to be produced in Mar OT
I1 = inventory at the end of Jan
I2 = inventory at the end of Feb
I3 = inventory at the end of Mar

AGGREGATE PRODUCTION
PLANNING PROBLEM cont.
FORMULATION cont.:
Minimise [100(X1+X2+X3) + 125 (Y1+Y2 +Y3)
+ 5(I1+I2+I3) ]
Subject to X1+Y1 - I1 = 100
I1+X2+Y2 - I2= 75
I2+X3 +Y3 -I3 = 125
X1, X2, X3 100
Y1, Y2, Y3 25
X1, X2, X3 , Y1, Y2, Y3 , I1, I2, I3 0

PRODUCTION PLANNING
STRATEGIES
Matching Demand Plan : Production
quantity in any month is equal to the demand
for the corresponding month. (as can be seen
in Plan 2)
Level Strategy: Implying that the production
quantity remains constant from month to
month. (as can be seen in Plan 1)

DETERMINING PRODUCTION
PLANNING STRATEGIES
Transportation Method
Jan
Feb Mar
Jan RT
OT
Feb RT
OT
Mar RT
OT
Demand
100
75
125

Cap
100
25
100
25
100
25

DETERMINING PRODUCTION
PLANNING STRATEGIES
Example 2: Demand forecast for the months Jan to
Apr are 5, 2, 3,4 units. The relevant
costs are,
(a)Production Cost = c(x) = 13+ 2 x, if x > 0
= 0 otherwise
(b) Inventory Cost = Rs.1/unit levied on the end of
month inventory.
Determine the minimum cost production plan.

CONCEPT OF DOMINANT SEQUENCE


In any plan, the total production is equal to the total demand, Hence the Total
variable cost for any plan will be same, here Rs.28.
The trade-off is thus between the fixed cost of Rs.13 and ICC of Rs.1.To gain
further insight to the problem, consider the demand of an item in the upcoming
two months as 100 & 50 units. The problem is to find the minimum cost
production plan. The relevant costs are, the fixed cost A (13 here) and inventory
carrying cost H. (1 here)
The alternative plans can be written as:
1.
Produce 100 in first month and 50 in the second
2.
Produce 101 in first month and 49 in the second
3.
Produce 102 in first month and 48 in the second
n.

Produce 150 in first month and 0 in the second

CONCEPT OF DOMINANT SEQUENCE cont.,


The costs of the alternative plans can be seen as 2A,
2A + H, 2A+2HA + 50H. As H is positive, one
needs to consider only the first and the last option
alternative. Thus, if the requirement for the two
months are D1 and D2 respectively, it is
sufficient to consider the following two plans for
optimality: 1. D1 + D2 , 0 and
2. D1 , D2
These are called the dominant sequences.

CONCEPT OF DOMINANT SEQUENCE cont.,


The number of dominant sequences for a T period
problem = 2 T-1, thus for a 3 period problem with
requirements D1 ,D2 , D3 , The minimum cost plan
will be one among the following eight plans:
1. D1 + D2 + D3 , 0,0
2. D1 + D2 , 0, D3
3. D1 , D2 + D3 , 0
4. D1 , D2 , D3

SOLUTION
For 4 period problem with demand 5,2,3,4, the dominant sequences are:

14-0-0-0

Cost = Rs.33

5-9-0-0 Cost = Rs.37

10-0-0-4

Cost = Rs.34

5-5-0-4 Cost = Rs.42

7-0-3-4

Cost = Rs.41

5-2-7-0 Cost = Rs.43

7-0-7-0

Cost = Rs.32

5-2-3-4 Cost = Rs.52

THE TYRE COMPANY PROBLEM


Apriori Analysis:
Step 1 Identify demand and supply gap
Month

N/F

Demand

W/R

Hours

Balance

Output

June

1000

120

580

1000

4000

580

3867

22

1478

133

300

2500

W over

350

1128

2500

+ 300 R
+148 R

N
July

5000

August

Remark

W over

8000

1280

148

8000

5000

600

400

5000

3000

400

2667

W over

53

247

333

+ 247 R

THE TYRE COMPANY PROBLEM


From Step 1 its clear that enough supply is there to meet all demands.
Step 2 Calculate the contribution per unit for each of the product
machine combinations. 1 unit of F produced by W m/c will give a
contribution = Rs. (9 3.90 0.23 0.60) = Rs. 4.27 (neglecting the
ICC which is a relatively small amount). Thus for FW combination,
there is a positive contribution. A quick check reveals that all other
combinations FR, NW, NR yield a positive contribution, implying it
is worthwhile producing quantity equal to the total demand of both
types of tyres, i.e., 15,000 of N and 11,000 of F

THE TYRE COMPANY PROBLEM


Step 3 As total production = total demand, the
revenue is a constant = Rs.(15000 x 7 + 11000 x 9)
= Rs. 204,000. Similarly, the total material cost as
well as the shipping cost are also constant.
Step 4 One may infer from the analysis that:
(1)In this case profit maximization and cost
minimization are equivalent.
(2) The trade-off is essentially between operating cost
and ICC

THE TYRE COMPANY PROBLEM


Note that the problem can be formulated & solved
using LP. You may reinforce your learning from OR
by defining the decision variables, objective and the
constraints. For e.g.
Decision variables:
Each of the two tyres can be produced by two
different machines in any of the 3 months, giving rise
to a total of 12 variables. For e.g. One may denote
NW1 as the no. of units of nylon (N) tyres to be
produced by wheeling (W) machine in June (say).
Are there any other type of Decision variables?

THE TYRE PROBLEM cont.


Constraints:
Availability of machine hours in any period.
In June the wheeling machine is available for only 700 hrs.
Each N & F tyre requires 0.15 and 0.12 hrs of wheeling
machine respectively. If NW1 & FW1 denote the production
in June of N and F using W, then 0.15NW1 + 0.12 FW1
700
Material Balance Equation.
For every period and every product, one needs to ensure
that beginning inventory + amount produced - amount
demanded = ending inventory. For June for Nylon tyre,
Beg. Inventory = 0, if June end Inventory = IN1, then
NW1+NR1-IN1=4000

LINE BALANCING & SCHEDULING


It may be noted that for mass production the concept of Line
Balancing is useful, while for Job Shop the theory of Scheduling is
useful for Planning. To recapitulate,
MASS PRODUCTION: high volume, standard products. Each
job goes through the same sequence of operations on different
machine.
JOB SHOP: Low volume, variety product. Each job has got a
number of operations to be performed in different machines in
different order.
Planning for Projects is covered separately under Project Mgmt.
PROJECT: A project consists of a number of activities which
when completed marks the end of the Project. The activities are
to be performed in some defined sequence. Project is a one shot
affair.

MASS PRODUCTION PLANNING


AND PROJECT PLANNING
Mass Production represents high volume
Production; Project is a one shot affair. The
data for these are similar looking but the
queries and hence the planning techniques
are different. For example, given the data on
an assembly, the query may be to determine
how the activities are to be planned to get
a defined continuous output per hour.

ASSEMBLY DATA
Activity Time(mins.)
Imm.Pred.
A. 2
B. 1
A
C. 2
A
D. 1
B,C
E. 3
D
Question: How many persons to employ and
activities to be assigned to each?
Desired output rate = 20 units/hour.

ASSEMBLY PLANNING
Network representation of the Assembly
1
B
1

2
D

A
2
C

3
E

LINE BALANCING
Given the data on an Assembly consisting of
(a)the activities comprising the Assembly,
(b) the time required to perform each activity and
( c) the precedence relationship governing the activities
(summarized in terms of immediate predecessor),
the objective of Line Balancing problem is to decide on the
allocation of the activities to various Work stations, so as
to achieve a desired out put rate, to maximize the Line
efficiency without violating the precedence constraints.

STEPS FOR LINE BALANCING


1. Find the desired cycle time from the desired output
rate. 20units/hour would imply a cycle time C= 3 min.
2. Find the required number of work stations. If total
assembly time = T, then no. of workers to whom the
whole assembly can be allocated has to be T/C=
9/3=3 work stations.
3. Prepare a list of all the activities in specific order for
the purpose of allocation. Basis of the ordering may be
any heuristic, e.g., Rank Positional Weight (RPW)
heuristic would order the activities based on PW (the
time required to perform the activity + time required to
perform all its successors.

STEPS FOR LINE BALANCING


4. Create Stations and start assigning activities. The activity with the
highest PW is assigned to Station 1. Check the order obtained
from Step 3 is A, C, B, D, E. Thus, activity A stands assigned to
Station 1.
5. For subsequent assignments calculate the remaining time that can
still be assigned without violating the Cycle Time constraint. As A
takes 2 min., C=3 min, its still possible to assign 1 min to Station
1. Go down the order list, to find the activity taking 1 min. Before
assigning any activity to a Station, avoid (a) Cycle Time and (b)
precedence violation.
6. If none of the remaining activities satisfy the above condition,
create a new Station and repeat the process till all activities have
been assigned

BALANCE DELAY & LINE EFFICIENCY


Balance Delay = ( NC - Ti)/ NC, where,
N= Number of Work Stations
C= Cycle Time
Ti= Time required to perform activity i.
Balance Delay is expressed as a percentage.
Efficiency = 100 Balance Delay

PLANNING FOR JOB SHOP SYSTEMS


For Job Shop Systems where each product may be
required to be processed on different machines in
different sequences, the identification of bottleneck
is not straightforward. Here the concept and
approaches of Job Shop Scheduling assume
importance.

SCHEDULING: SINGLE MACHINE


PROBLEM
PROBLEM 1
Consider 3 Jobs, each taking 1, 2, 3 hours respectively, to be
scheduled on a machine to minimize the average waiting time of the jobs.
SOLUTION: Job 1 with minimum processing time to be scheduled first, Job 2
with next minimum time second and so on.
PROBLEM 2
Consider the above problem with more information. The
waiting cost per hour for each Job are Rs. 20, 45, and 63. You have to decide on
the schedule that minimizes the total waiting cost.
SOLUTION: The p/w ratio (p = processing time, w= waiting cost per hour) can
be calculated for each Job. Job with the minimum p/w is to be ordered first,
followed by the Job with the next minimum and so on.

SCHEDULING: SINGLE MACHINE


PROBLEM

S
T
j

S1

Waiting cost under schedule S or S1 = waiting cost (WC) of Jobs other than I
and j, + WC of Job i and j. It may be noted that the WC of Jobs other than I
and j, is same in S and S1 and the difference in WC is because I and j.

TWO M/C FLOW SHOP


PROBLEM 3 Three books are to be printed and bound. There is one
of each kind of m/c. Processing time data are given below:
OBook Number
Printing Time (Hours)
Binding Time (Hours)
1

Objective is to order the books, so that minimum time is taken to


complete all the books.

TWO M/C FLOW SHOP


SOLUTION: (Johnson) Applying Johnsons rule:
Step 1 Identify from processing time(P) data matrix where the
minimum P occurs. If P occurs on the 1st m/c put that job first. If P
occurs on the 2nd m/c, put that job last. Check P= 1 occurs on m/c 1.
Hence job 2 will come first.
Step 2 Remove the job from the list and repeat till all jobs are
scheduled. Thus job 1 will be ordered last. Thus the schedule 2, 3, 1
will minimize the maximum flow time which is the time by which
all jobs are completed (time by which job 1 comes out from the
second m/c)
Note: Flow time is the time the job spends in the Shop.
Maximum Flow time = FMAX = Flow time of the job which comes last.

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