PRODUCTION PLAN

The production plan (technical study) consists of the following:

A. Technical Product Description
This portion describes the product(s) to be manufactured and sold.
The description specifies the products’ physical, mechanical, and
chemical properties and identifies their various uses, both as finished
goods and industrial inputs.

B. Production/Operation Processes

The selected manufacturing process must be described simply and

clearly, preferably with the aid of flow charts and diagrams. The
alternative processes and the way they compare with the chosen process
must be mentioned. The analysis should further touch on the
manufacturing processes used in existing plants with the same or similar
activity, both domestic and foreign. Finally, a review of the licensing
agreements and patents would also be helpful.

1. Step by Step Procedure

2. Duration per Step per Batch
3. Labor and Machine Requirement per Step

C. Production Schedule

Describes the projected scale of operation for the next several years.
1. Will production increase in time?
2. By how much?

The factors which will provide the answers are the expected growth
in market share, the availability of financing possible expansion, the
availability of more raw materials, and the level of utilization of plant
capacity.

D. Labor Requirement

The various jobs and functions necessary for the operational stage
must be described. For costing, labor is generally classified into three
types—direct, indirect, and administrative. The number of workers to be
employed for each job classification, the pay scales, employee
development programs, the organizational set-up, and the aggregate labor
costs must be described in detail.
E. Machinery/Equipment Requirement

Machinery and equipment required must be identified and

individually listed according to type and use. Specifications, capacities,
and costs must be described in detail. Likewise, the origin of the
machinery, whether local or imported, as well as the manner of and cost
transporting them must be indicated.

F. Raw Materials Requirement

The required raw materials and supplies should be listed down and
the basis for their selection must be presented. Descriptions and
specifications on their physical, mechanical, and chemical properties must
also be given. Current and prospective costs of raw materials, the
availability and continuity of supply, and the current prospective sources
should also be included. The volume required at various phases of
operations must be clearly presented.

G. Plant/Factory Location

A thorough and comparative analysis for each potential location

should be made to determine the most ideal plant/factory site.
It has to consider the following factors:
1. The accessibility to and availability of raw material sources
2. The availability of cheap or moderately-priced utilities
3. The combined cost of transporting raw materials and fuel to plant site
4. The proximity to distributing outlets
5. The availability of workers

H. Plant Layout
The plant layout should be carefully depicted through diagrams and
descriptions. A good plant layout is characterized by minimum material
handling, effective space utilization, smooth work flow through the plant,
safe and conducive working areas for the workers, safety and sanitation
facilities, and flexibility of arrangements.

I. Waste Disposal System

A description of the quantity, manner of disposal, and the cost

involved in doing away with expected waste from production is necessary.
 The analysis must be expanded to consider the possibilities of further
using these wastes.
J. Quality Control System
K. Utilities
This portion describes the amount, cost, and sources of electricity,
and/or steam required. This must be determined in relation to the
production schedule and capacity utilization defined. Alternative sources
of these utilities and the feasibility of their use must also be described
L. Production Cost
Here, the monetary aspect of all the production plans is put into
perspective. How much does it cost to produce one unit of output?
To arrive at this, the following must be determined: raw materials,
labor cost, overhead cost (fixed costs), operating costs (variable costs),
and other pertinent costs.