Concepts of PPC

Prasad Bari
 Concepts of PPC

Quiz 1
1. What is PPC?
2. Why there is a need for PPC?
3. Which of the following is not prior planning?
4. Data Collection comes under ……
5. The action plan consists of …….
 Concepts of PPC
Production Planning & Control
Production
• It is the process by which goods or services are created.

• It can also be defined as a means of

converting the raw materials into
finished products by performing a set
of manufacturing operations in a
predetermined sequence that
transforms material from a given to
desired form.
 Concepts of PPC
Production Planning & Control
Planning
It means preparing the scheme in advance before the actual work is started.
 Concepts of PPC
Production Planning & Control
Control

It means the supervision of all the relevant operation with the help of a
control mechanism that feeds back the progress of the work.
 Concepts of PPC
Production Planning & Control
Production Planning
It is a pre-production activity.
It is the determination of manufacturing requirements such as
manpower, materials, machines and manufacturing processes.
 Concepts of PPC
Production Planning & Control
Production Control
It reviews the progress of the work and takes corrective steps in order to
ensure that programmed production takes place.
 Concepts of PPC

Production Planning and Control

It is defined as the direction and co-ordination of the firm's material and physical
facilities towards the attainment of pre-specified production goals in the most efficient
and economical manner.
 Concepts of PPC
Need for PPC
• Effective utilisation of firms resources.

• To achieve the production objectives with respect to quality, quantity, cost

and timeliness of delivery.

• To obtain the uninterrupted production flow in order to meet customers'

varied demand with respect to quality and committed delivery schedule.

• To help the company to supply a good quality product to the customer on

the continuous basis at competitive rate.
 Concepts of PPC
Functions of PPC
Forecasting
Order Writing
Prior Planning
Product Design
Planning Process Planning and Routing
Phase
Material Control
Action Planning Tool Control
Loading
Scheduling
 Concepts of PPC

Action Phase Dispatching

Data Collection
Progress
Reporting
Data Interpretation
Control Phase
Expediting
Corrective
Action Replanning
 Concepts of PPC

Factors Influencing PPC

 Market Forecast
 Sales Order
 Process Sheet
 Load Charts
 Project Planning Method
 Concepts of PPC

Quiz 2
1. Manufacture of products to meet specific customer
requirements is ……..
2. The sugar industry is a type of …………..
3. Cost of Production is very high in ………..
4. Status of PPC department depends on the company's
manufacturing process ………
5. PPC needs active cooperation and coordination of ……..
 Concepts of PPC

Manufacturing Methods

Job Production
Batch Production
Mass & Flow Production
Continuous or Process Production
 Concepts of PPC
Manufacturing Methods
 Job Production
Job order production is the manufacture of
products to meet specific customer
requirements of special order. The
quantity is small, usually one or few
numbers of a single product. This type of
production is mainly concerned with
special projects, models, proto-types,
special machinery or equipment to
perform specialised and specific tasks.
 Concepts of PPC

Manufacturing Methods

Job Production
Batch Production
Mass & Flow Production
Continuous or Process Production
 Concepts of PPC

 Batch Production
It is the manufacture of a number of
similar articles, either to meet a
specific order or to satisfy a continuous
demand. When the production of the
batch is terminated the plant and
equipment are available for the
production of similar or other
products.
 Concepts of PPC

Manufacturing Methods

Job Production
Batch Production
Mass & Flow Production
Continuous or Process Production
 Concepts of PPC

 Mass & Flow Production

It is characterized by the
manufacture of several numbers of
a standard product produced and
stocked in the warehouses as
finished goods awaiting sales.
 Concepts of PPC

Manufacturing Methods

Job Production
Batch Production
Mass & Flow Production
Continuous or Process Production
 Concepts of PPC
 Continuous or Process Production

In this a single product is produced

and stock in the warehouses awaiting
sales. The flexibility of such plant is
zero as only one type of product can be
produced in such plants.
 Concepts of PPC
Characteristics of Manufacturing Methods
Characteristics Job Batch Mass & Flow Continuous
Production Runs Small Short Long Long
Flow of Materials Discontinuous Continuous Continuous Continuous
Manufacturing
Long delays Smaller Smaller Almost Zero
Cycle Time
Plant Layout Process Pocess Product Product
Knowledge of at Relatively
Skill of Labour High Semi-skilled
least one process Low
Quality of Knowledge of at Relatively
High Semi-skilled
Supervision least one process Low
Relatively
Material Handling More Relatively Less Mechanised
Less
Flexibility in
Production More Relatively Less Less Less
Schedule
Cost of Production High Relatively Low Low Low
 Concepts of PPC

Management Policies
 Planning for meeting demands
 Distribution of work
 Degree of Centralisation
• Centralised planning
• Decentralised planning
• Semi centralised planning
 Concepts of PPC

Status of PPC Department

It depends upon the company's manufacturing process.
 Concepts of PPC
PPC as an Integrated Approach
The effectiveness of PPC cannot be directly and quantitatively measured.
PPC is expected to satisfy number requirements some of which are of
conflicting nature.
 Sales department
 Production department
 Purchase department
 Finance department
 R&D department
PPC needs active cooperation and coordination of various departments of
the company.
 Concepts of PPC

Prerequisites of PPC
 Data pertaining to design
 Equipment
 Raw materials
 Tooling
 Performance Standard
 Labour
 Operating systems
Congratulations !

Chapter Done !!
 Module 2

Forecasting

Prasad Bari
 Forecasting
Forecasting
It is the projection based on the past data.

It is defined as an estimate of sales in physical units or monetary value for

a specified future period under proposed marketing plan and under the
assumed set of economic and forces outside the organisation for which the
forecast is made.
 Forecasting

Quiz
• Forecasting is the projection based on the …..... Data.
• …….. is one of the quantitative forecasting method.
• Regression Analysis is also known by ………
• In moving average method more weightage is given to ……….
• …….. is the numerical difference between the forecasted demand and the actual
demand.
 Forecasting
Classification of Forecasting Methods
 Qualitative or subjective methods (Judgemental techniques)
• Opinion survey method
• Executive opinion method
• Customer and distributors surveys
• Marketing trials
• Delphi Technique

 Quantitative or objective methods

(Time series method or Econometric method)
 Forecasting
Least Square Method (Regression Analysis)
 It is a mathematical model of obtaining the line of best fit between
the dependent variable (demand) and independent variable (time
period)
 In a simple regression analysis, the relationship between the
dependent variable y and independent variable x can be represented
by a straight line, y = a + b x
 Where, b is the slope of the line and a is the y intercept
 The values of the constant a and b are determined by the two
simultaneous equations.
 Forecasting
𝛴𝑦 = 𝑛𝑎 + 𝑏𝛴𝑥 ……(1)
𝛴𝑥𝑦 = 𝑎𝛴𝑥 + 𝑏𝛴𝑥 2 ……(2)
Substituting the value of 𝛴𝑥 = 0 in equation (1) & (2)
𝑎 = 𝛴𝑦/𝑛
𝑏 = 𝛴𝑥𝑦/𝛴𝑥 2
Forecasting
Forecasting
Forecasting
Forecasting
Forecasting
Forecasting
Forecasting
Forecasting
 Forecasting
Moving Average Forecasting
It is a statistical method to establish and extrapolate trend of past
sales.

This method discards old figures as new ones come in i.e. fresh
average is computed at the end of each period by adding the demand
of the most recent period and omitting the demand of the oldest
period.

Since the data used in this method changes from period to period
hence it is called moving average method.
 Forecasting
The consumption rate of a particular item over the past 6 months is as
follows.

Month Jan Feb Mar Apr May June

Consumption 400 350 450 420 460 380

Compute the forecast for the month of July.

Solution:-
The average 410 can be used as forecast for the month of July.
 Forecasting
The past data of the load on a machine is given in the table below
i) Compute the load on the machine using the 5th moving average for
the month of December.
ii) Compute a weighted 3 months moving average for December where
the weights are 0.5, 0.3 and 0.2 for the month of November, October
and September respectively.
Month June July Aug Sept Oct Nov
Load (Hrs.) 585 610 675 750 860 970

Solution:-
i) (970+860+750+675+610) / 5 = 773 Hrs.
ii) (970*0.5) + (860*0.3) + (750*0.2) = 947 Hrs.
 Forecasting

Exponential Smoothing Method

Simple ‘n’ period moving average gives equal weightage to the last ‘n’
periods. Exponential smoothing effect gives greater weightage to recent
data and lesser weightage to older data.

Also moving average forecasting is laborious operation of maintaining

the data for all the previous year, but exponential smoothing method
requires only the current demand and the forecasted demand for the
current month.
 Forecasting
Let,
Ft = Forecast for the period t
Ft-1 = Forecasted demand for the last period
Dt-1 = Actual demand for the last period
∝ = Smoothing constant

Ft = ∝Dt -1 + (1-∝) Ft -1

Now, value of selected ∝ is small if the demand pattern is table and large value
of ∝ is selected if the demand is fluctuating.
 Forecasting
The demand for the disposable plastic tubing for a General Hospital is
300 units and 350 units for September and October respectively. Using
200 units as forecasted demand for September, compute the forecast for
the month of November. Assume ∝ = 0.7.

Solution:-
Ft = ∝Dt -1 + (1-∝) Ft -1
Dt-1 = Demand for September = 300
Ft-1 = Forecast for September = 200
Forecast for October = Ft = 0.7*300 + 0.3*200 = 270
Now, forecast for November
Ft =∝Dt -1 +(1-∝) Ft -1
0.7*350 + 0.3*270 = 326 units
 Forecasting

Estimate the sales forecast for the year 2020 using exponential
smoothing forecast. Take ∝ = 0.5 and the forecast for the year 2015
as 160*105 units.

Year 2015 2016 2017 2018 2019

5
Sales (Rs.) (10 ) 180 168 159 170 188
 Forecasting
Solution:-
Ft =∝Dt -1 +(1-∝) Ft -1
Year Sales (Dt-1) (Ft-1) Ft = ∝Dt -1 +(1-∝) Ft -1
2015 180 160 -
2016 168 170 170
2017 159 169 169
2018 170 164 164
2019 188 167 167
2020 177.5
The forecast demand for the year 2020 is 177.5 units
 Forecasting
Causal forecasting method (Econometric forecasting)
The objective of this method is to establish a cause and effect relationship
between the changes in sales level of the product and the set of relevant
explanatory variables.
𝛴𝑥𝑦
The coefficient of correlation is given by ౪=
𝛴𝑥 2 𝛴𝑦 2
The value of ౪ Lies between + 1 and -1

+1 represent perfect correlation and there is the direct relationship

0 represent that there is no correlation between the two variables
-1 represent inverse or indirect relationship.
Forecasting
Forecasting
Forecasting
 Forecasting
Forecasting Error
It is the numerical difference between the forecasted demand and the
actual demand.
This error should be minimum.
Average forecast error is measured by mean absolute deviation (MAD)
without direction.

MAD = sum of absolute value of forecast error for all the periods
number of periods

MAD expresses the magnitude but not the direction of the error.
 Forecasting
Forecasting BIAS
It measures the forecast error with regard to direction and tendency to
over forecast or under forecast.

BIAS = sum of forecast error for all the period

number of period

It indicates the directional tendency of forecast errors. If the forecast

repeatedly overestimates actual demand BIAS will have a positive value
and underestimation will be indicated by a negative value.
Forecasting
Forecasting
 Forecasting

Capacity Planning

It is concerned with matching the resources to demand.

Capacity decisions have a direct influence on performance of the

production system in respect to both resource productivity and customer
service. Excess capacity results in low resource productivity while
inadequate capacity leads to poor customer service.
 Forecasting
Quiz
• ….. is matching the resources to demand.
• …… capacity is the limitation on the output exercised by the
regulatory authorities.
• …….. is/are the factors influencing effective capacity.
• Aggregate planning is the process of planning the quantity for
……….
• Subcontracting is one of the aggregate planning strategy
 Forecasting

Measurement of Capacity
 When the firm produces a single product.

Example - Capacity of a textile mill in millions of metres of cloth per year.

 When the firm produces multiple products.

Example - Job shop can measure its capacity in machine hours or man
hours.
 Forecasting

Measures of Capacity
 Design capacity
 System capacity
 Licensed capacity
 Installed capacity
 Rated capacity
 Forecasting

Factors Influencing Effective Capacity

 Demand forecast
 Plant efficiency
 Labour efficiency
 Subcontracting
 Multiple shift operation
 Management policies
 Forecasting

Future capacity needs

 Long-term capacity strategies
 Short term capacity strategies
 Forecasting

Aggregate Planning

It is the process of planning the quantity and timing of output over

the intermediate time period (3 months to 1 year). Within this range, the
physical facilities are assumed to be fixed for the planning period.

Fluctuation in demand must be met by varying labour and inventory

schedule.
 Forecasting
Aggregate planning strategies
The variables of the production system are labour, materials and capital. These variables
constitute pure strategies by which fluctuations in demand and uncertainties in
production activities can be accommodated.

 Vary the size of the workforce

 Vary the work hours
 Vary inventory levels
 Subcontract
Forecasting
Forecasting
Forecasting
Forecasting
Forecasting
Congratulations !

Chapter Done !!
 Module 3

Inventory Control

Prasad Bari
 Inventory Control
Inventories
It represents those items which are either stocked for sale or they are in
the process of manufacturing or they are in the form of materials which
are yet to be utilised.

2
 Inventory Control
Types of Inventories
 Raw materials
 Work in process
 Finished parts
 Finished goods
 Tools inventory
 Maintenance, Repair and Operating Store

3
 Inventory Control
Quiz

• One of the reasons for keeping inventories

• Inventory control basically deals with following problem
• Which of the following is NOT a selective control
• When there is a demand for the product and item needed is not in
stock, then we incur a…….. cost.
• EOQ stands for....

4
 Inventory Control
Reasons for keeping Inventories
 To stabilize production
 To take advantage of price discounts
 To satisfy demand during replenishment period
 To prevent loss of sales
 To keep pace with changing market conditions
 Sometimes the company is forced to buy quantities more than the
current requirements due to supplier’s condition of minimum quantity,
government regulations and seasonal availability.

5
 Inventory Control
Inventory Control
It is the system which strikes the balance between the lost due too to
non availability of an item and cost of carrying the stock of an item.
It aims at maintaining optimum level of stock of goods required by the
company at the minimum cost to the company.

6
 Inventory Control
Inventory Control Contd .......
Inventory control basically deals with two problems.
 Order level - When should an order be placed?
 Order quantity - How much should be ordered?

7
 Inventory Control
Benefits of Inventory Control
 Timely delivery of goods and services to the customers.
 Smooth and uninterrupted production.
 Economy in purchasing.
 Efficient utilisation of working capital.

8
 Inventory Control
Terminologies
 Demand- It is the number of items required per unit of time.
 Order Cycle- It is the time period between two successive orders.
 Lead Time- It is the length of time between placing an order and
receipt of items.
 Safety Stock (Buffer stock or Minimum stock) - It is the stock
needed to account for delays in material supply and to account for
sudden increase in demand due to rush orders.

9
 Inventory Control
Terminologies Contd .......
 Reorder Level- It is the point at which replenishment action is
initiated. When the stock level reaches ROL, the order is placed for the
item.

 Reorder Quantity- This is the quantity of items to be ordered at the

reorder level. This quantity is equal to the economic order quantity
(EOQ).

10
 Inventory Control
Terminologies Contd .......
 Ordering Cost- It is the amount of money spent to get an item into
inventory.
It is of two types
• Fixed cost- which do not depend on the number of orders.
• Variable cost- it changes with respect to the number of orders
placed.

11
 Inventory Control
Terminologies Contd .......
 Inventory Carrying Cost (Holding Cost)- This cost includes holding
a given level of inventory on hand. It is directly proportional to the
amount of holding and period of holding the stock in stores.

 Shortage Cost- When there is a demand for the product and item
needed is not in stock, then we incur a shortage cost.

12
 Inventory Control
Inventory Cost Relationship

13
 Inventory Control
Selective control of inventory
 It refers to the variation in method of control from item to item on
some selective basis.

14
 Inventory Control
Classification of selective control
 ABC Analysis
 HML Analysis
 VED Analysis
 SDE Analysis
 GOLF Analysis
 SOS Analysis
 FSN Analysis
 XYZ Analysis

15
 Inventory Control
ABC Analysis
 It tends to segregate all the items into three categories A, B and C on
the basis of their annual usage.

Class Items % Expenditure %

A 5 to 10 70 to 75

B 10 to 15 10 to 15

C 70 to 80 5 to 10

16
 Inventory Control
HML Analysis
 It is similar to ABC analysis but here the criteria is price instead of
usage value. Items are classified into High, Medium and Low
categories.

17
 Inventory Control
VED Analysis
 It represents classification of items based on criticality i.e. Vital,
Essential and Desirable.

18
 Inventory Control
SDE Analysis
 It is based on the problems of procurement and is classified as Scarce,
Difficult and Easy.

19
 Inventory Control
GOLF Analysis
 It is based on the nature of suppliers which determine quality, lead
time, terms of payment, supply and administrative work involved.
• G group - Government suppliers
• O group - Ordinary suppliers
• L group - Local suppliers
• F group - Foreign suppliers

20
 Inventory Control
SOS Analysis
 It is based on the seasonality of the items as seasonal and off seasonal.

21
 Inventory Control
FSN Analysis
 All the items in the inventory are not required at the same frequency.
Some are required regularly, some occasionally and some very rarely.
 It classifies the items into fast moving, slow moving and non moving.

22
 Inventory Control
XYZ Analysis
 Items whose inventory values are high are X category and whose
values are low are Z category.

23
 Inventory Control
Inventory models
 It helps to find out the order quantity which minimises the total cost.

24
 Inventory Control
Model I
 EOQ with instantaneous stock replenishment (Basic inventory model)

 Assumptions -
• Demand is deterministic, constant and known.
• Stock replenishment is instantaneous. (Lead time is zero).
• Price of material is fixed (Quantity discount not allowed).
• Ordering cost does not vary with the order quantity.

25
 Inventory Control
Quiz
• Mathematically EOQ is given by.
• In the production model, what is applicable?
• Following is one of the replenishment systems
• Two Bin System is an application of…..
• Discount from the supplier should always be availed

26
 Inventory Control
Maximum
Inventory
Consumption
Rate

Average
Quantity Inventory

Time
27
 Inventory Control
Model I Contd .....
Let,
• D = Annual demand (Units / year)
• Co = Ordering cost ( Rs. / order)
• Ch = Inventory carrying cost (Rs. / unit / unit time)
• Cp = Price per unit
• Q = Order Quantity
• Q* = EOQ
• N = Number of order placed per annum
• Tc = Total cost per annum

28
 Inventory Control
𝐴𝑛𝑛𝑢𝑎𝑙 𝑜𝑟𝑑𝑒𝑟𝑖𝑛𝑔 𝑐𝑜𝑠𝑡 = 𝑁𝑜. 𝑜𝑓 𝑜𝑟𝑑𝑒𝑟𝑠 ∗ 𝑂𝑟𝑑𝑒𝑟𝑖𝑛𝑔 𝑐𝑜𝑠𝑡/𝑜𝑟𝑑𝑒𝑟
𝐴𝑛𝑛𝑢𝑎𝑙 𝐷𝑒𝑚𝑎𝑛𝑑
= ∗ 𝑂𝑟𝑑𝑒𝑟𝑖𝑛𝑔 𝑐𝑜𝑠𝑡/𝑜𝑟𝑑𝑒𝑟
𝑂𝑟𝑑𝑒𝑟 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦
𝐷
= ∗ 𝐶𝑂
𝑄
𝐴𝑛𝑛𝑢𝑎𝑙 𝑖𝑛𝑣. 𝑐𝑎𝑟𝑟𝑦𝑖𝑛𝑔 𝑐𝑜𝑠𝑡 = 𝐴𝑣𝑔. 𝐼𝑛𝑣. 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 ∗ 𝐼𝑛𝑣. 𝑐𝑎𝑟𝑟𝑦𝑖𝑛𝑔 𝑐𝑜𝑠𝑡
𝑀𝑎𝑥. 𝐼𝑛𝑣. + 𝑀𝑖𝑛. 𝐼𝑛𝑣.
= ∗ 𝐼𝑛𝑣. 𝑐𝑎𝑟𝑟𝑦𝑖𝑛𝑔 𝑐𝑜𝑠𝑡
2
𝑄
= ∗ 𝐶ℎ
2
29
 Inventory Control
𝐴𝑛𝑛𝑢𝑎𝑙 𝑡𝑜𝑡𝑎𝑙 𝑐𝑜𝑠𝑡 = 𝐴𝑛𝑛𝑢𝑎𝑙 𝑜𝑟𝑑𝑒𝑟𝑖𝑛𝑔 𝑐𝑜𝑠𝑡 + 𝐴𝑛𝑛𝑢𝑎𝑙 𝑖𝑛𝑣. 𝑐𝑎𝑟𝑟𝑦𝑖𝑛𝑔 𝑐𝑜𝑠𝑡
𝐷 𝑄
𝑇𝐶 = ∗ 𝐶𝑂 + ∗ 𝐶ℎ
𝑄 2

To determine EOQ, differentiate Tc with respect to Q and equate

it to zero.
𝑑𝑇𝑐 −𝐷𝐶𝑂 𝐶ℎ
= 2
+ =0
𝑑𝑄 𝑄 2

2𝐷𝐶𝑂 ∗ 2𝐷𝐶𝑂
𝑄∗ = 𝑄 =
𝐶ℎ 𝐶𝑝 𝐼

30
 Inventory Control
The optimal no. of orders placed per annum
∗ 𝐴𝑛𝑛𝑢𝑎𝑙 𝐷𝑒𝑚𝑎𝑛𝑑 𝐷
𝑁 = =
𝐸𝑂𝑄 𝑄∗

Optimal time interval between two orders

∗ 𝑁𝑜.𝑜𝑓 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑑𝑎𝑦𝑠 𝑖𝑛 𝑎 𝑦𝑒𝑎𝑟
𝑇 =
𝑁∗
Minimum total yearly inventory cost is given by…
𝐷𝐶𝑂 𝑄 ∗ 𝐶ℎ
𝑇𝑐𝑚 =
𝑄∗
+ 2
Substituting the value of Q* in the above equation
𝑇𝑐𝑚 = 2𝐷𝐶𝑂 𝐶ℎ

31
 Inventory Control
A company has got a demand for a particular part at 10,000 units per year.
The cost per unit is Rs. 2/- and it cost Rs. 36/- to place an order and to
process the delivery. The inventory carrying cost is estimated at 9% of the
average inventory investment. Determine,
i) EOQ
ii) Optimum no. of orders to be placed per annum.
iii) Minimum total cost of inventory per annum.

Given:- D = 10000 units/year

Cp = Rs. 2/- per unit
Co = Rs. 36/- per order
I = 0.09
32
 Inventory Control

Solution:-
∗ 2𝐷𝐶𝑜 2∗10000∗36
𝑖)𝑄 = = = 20 units
𝐶𝑃 𝐼 2∗0.09

𝑖𝑖) 𝑁 ∗ = 𝑄𝐷∗ 10000

2000
=5

𝑖𝑖𝑖) 𝑇𝑐𝑚 = 2𝐷𝐶𝑜 𝐶𝑃 I

= 2 ∗ 10,000 ∗ 36 ∗ 2 ∗ 0.09

= Rs. 360 / order

33
 Inventory Control
A manufacturer has to supply his customers 3600 units of his products
per year. Inventory carrying cost amounts Rs. 1.2/- per unit per annum.
The set up cost per run is Rs. 80/- Find,
i) EOQ
ii) Optimum no. of orders per annum
iii) Minimum annual inventory cost
iv) Optimum period of supply per optimum order.

Given:- D = 3600 units

Ch = Rs. 1.2/unit/annum
Co = Rs. 80/order
34
 Inventory Control
Solution:-
∗ 2𝐷𝐶𝑜
𝑖) 𝑄 = = 693 𝑢𝑛𝑖𝑡𝑠
𝐶ℎ
𝐷
𝑖𝑖) 𝑁 = = 5.1 ≈ 5 𝑜𝑟𝑑𝑒𝑟𝑠
𝑄

𝑖𝑖𝑖) 𝑇𝑐𝑚 = 2𝐷𝐶𝑜 𝐶ℎ = 𝑅𝑠. 831/-

𝑖𝑣) Optimum period of supply per optimum order = 1/N = 0.2 years

35
 Inventory Control
Model II
 EOQ when stock replenishment is non instantaneous (production model)

 This model is applicable when inventory continuously builds up over a

period of time after placing an order or when the units are manufactured
and used at a constant rate.

Let,
• p = production rate
• d = demand for consumption rate
36
 Inventory Control

Rate of Max. Inventory Level

Production(p)
Quantity (Stock Level)

Only Sale
of item (d)

1stInv 2nd Inv

cycle cycle

Production & Sale

simultaneously (p-d)
tp tc Time 37
T
 Inventory Control

∗
2𝐷𝐶𝑂 ∗
2𝐷𝐶𝑂
𝑄 = 𝑄 =
𝑑 𝑑
1 − 𝐶ℎ 1 − 𝐶𝑝 𝐼
𝑝 𝑝

𝑑
𝑇𝑐𝑚 = 2𝐷𝐶𝑂 𝐶ℎ (1 − )
𝑝

38
 Inventory Control
A company produces a cable at the rate of 5000 m/hr. The cable is used
at the rate of 2500 m/hr. The total cost of the cable is Rs. 5 per m. The
inventory carrying cost is 25% and set up cost is Rs. 4050/- per set up.
Determine the optimal no. of cycles required in a year for the
manufacture of this cable.
Solution:-
Given:- p = 5000 m/hr
∗ 2𝐷𝐶𝑜
d = 2500 m/hr 𝑄 = = 3,07,585 m
(1−𝑑/𝑝)𝐶ℎ
Cp = Rs. 5/m
I = 0.25
Optimal no. of cycles per annum =
Ch = Cp*I = 5*0.25 = 1.25 𝐷
Co = Rs. 4050 per set up = 23.75 ≈ 24
𝑄∗
D = 2500*8*365

39
 Inventory Control
Model III - Inventory Model when Shortages are Permitted
Y

P
Lead Time
Consumption
O
L X
Y

P
Lead Time
R.O.L.
Consumption
O
Safety Stock
O’ X 40
 Inventory Control
Model III - Inventory Model when Shortages are Permitted
Max. Inventory

S
Q
Quantity

Time
Q-S

t1 t2
T

41
 Inventory Control

∗ 2𝐷𝐶𝑂 (𝐶𝑠 + 𝐶ℎ ) ∗ 2𝐷𝐶𝑂 𝐶𝑠

𝑄 = 𝑆 =
𝐶ℎ 𝐶𝑠 𝐶ℎ (𝐶𝑠 + 𝐶ℎ )

𝐶𝑠
𝑇𝑐𝑚 = 2𝐷𝐶𝑂 𝐶ℎ
(𝐶𝑠 + 𝐶ℎ )

42
 Inventory Control
The demand for an item is uniform at the rate of 25 units per month. Ordering cost
is Rs. 30/- Inventory carrying cost is Rs. 0.5 per unit per month and if shortage cost
is Rs. 0.3 per unit per month, determine EOQ and how often to make the
production run.
Solution:-
Given:- D = 25 units/month
∗ 2𝐷𝐶𝑜 (𝐶ℎ+𝐶𝑠)
Co = Rs. 30/- 𝑄 = = 90 units
𝐶ℎ∗𝐶𝑠
Ch = Rs. 0.5 / unit / month
Cs = Rs. 0.3 / unit / month
Optimal scheduling between two
consecutive orders =
𝑄∗
= 3.6 months
𝐷

43
 Inventory Control
Model – IV Inventory Models with Price Discounts
 When items are bought in large quantities, the supplier often gives
discount. However, if the material is purchased to take advantage of
discount, the average inventory level and so the inventory carrying
cost will increase.

 The benefits of purchasing large orders are compared with the increase
in carrying cost.

 A decision is therefore to be taken whether the buyer should stick to

EOQ or increase the same to take advantage of price discount.

44
 Inventory Control
Let,
• D = Demand or Annual Consumption
• C1 = Basic price per unit
• Q1 = EOQ at basic price C1
• C2 = Discounted price per unit
• Q2 = EOQ at discounted price C2
• Co = Ordering Cost
• I = Inventory carrying cost expressed as % of Avg. inventory investment
• QB = Price break quantity (Quantity at which price changes)

45
 START
Inventory Control
Q2 = EOQ at discounted price C2
Calculate Q2 & 2𝐷𝐶𝑜
Compare with QB 𝑄2 =
𝐶2 𝐼
Yes
If
Q2 > QB
No Purchase
Qty. Q2 Q1 = EOQ at basic price C1
Calculate Q1
2𝐷𝐶𝑜
𝑄1 =
𝐶1 𝐼
Cal. Annual Total cost TCQB at QB &
TCQ1 at Q1
𝐷𝐶𝑜 𝑄𝐵 𝐶2 𝐼
No 𝑇𝐶𝑄𝐵 = 𝐷 𝐶2 + +
If 𝑄𝐵 2
TCQB < TCQ1 𝐷𝐶𝑜 𝑄1 𝐶1 𝐼
Purchase 𝑇𝐶𝑄1 = 𝐷𝐶1 + +
Yes 𝑄1 2
Purchase QB Qty. Q1
46
 Inventory Control
Annual requirement of an item is 2400 units. Each item costs the company Rs. 6/-
The manufacturer offers discount of 5% if 500 or more quantities are purchase .
The ordering cost is Rs.32 per order & inventory cost is 16%.
Whether it is advisable to accept the discount ? Comment?
Given:-D = 2400 units
C1 = Rs. 6/-
C2 = 95% (6) = Rs. 5.7
QB = 500
CO = Rs. 32/-
I = 0.16

47
 Inventory Control
Solution:- 2𝐷𝐶𝑜
𝑄2 = = 410 𝑢𝑛𝑖𝑡𝑠
𝐶2 𝐼

2𝐷𝐶𝑜
𝑄1 = = 400 𝑢𝑛𝑖𝑡𝑠 𝐴𝑠 𝑄2 < 𝑄𝐵
𝐶1 𝐼

Now, to calculate the total annual cost for Q1 & QB

𝐷𝐶𝑜 𝑄1 𝐶1 𝐼
𝑇𝐶𝑄1 = 𝐷𝐶1 + + = 𝑅𝑠. 14784/𝑎𝑛𝑛𝑢𝑚
𝑄1 2

𝐷𝐶𝑜 𝑄𝐵 𝐶2 𝐼
𝑇𝐶𝑄𝐵 = 𝐷 𝐶2 + + = 𝑅𝑠. 14061/𝑎𝑛𝑛𝑢𝑚
𝑄𝐵 2
TCQB < TCQ1 Discount should be availed & order qty. should be 500
48
 Inventory Control
Types of Replenishment System
1) Fixed quantity system (Q-System)
2) Fixed period system (P-System)

Fixed quantity system (Q-System)

In this system the order quantity is fixed and ordering time varies
according to the function in demand.

49
 Inventory Control

Y Max. Level

O1 O2
P O1, O2 – Order Pts.
Lead Time
Consumption
O Lead
Time Safety Stock
O’ X

50
 Inventory Control
Application of Q-system (Two Bin System)
Two bin system operates on ROL system and it segregates the stock of
entire items into two bins.

The stock from the first bin is consumed. The emptying of first bin
indicates that the stock has reached ROL and the replenishment action is
initiated. The quantity in the second bin is thus consumed during the
replenishment period.

51
 Inventory Control
Fixed period system (P-System)
This system has a fixed ordering interval but the size of the order quantity may
vary with the changes in the demand.

Quantity
Order
Quantity
Order

Quantity
Order
Stock P1,P2,P3…
Level P3
Review Pts.
P1
P2
L

R1 R2 R3
Time
52
Conratulations !

Chapter Done !!
 Module 4

Process Planning

Prasad Bari
Process Planning

Quiz

• Process planning establishes the ………….route that is followed from

the raw material stage till it leaves as a finished product.
• BOM which is one of the prerequisite information required for
process planning stands for…..
• The process sheets is required to be prepared each time a new item is
run on the shop floor in…...
• The following documents are generally prepared in process planning.
• Make or buy is one of the steps in process planning.
Process Planning
Process Planning
• It is defined as the systematic determination of methods by which a
product is to be manufactured economically and competitively.

• It consists of selecting the proper machines, determining the sequence

of operations, specifying the inspection stages, tools, jigs and fixtures
such that the product can be manufactured as per the required
specifications.

• By doing so, it establishes the shortest route that is followed from

the raw material stage till it leaves as a finished product.
Process Planning
Prerequisite Information Required For
Process Planning
• Components and assembly drawing along with BOM
• Machine capacity charts
• Standard elemental time data
• Availability of standard and special purpose tooling
Process Planning
Factors Affecting Process Planning
• Size and form of raw materials
• Processing method
• Plant layout
• Capacities of machines
• Tolerance
Process Planning
Factors Affecting Process Planning Contd …..
• Surface finish
• Skill of the available manpower
• Quantity to be manufactured
• Delivery dates of products
Process Planning
Steps in Process Planning
• Analysis of the product print and specifications
• Improvement of the specifications
• Make or buy decision
• Selection of basic manufacturing process
• Determine the sequence of operations and their combination
Process Planning
Steps in Process Planning Contd …..
• Determine the work centre, tools, jigs & fixtures etc.
• Determine the speed, feed and depth of cut for each operation
• Determine the kind of labour required to do the job
• Estimate the operation time
• Estimate the cost of production
• Represent the details in the process sheet
Process Planning
Process Planning in Different Situations
• In the job order production unit, the process planning poses a
considerable problem. The process sheets required to be prepared
each time a new item is run on the shop floor.

• In batch production units, process planning is comparatively less

troublesome. The process sheets for parts are prepared once and
maintained as standard or master process sheets.

• In the process and mass production units, the process planning is

dictated by the plant layout itself. The process is prepared to get
the best out of the existing layout.
Process Planning
Documents in Process Planning
The following documents are generally prepared in process planning

• Process Sheet - These sheets are prepared to show the basic

operations and their sequence, machine tools for each operation,
cutting tools, jigs and fixtures, speed, feed, depth of cut, setup
standard time, etc.

• Operational Layout - These are to give for each operation the part
sketch, methods of manufacturing and other variable information.
Process Planning
Assembly Line Balancing
• Line balancing is to arrange the individual processing and assembly
task at the workstations so that the total time required at each
workstation is approximately the same.
• In practical situations it is very difficult to achieve perfect balance.
When workstation times are unequal, the slowest station determines
the overall production rate of the line.
25 units/hr
Machine
Receipt B
Machine
of Output 50 units/hr
A
material Machine
50 units/hr B
25 units/hr
Process Planning

Quiz
• When workstation times are unequal, the ……. station determines the
overall production rate of the line.
• …….. is the location on assembly line where given amount of work is
performed.
• Which of the following is not a method of line balancing.
• Precedence diagram is required in……
• Task that must be performed before performing another task is
called…..
 Process Planning
Terminology in Assembly Line
• Workstation - It is the location on assembly line where given amount of
work is performed.
• Cycle time - It is the time the product spends at each workstation .
• Task - The smallest group of work that can be assigned to a workstation.
• Predecessor Task - Task that must be performed before performing another
(successor) task.
• Task Time - Total standard work content of specific workstation.
• Balance Delay- Percentage of total idle time on the line to total time spent by
the product from beginning to end of the line.
Process Planning
Methods of Line Balancing
• Largest Candidate Rule
• Kilbridge Wester Method
• Rank Positional Weight
Process Planning
Largest Candidate Rule
 Process Planning
No. 1 2 3 4 5 6 7 8 9 10 11 12
Time (mins) 0.2 0.4 0.7 0.1 0.3 0.11 0.32 0.6 0.27 0.38 0.5 0.12
Preceded by - - 1 1,2 2 3 3 3,4 6,7,8 5,8 9,10 11
Assume cycle time = 1 min
Step -1 - Precedence Diagram
6

3
7
9
1
11 12
4
10
8
2
5
Process Planning
Step -2 - List all elements in the descending order of cycle time
Work Element Task time Immediate Predecessor
3 0.7 1
8 0.6 3,4
11 0.5 9,10
2 0.4 -
10 0.38 5,8
7 0.32 3
5 0.3 2
9 0.27 6,7,8
1 0.2 -
12 0.12 11
6 0.11 3
4 0.1 1,2
 Process Planning
Step – 3 – To assign elements to the first workstation, start at the top of the list and work done,
selecting the first feasible element for placement at the station. A feasible element is one that
satisfies the precedence requirements and does not cause the sum of task time at station to
exceed the cycle time.
Station Element Task Time Sum of Task Time

2 0.4
5 0.3
1
1 0.2
4 0.1 1
3 0.7
2
6 0.11 0.81
8 0.6
3
10 0.38 0.98
7 0.32
4
9 0.27 0.59
11 0.5
5
12 0.11 0.62
 Process Planning
6

3
9
1 7
11 12
4
10
8
2
5

Station 1 Station 2 Station 3 Station 4 Station 5

Work Element Element Element Element Element
Flow 2,5,1,4 3,6 8,10 7,9 11,12
 Process Planning

Kilbridge Wester Method

• This method selects work elements for assignment to stations according to their
position in the precedence diagram. This overcomes one of the difficulties of
LCR, in which elements at the end of the precedence diagram might be first
candidate to be considered, simply because their values are large.
Process Planning
Step -1 - Construct the precedence diagram so those nodes representing
work elements of identical precedence are arranged vertically in
columns. I II III IV V VI
6

3
7
9
1
11 12
4
10
8
2
5
Process Planning
Step -2 - List the elements in order of their columns, column I at the top of
the list. If an element can be located in more than one column, list all columns
by the element to show the transferability of the element.
Work Element Column Task Time Sum of Time
1 I 0.2
2 I 0.4 0.6
3 II 0.7
4 II 0.1
5 II,III 0.3 1.1
6 III 0.11
7 III 0.32
8 III 0.6 1.03
9 IV 0.27
10 IV 0.38 0.65
11 V 0.5 0.5
12 VI 0.12 0.12
Process Planning
Step -3 - To assign elements to workstations, start with column I elements.
Continue the assignment procedure in order of column number until the cycle
time is 1.
Station Element Task Time Cycle Time
1 0.2
2 0.4
1
4 0.1
5 0.3 1.00
3 0.7
2
6 0.11 0.81
7 0.32
3
8 0.6 0.92
9 0.27
4
10 0.38 0.65
11 0.5
5
12 0.11 0.62
 Process Planning
Rank Positional Weight Method
Step - 1 - Calculate the RPW for each element by summing the elements task time
together with the task time values for all the elements that follow it in the arrow chain
of the precedence diagram.

Example -For element one, the elements that follow it in the arrow chain are 3, 4, 6, 7, 8,
9, 10, 11 and 12.

The RPW for element one would be the sum of

0.2 + 0.7 + 0.1 + 0.11 + 0.32 + 0.6 + 0.27 + 0.38 + 0.5 + 0.12 = 3.3
 Process Planning
Step - 2 - List the elements in the order of their RPW, largest RPW at the top
of the list. (For convenience, include task value and immediate predecessors
for each element) Work Element RPW Task Time Immediate Predecessor
1 3.30 0.2 -
3 3.00 0.7 1
2 2.67 0.4 -
4 1.97 0.1 1,2
8 1.87 0.6 3,4
5 1.3 0.3 2
7 1.21 0.32 3
6 1.00 0.11 3
10 1.00 0.38 5,8
9 0.89 0.27 6,7,8
11 0.62 0.5 9,10
12 0.12 0.12 11
Process Planning
Step - 3 - Assign elements to station according to RPW, avoiding precedence
constraint and time cycle violations.
Station Element Task Time Sum of Time
1 0.2
1
3 0.7 0.9
2 0.4
4 0.1
2
5 0.3
6 0.11 0.91
8 0.6
3
7 0.32 0.92
10 0.38
4
9 0.27 0.65
11 0.5
5
12 0.11 0.62
Conratulations !

Chapter Done !!
 Module 5
Production
Scheduling
&
Sequencing

Prasad Bari
 Scheduling
Production Scheduling & Sequencing

• It is defined as establishing of times at which to begin and

complete each event or operation comprising a procedure.

• Its principle aim is to plan the sequence of work so that the

production can be systematically arranged towards the end of
completion of all products by due date.

2
Production Scheduling & Sequencing
Quiz

• ……. is defined as establishing of times at which to begin and

complete each event or operation comprising a procedure.
• When the jobs are completed with different operations on various
machines in varying operation sequences, the device used is ……
• Which of the following is/are the factors influencing scheduling?
• In this method jobs are assigned to the best machine till it is loaded
to its full capacity and remaining jobs to the next best machine.
• Which of the following is a correct scheduling term?
3
Production Scheduling & Sequencing Tool Travel, Speed,
Feed, Depth of cut,
Inputs for Scheduling etc.

• Performance standards
• Units of measurement
• Unit of loading and scheduling
• Effective capacity of the work centre

Power failure,
Maintenance, Daily, Weekly,
M/C breakdown, Monthly
Washroom, etc.
4
Production Scheduling & Sequencing

Inputs for Scheduling Contd …..

• Extent of rush orders
• Overlapping of operations
• Individual job schedules
• Load charts

5
 Loading and Scheduling Devices
Production Scheduling & Sequencing

• Loading and scheduling devices indicate when different operations

in a job should begin and end.

• When the jobs are completed in one operation or more than one
operation but in a fixed sequence, the device can be in the form of
sheet or a card.

• When the jobs are completed with different operations on various

machines in varying operation sequences, the device used is job
schedule and load chart.
6
Production Scheduling & Sequencing
Gantt Chart

• Developed by American engineer, Henry Gantt is a useful aid in

loading, scheduling, dispatching and progressing.

• The chart is normally drawn on a printed or ruled sheet or

alternatively it may be drawn on a ruled board.

7
 Gantt Chart Contd ….
Production Scheduling & Sequencing

The chart consist of a simple grid formed by a series of horizontal and

vertical lines, which forms small squares representing units of
measurement which may be in days, weeks or months. The horizontal
lines divide vertical lines into sections which are used to represent
either operations or to represent work centres.
8
 Factors Influencing Scheduling
Production Scheduling & Sequencing

• Degree of centralisation

• Relative job priority

• Load charts

9
 Relative Job Priority
Production Scheduling & Sequencing

Certain jobs are given preference over others and hence required to be
loaded and scheduled first.

• Items with the fewest remaining operations

• Penalty clause items
• Long pending jobs
• Certain customers are given preference for the completion of their
jobs over others as they get more businesses, terms of contract
are attractive, loan for business ethics
• Items which fetch better price
• Jobs going through more work centres
• Those items causing production hold-ups at the customer’s plant or
the company’s own plant
10
 Simplifying Scheduling Problems
Production Scheduling & Sequencing

• Product simplification
• Job enlargement Less
Income
• Subcontracting
• Re-allocation of resources to suit work content
• Minimization of rush orders
• Improving progress chasing.

Separate
Machines
11
 Forward Scheduling & Backward Scheduling
Production Scheduling & Sequencing

Forward
Scheduling

Obtain Raw Final

Operation 1 Operation 2
Material Assembly

1 2 3 4 5 6 7 8 9 10 11 12

Obtain Raw Final

Operation 1 Operation 2
Material Assembly

Backward
Scheduling
12
 Techniques of Scheduling
Production Scheduling & Sequencing

• Index Method - In this method jobs are assigned to the best

machine till it is loaded to its full capacity and remaining jobs to the
next best machine.

• Critical Ratio Scheduling - Relationship between when a product

is required and when it can be supplied.

𝑃𝑟𝑜𝑑𝑢𝑐𝑡 𝑖𝑠 𝑟𝑒𝑞𝑢𝑖𝑟𝑒𝑑 𝑖𝑛 20 𝑑𝑎𝑦𝑠

𝐶𝑅 = =2
𝑃𝑟𝑜𝑑𝑢𝑐𝑡 𝑐𝑎𝑛 𝑏𝑒 𝑚𝑎𝑑𝑒 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑖𝑛 10 𝑑𝑎𝑦𝑠

13
 Techniques of Scheduling Contd ….
Production Scheduling & Sequencing

• Critical Path Method - It overcomes the deficiencies of Gantt

chart and used for scheduling large projects, where relationships
between various activities of the project are more complicated.

• Johnson's Two Machine Algorithm - It is used when the operation

sequence involves two machines and the progressing time depends
on the sequence in which the jobs are loaded.

14
Production Scheduling & Sequencing

Product Sequencing (Job Sequencing)

It determines an optimum order of performing a number of jobs by
number of facilities according to some pre assigned order so as to
optimise the output in terms of cost, time or profit.

In sequencing problem there are two or more jobs to be done and one
or more machines are available for this purpose.

We want to know when each job is to begin, how long each operation
will take and what is its due date.
15
Production Scheduling & Sequencing
Quiz

• In sequencing we need to know……

• EDD is a method of…….
• Johnson’s algorithm is used for…..
• Graphical method is generally used for…..
• Which of the following assumption is correct?

16
 Assumptions
Production Scheduling & Sequencing

Each machine can perform only one job at a time.

Each job once started on one machine is continued till completion on it.

All jobs require the same sequence of operations, each must be processed
on machine A and then on machine B, in the fixed sequence AB.

Time involved in moving a job from one machine to another is negligibly

small.
17
 Production Scheduling & Sequencing
n Jobs and 1 machine

18
 Shortest Processing Time (SPT)
Production Scheduling & Sequencing

• Sequencing the jobs in such a way that the job with least processing
time is picked up first, followed by the one with the next smallest
processing time and so on.

19
Production Scheduling & Sequencing Shortest Processing Time (SPT)
Six jobs A,B,C,D,E & F have arrived at one time to be processed on a
single machine. Assuming that no new jobs arrive thereafter, determine,
i) Optimal sequence as per SPT rule
ii) Completion times of the job Job AB C D E F
iii) Mean flow time Processing Time
7 6 8 4 3 5
(min)
Solution:-
Sequence as per SPT rule is E-D-F-B-A-C

Completion times of the jobs are 3,7,12,18,25,33 minutes

respectively.

Mean flow time is (3+7+12+18+25+33)/6 = 16.33 minutes

 Production Scheduling & Sequencing

21
 Production Scheduling & Sequencing

22
Production Scheduling & Sequencing
Earliest Due Date (EDD )
 Production Scheduling & Sequencing

24
 n Jobs and 2 machines
Production Scheduling & Sequencing

There are two machines A and B and each job is processed in the
order AB. The processing time is known and the problem is to find
the order in which n jobs are to be processed to minimise the total
elapsed time to complete all the jobs.

Johnson’s Algorithm
25
 There are five jobs which require to be processed on two machines
Production Scheduling & Sequencing
A & B in the order AB. The processing time of these jobs on the
two machines are given in the table, determine the sequence for the
five jobs to minimized total elapsed time.

Processing time on
JOB
Machine A Machine B

I 8 3

II 4 2

III 1 5

IV 4 6

V 5 7
26
 Solution:-The jobs are scheduled as given below.
Production Scheduling & Sequencing

III Processing time on

JOB
Machine A Machine B
III II
I 8 3
III I II
II 4 2
III IV I II III 1 5

III IV V I II IV 4 6

V 5 7

27
Production Scheduling & Sequencing
Elapsed Time (Hrs.)
Job Machine A Machine B Idle Time on
Sequence Start Finish Start Finish Machine B
Time Time Time Time
III 0 1 1 6 1
IV 1 5 6 12 0
V 5 10 12 19 0
I 10 18 19 22 0
II 18 22 22 24 0

Total elapsed time is 24 hrs and the idle time on machine B is 1 hr.

28
Production Scheduling & Sequencing A computer centre has four jobs to be performed during a shift. Each
job undergoes two stages of operation which is fixed. The list of jobs
to be processed along with time for each job is given below. Find a
job sequence to reduce total time to be taken for all jobs.
Job
Stage
A B C D
I 38 31 50 18
II 49 47 31 36

Solution:-

D B A C

29
Production Scheduling & Sequencing A company manufactures five types of gears. All the gears are hobbed
and shaved. The monthly requirements of hobbing and shaving
capacity required for each type of gear is given. In what sequence the
gears be scheduled to minimize requirement of capacity?
Capacity Required (Hrs.)
Gear
Hobbing Shaving
I 90 70
II 40 80
III 40 50
IV 30 10
V 25 35
Solution:-
V III II I IV 30
 n jobs 3 machines
Production Scheduling & Sequencing

There are three machines M1, M2 and M3 and each job has to go
through three machines in the order M1, M2 and M3.
Condition
• The smallest processing time on machine M1 > largest processing
time on machine M2
• The smallest processing time on machine M3 > largest processing
time on machine M2
If either or both of the above stated conditions are satisfied, the given
problem can be solved by Johnson's algorithm.

31
 Procedure
Production Scheduling & Sequencing

Convert the three machines problem into two machine problem by

introducing two fictitious machines G and H such that,

Gi = M1i + M2i { i = 1,2,3,…..

Hi = M2i + M3i

Once the problem is converted to n jobs two machines, the sequence

is determined using Johnson's algorithm for n jobs and two machines.

32
 Seven jobs are to be processed through three machines M1, M2 and
Production Scheduling & Sequencing
M3. The processing times are given in hours to process each one of
the job through all the machines. Find the optimal sequence of the
jobs. Also find the minimum elapsed times and idle times on M2 and
M3. Jobs M1 M2 M3
A 3 4 6
B 8 3 7
C 7 2 5
D 4 5 11
E 9 1 5
F 8 4 6
G 7 3 12 33
Production Scheduling & Sequencing Solution :-
Check for the condition
Minimum processing time on M1 = 3
Minimum processing time on M3 = 5
Maximum processing time on M2 = 5

Condition 1 :- Minimum time on M1 > Maximum time on M2

(condition not satisfied)
Condition 2 :- Minimum time on M3 > Maximum time on M2
(condition satisfied)

34
Production Scheduling & Sequencing Hence convert the problem into n jobs 2 machines and solve by
Johnson's algorithm

Gi = M1i + M2i Jobs Gi Hi

Hi = M2i + M3i
A 7 10
B 11 10
C 9 7
D 9 16
E 10 6
F 12 10
G 10 15
35
 Job Sequence
Production Scheduling & Sequencing

A D G F B C E

Minimum total processing time to complete all the jobs

Job M1 M2 M3 Idle Time
Sequence
In Out In Out In Out M1 M2 M3
A 0 3 3 7 7 13 0 3 7
D 3 7 7 12 13 24 0 0 0
G 7 14 14 17 24 36 0 2 0
F 14 22 22 26 36 42 0 5 0
B 14 22 22 26 42 49 0 4 0
C 30 37 37 39 49 54 0 4 0
E 37 46 46 47 54 59 13 12 0 36
Production Scheduling & Sequencing

Minimum total elapsed time = 59 hrs.

Idle time on M2 = 37 hours
Idle time on M3 = 7 hours

37
 Processing n jobs through m machines
Production Scheduling & Sequencing

Jobs each of which must be processed on the Machines M1, M2 ….. M6.
The processing times in hours are given. Find the optimal sequence and
the minimum total elapsed time.

Jobs M1 M2 M3 M4 M5 M6

A 18 8 7 2 10 25

B 17 6 9 6 8 19

C 11 5 8 5 7 15

D 20 4 3 4 8 12
38
Production Scheduling & Sequencing Minimum time on first machine = 11
Minimum time on last machine = 12
Maximum time on intermediate machines = (8,9,6,10)
11 > (8,9,6,10) & 12 > (8,9,6,10)
Both the conditions are satisfied hence the problem can be solved
using Johnson's algorithm. Jobs Gi Hi
A 45 52
B 46 48
C 36 40
D 39 31

C A B D
39
Production Scheduling & Sequencing
M1 M2 M3 M4 M5 M6
Jobs
In Out In Out In Out In Out In Out In Out
C 0 11 11 16 16 24 24 29 29 36 36 51
A 11 29 29 37 37 44 44 46 46 56 56 81
B 29 46 46 52 52 61 61 67 67 75 81 100
D 46 66 66 70 70 73 73 77 77 85 100 112

Total Elapsed Time = 112 hrs

40
Production Scheduling & Sequencing Processing 2 jobs through m machines
The problem is to minimise the total elapsed time and the Sequencing
problem is described as follows,

There are m machines denoted by A,B,C,........

Only two jobs are to be performed, job 1 and job 2.
The actual or expected processing times are known.
Each machine can work only one job at a time and storage space for in
process inventory is available.

41
 Use graphical method to minimise the time required to process the
Production Scheduling & Sequencing
following jobs on the machines. For each machine specify the job
which should be done first. Also calculate the total elapsed time to
complete both the jobs.

Machines
Sequence A B C D E
Job 1
Time 6 8 4 12 4
Sequence B C A D E
Job 2
Time 10 8 6 4 12

42
 4

40
Production Scheduling & Sequencing

38
36
E
34
32
30
26 28

6 D
24
22

A
20

Idle Time
Job2
18

Job1 = 4 + 6 = 10 hrs
16

Job2 = 4 hrs
C
14
12

Total elapsed time

10

Job1 = (6+8+4+12+4) + 10 = 44 hrs

4
8

Job2 = (10+8+6+4+12) + 4 = 44 hrs

6

B
4
2

2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 43
Job1
 A B C D E
Production Scheduling & Sequencing
Job 1
6 10 18 22 28 40 44

A D E
B C
Job 2
10 18 24 28 40 44

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44

Machine A – Job 1 precedes job 2

Machine B – Job 2 precedes job 1
Machine C – Job 2 precedes job 1
Machine D – Job 2 precedes job 1
Machine E – Job 2 precedes job 1
44
 Production Scheduling & Sequencing
Network Logic

45
 Activity and Event
Production Scheduling & Sequencing

• Activity - It is physically an identifiable part of a project which

requires time and resources for its execution. It is represented by an
arrow, the tail of which represents start and head the finish activity.

• Events - They are the beginning and end points of an activity.

Event Event
Activity
i j

46
 Predecessor / Successor
Production Scheduling & Sequencing

• Activities which must be completed before a particular activity starts

are called predecessor activities and those which must follow a
particular activity are called successor activities.

Activity Activity
i j k

47
Production Scheduling & Sequencing
Quiz

• What does CPM stand for?

• A dummy activity is represented by…
• Event is represented by…
• Is successor activity followed by predecessor activity?
• Do delays in the critical path delay the duration of the project?

48
Production Scheduling & Sequencing • Earliest Start Time
The time at which an activity can begin at the earliest.

• Latest Start Time

The time at which an activity can begin at the latest.

• Earliest Finish Time

The earliest by which an activity can be completed.

• Latest Finish Time

The latest by which an activity must be completed in order that the
project may not be delayed beyond its targeted completion time. 49
Production Scheduling & Sequencing Critical Path Method (CPM)
Activity 1-2 1-3 2-3 2-5 3-4 3-6 4-5 4-6 5-6 6-7
Duration 15 15 3 5 8 12 1 14 3 14
Solution:-

E=18
L=18

E=0 3 12
L=0 E=40
8 L=40
15 14 14
3 4 6 7
E=26
E=0
L=26
1
L=0 E=54
15 5 L=54
5 3
1 2
E=15 E=27
L=15 L=27
50
Production Scheduling & Sequencing

• Earliest Finish Time = TEF = E + tij

• Latest Start Time = TLS = L – tij

• Float = L – TEF = TLS - E

51
Production Scheduling & Sequencing
Activity Start Time Finish Time Total
Duration
i-j Earliest Latest Earliest Latest Float
1-2 15 0 0 15 15 0
1-3 15 0 3 15 18 3
2-3 3 15 15 18 18 0
2-5 5 15 32 20 37 17
3-4 8 18 18 26 26 0
3-6 12 18 28 30 40 10
4-5 1 26 36 27 37 10
4-6 14 26 26 40 40 0
5-6 3 27 37 30 40 10
52
6-7 14 40 40 54 54 0
Production Scheduling & Sequencing

• Column 4 = Column 6 – Column 2

• Column 5 = Column 3 + Column 2

• Column 7 = Column 6 – Column 5

= Column 4 – Column 3

Critical Path is the path containing activities with zero float.

53
 Critical Path
Production Scheduling & Sequencing

• The critical path of a network gives the smallest time in which the
whole project can be completed.

• It is the chain of activities with the longest time duration. These are
critical activities and delay in any of them results in the delay of the
project.

54
Production Scheduling & Sequencing Programme Evaluation & Review
Technique (PERT)
• It is based on the three time estimates of the performance time of an
activity.

• Optimistic Time – The shortest possible time required for the

completion of an activity if all goes extremely well.
• Pessimistic Time – The maximum possible time the activity will
take if everything goes bad.
• Most Likely Time – The time an activity will take if executed
under normal conditions.

55
Production Scheduling & Sequencing Standard Deviation:

𝑡𝑝 − 𝑡𝑜
𝜎=
6
Variance:

𝑡𝑝 −𝑡𝑜 2
v = 𝜎2 = ( )
6

Mean (𝜇) = Expected Time (𝑡𝑒 )

𝑡𝑜 + 4 𝑡𝑚 + 𝑡𝑝
(𝑡𝑒 ) = 𝜇 =
6

Normal Variate:

𝑇 − 𝑇𝑐𝑝
𝑧=
𝜎
56
 Consider the network diagram shown in the fig. The three time
Production Scheduling & Sequencing

estimates for the activities are given along the arrows. Determine the
critical path. What is the probability that the project will be completed
in 20 days?
4

2-2-8

0-0-0
1 2 5
4-6-8 6

57
 Solution:-
Production Scheduling & Sequencing

Activity to tm tp 2
𝑡𝑝 − 𝑡𝑜 2 𝑡𝑜 + 4 𝑡𝑚 + 𝑡𝑝
𝜎 =( ) (𝑡𝑒 ) =
6 6
1-2 2 2 8 1 3
2-3 1 1.5 11 2.8 3
2-4 0.5 2.5 7.5 1.36 3
3-4 0 0 0 0 0
3-5 1 2.5 7 1 3
3-6 1 2 3 0.11 2
4-5 6 7 8 0.11 7
4-6 3 4 11 1.78 5
5-6 4 6 8 0.44 6

58
Production Scheduling & Sequencing
E=6
L=6
4
3
E=3 5
E=0 7 E=19
L=0 L=3
3 0 L=19
6
1 2 5 6
3 E=13 2
3
L=13

3
E=6
L=6

59
Production Scheduling & Sequencing Expected Duration = Tcp = 19 days

Contractual Obligation Time = T = 20 days

Critical Path = 1-2-3-4-5-6

Standard Deviation of the Project = 𝜎 = 𝜎 2 for all i-j of critical path

𝜎 = (1 + 2.8 + 0 + 0.11 + 0.44 = 2.08

𝑇−𝑇𝑐𝑝
Normal Variate = 𝑧 = = 0.48
𝜎

Therefore, probability = 68.44% (from Z table)

60
 Production Scheduling & Sequencing
Probability from Z Table

61
 Production Scheduling & Sequencing

62
 Details of the project are given below.
Production Scheduling & Sequencing

1) Find the critical path.

2) Crash the network fully to find out minimum duration.
3) If the indirect cost is Rs. 2/min and normal direct cost as Rs. 18,
determine time-cost trade off for the project.

Normal Crash
Activity Slope Δ𝐶
Time Cost Time Cost
𝑆𝑙𝑜𝑝𝑒 =
Δ𝑇
𝐶𝑐 − 𝑁𝑐
1-2 4 4 3 5 1 =
𝑁𝑇 − 𝐶𝑇
1-3 5 10 4 15 5

2-3 3 4 2 6 2 63
Production Scheduling & Sequencing
Solution:-
Network diagram and critical path

E=4
L=4
2
3(2)
4(3)
Path 1-2-3 = 7
E=0 Path 1-3 =5
L=0
1 3
5(4) ⸫ C. P. = 1-2-3
E=7
L=7
64
 Represent the network on time scale diagram
4(3), 1 3(2), 2
Production Scheduling & Sequencing
1 2 3
Crash activity 1-2 by 1 min
Crash cost = 1
5(4), 5 2 Project duration = 6 min

0 1 2 3 4 5 6 7

3(3), 1 3(2), 2
1 2 3
Crash activity 2-3 by 1 min
Crash cost = 1+2 = 3
5(4), 5 1 Project duration = 5 min

0 1 2 3 4 5 6
3(3), 1 2(2), 2
1 2 3

5(4), 5
0 1 2 3 4 5 65
 Network Diagram
Production Scheduling & Sequencing

Normal
Duration Crash cost Indirect Cost Total cost
Direct Cost
7 18 0 2 x 7=14 32

6 18 1 2 x 6=12 31

5 18 3 2 x 5=10 31

66
 MODULE 6
MRP, MRP II & ERP
 MRP, MRP II & ERP

Material Requirements Planning (MRP)

• Itis a production planning, scheduling, and inventory control
system used to manage manufacturing processes.

• The technique determines what components are needed, how

many are needed, when they are needed and when they should be
ordered so that they are likely to be available as needed.

• MostMRP systems are software-based, but it is possible to

conduct MRP by hand as well.
2
MRP, MRP II & ERP

4
 MRP, MRP II & ERP

MRP Objectives
• Inventory reduction

• Reduction in the manufacturing and delivery lead times

• Realistic delivery commitments

• Increased efficiency
7
 MRP, MRP II & ERP

Manufacturing Resource Planning (MRP II)

• It
is a computer based system designed to synchronise all the aspects
(not just manufacturing) of the business and thereby overcoming the
limitations of MRP which does not take into account the capacity
required to execute the plan.
• It
is defined as a method for the effective planning of all resources of
a manufacturing company.
• Itis also called closed loop MRP, the feedback loop is used to
ascertain whether sufficient manufacturing capacity exists to execute
the proposed master schedule
8
MRP, MRP II & ERP

9
 MRP, MRP II & ERP

Benefits of MRP II
• Inventory reduction
• Better financial planning
• Improved utilization of machines
• Better customer service
• Greater effectiveness of management & supervisors

10
 MRP, MRP II & ERP

Limitations
• High initial cost of software
• Large amount of data required
• High accuracy of data input

11
 MRP, MRP II & ERP

Enterprise Resource Planning (ERP)

• It
refers to software and systems used to plan and manage all the
core supply chain, manufacturing, services, financial and other
processes of an organization.

12
MRP, MRP II & ERP

13
Congratulations !

Chapter Done !!
14