Noble MBA Study Material PRODUCTION PLANNING & CONTROL Writers.: Dr. (Prof.) Shyam S. Agarwal Ph.d., M-E., B.E., (Director) BSA College of Engg. & Technology, Mathura & Dr. Beena Agarwal Ph.d., M.B.A. (Finance), M.A. (Maths) Deptt. of Mgmt. Studies BSA College of Engg. & Technology, Mathura New Edition R. Narain & Co. Pereeeeeees Educational Publishers, Agra RMB OP 03 (1)ae a SYLLABUS Production Planning & Control UNIT — 1 Introduction: Meaning and objective of Production Planning & Control, functions, roles & responsibilities of PPC manager. Forecasting — different techniques of production forecast. UNIT -— 2 Process of Production Planning and Control — Routing, scheduling and controlling. PPC: Job, batch, Mass (assembly) and continuous, and Master Production Schedule. UNIT — 3 Aggregate Planning — Meaning, Strategies and Cost, concept of aggregate planning; capital-intensive, labour-intensive, and fashion industries. UNIT — 4 Waste management. value and waste, types of waste: 5S techniques of eliminating wastes. UNIT - 5 Control Systems: Product control systems, Gantt Charts, Bar Charts.wt as ONAN SP NAYS WN N= CONTENT UNIT -1 Short Questions: What do you mean by Production? What do you mean by Production System? What do you mean by Job Shop Production? What do you mean by Batch Production? What do you mean by Mass Production? What do you mean by Continuous Production? What do you mean by forecasting? Discuss Qualitative methods. Discuss Qualitative methods. Long Questions: What do you mean by Production? Explain production system. What do you understand Production planning and control? Discuss its objective and factors affecting production planning and control. Explain functions of production planning and control. What do you mean by forecasting? Explain its methods. Applied Question UNIT -—2 Short Questions: What do you meaning Routing? What do you meaning Routing Procedure? What do you meaning Scheduling? Explain in detail Master Production Scheduling (MPS)? Explain in detail Material Requirement Planning (MRP)? What do you meaning Flow Production? What do you meaning Process Production? What do you meaning Intermittent Production? Long Questions: What do you meaning Routing? Explain its procedure. What do you meaning Scheduling? Explain its procedure. \ ce 10 10 10 10 11 1 15 18 19 24 29 29 29 30 30 30 30 30 31 336 | Noble Study Material o 4, ce 6 Aw YN Wn SP an ee) Explain in detail Master Production Scheduling (MPS)? Explain in detail Material Requirement Planning (MRP)? Write a short note on MRP? Explain Production System. Applied Question UNIT—3 Short Questions: What do you mean by aggregate planning? What do you mean by Pure strategies? What do you mean by Mixed strategies? What do you mean by Capital intensive? What do you mean by labor intensive ? What are the difference between labor intensive and capital intensive ? Write a short note on fashion industry. Long Questions: What do you mean by aggregate planning? List and explain various pure strategies and mixed strategies. Write a short note on Aggregate planning. What do you mean by aggregate planning in labour intensive? What do you mean by aggregate planning in Capital intensive? Discuss Capital-intensive production. What do you mean by aggregate planning in fashion industry? Applied Question UNIT—4 Short Questions: What is Waste ? Explain Sources of waste. What is paper waste? What is plastic waste? What is glass waste? What is aluminium waste? Explain 5 S’. What are the procedure of 5 S? 38) f$eoe S45ea88 47 49 52 | 53 54 55 Ann aAa4 57 57 58 58Noble Study Material |7 Long Questions: 1, What is waste (trash, garbage, rubbish, refuse?) 58 2. Explain Sources of waste. 60 3. How is waste treated and disposed off? 61 4, What is Waste Recycling? 62 5. How is glass recycled? 65 6. Writes a short note on Waste management? 68 7. Explain 5S’. 68 8. What are the procedure of 5 S? 69 Applied Question 71 . “UNIT -5 Short Questions: 1. What is a Bar Chart? 73 2. What is a types of Bar Chart? 73 3. What is a Gantt chart? 73 4. What is a history of Gantt chart? 73 Long Questions: 1. What is a Bar Chart in Data interpretation? 74 2. What is a Gantt Chart? 75 Applied Question au Sample Paper 719 oo[1] Introduction of PPC —— Sii}— Q 1. What do you mean by Production? Ans. Production: Production is defined as “the step-by-step conversion of one form of material into another form through chemical or mechanical process to create or enhance the utility of the product to the user.” Thus production is a value addition process. At each stage of processing, there will be value addition. Production may be defined as conversion of inputs-men, machine. materials. money. methods and management (6Ms) into output through a transformation process. Output may be goods produced or services rendered. Q2. What do you mean by Production System? Ans Production Systems: Production system involves in producing goods with the help of an efficient management, utilizing land, labor, machines, capital and materials. A production system constitutes an efficient process with an organized procedure for accomplishing the transformation of input elements to useful output products. In any production process, there is an organized procedure to produce a unit of output from the several types of inputs as such materials. labor, machines, facilities, energies, information, and technology. Q 3. What do you mean by Job Shop Production? Ans. Job Shop Production: In this system, goods are produced according to the orders of the customers. Continuous demand of such items is not assured and therefore production is done only when the orders for the manufacturing of items are produced from the customers. As the need of cach customer differs the materials, plants and equipments to be used also differ and therefore each product is a class by itself a constitutes a distinct and separate job for production purposes.—— 10 | Noble Study Material ; Q 4. What do you mean by Batch Production? Ans. Batch Production: Under this system, the manufacturing is done in Batches or groups or lots either on the basis of customer’s order or with a hope of a continuous demand of the product. Under this system, medium scale production is warranted. The best example of this type of production system is chemical industry where different medicines are produced in batches. Q 5. What do you mean by Mass Production? Ans. Mass Production: This system of production is used by concerns where manufacturing is carried on continuously in anticipation of demand though demand of the product may not be uniform throughout the year. Standardization is the keynote of mass production. This system may also be called “Flow Production System’. This system is useful on single Purpose type of machines and where | standardized products are manufactured through standardized plant machineries and processes. Moreover this system requires huge investments in machines are equipment. Q 6. What do you mean by Continuous Production? Ans. Continuous Production: Production facilities are arranged as per the sequence of production operations from the first operations to the finished product. The items are made to flow through the sequence of operations through material handling devices such as conveyors, transfer devices, etc. Q7. What do you mean by forecasting? Ans. Forecasting: Forecasting is an estimate of demand which will happen in future. Since it is only an estimate based on the past demand, proper care must be taken while estimating it. Q8 Discuss Qualitative methods. Ans. Qualitative methods: These types of forecasting methods are based on judgments, opinions, intuition, emotions, or personal experiences and are subjective in nature. They do not rely on any rigorous mathematical computationsNoble Study Material | 11 Q 9. Discuss Qualitative methods. Ans. Qualitative methods: These types of forecasting methods are based on mathematical (quantitative) models, and are objective in nature. They rely heavily on mathematical computations. — kz —_—— Q 1. What do you mean by Production? Explain production system. Ans. Production: Production is defined as “the step-by-step conversion of one form of material into another form through chemical or mechanical process to create or enhance the utility of the product to the user.” Thus production is a value addition process. At each stage of processing, there will be value addition. Production may be defined as conversion of inputs-men, machine, materials, money, methods and management (6Ms) into output through a transformation process. Output may be goods produced or services rendered. Production Systems: Production system involves in producing goods with the help of an efficient management, utilizing land, labor, machines, capital and materials. A production system constitutes an efficient process with an organized procedure for accomplishing the transformation of input elements to useful output products. In any production process, there is an organized procedure to produce a unit of output from the several types of inputs as such materials, labor, machines, facilities, energies, information. and technology. Continuous Production Mass Production Production/ Operations Volume Production Output/Product Variety—_— 12 | Noble Study Material Classification of Production System: Production systems can be classified as Job Shop, Batch, Mass and Continuous Production systems. 1. Job Shop Production: Job shop production are characterized by manufacturing of one or few quantity of products designed and produced as per the specification of customers within prefixed time and cost. The distinguishing feature of this is low volume and high variety of products. A job shop comprises of general purpose machines arranged into different departments. Each job demands unique technological requifements, demands processing on machines in a certain sequence. Characteristics The Job-shop production system is followed when there is: a) A wide range of general purpose machines like grinder, drill press, sharpener. etc. are used. b) Whole project is taken as a single operation. c) The product manufactured is customized. d) Volume of output is generally less. e) Versatile and skilled labor is needed. f) High capital investment is required. g) Firms’ can offer the “personal touch’ which some customers prefer. h) Quality tends to be very high as workers are skilled and well motivated. i) It is expensive method of production as workforce is skilled. j) Awide range of tools, machines and equipment is needed which is expensive. Advantages Following are the advantages of job shap production: a) Because of general purpose machines and facilities variety of products can be produced. , b) Operators will become more skilled and competent, as each job gives them learning opportunities. c) Full potential of operators can be utilized. 4) Opportunity exists for creative methods and innovative ideas.Noble Study Material | 13 Limitations 2. Following are the limitations of job shop production: a) Higher cost due to frequent set up changes. b) Higher level of inventory at all levels and hence higher inventory cost. c) Production planning is complicated. d) Larger space requirements. Batch Production: Batch production is defined by American Production and Inventory Control Society (APICS) “as a form of manufacturing in which the job passes through the functional departments in lots or batches and each lot may have a different routing.” It is characterised by the manufacture of limited number of products produced at regular intervals and stocked awaiting sales. Characteristics Batch production system is used under the following circumstances: a) When there is shorter production runs. b) When plant and machinery are flexible. c) When plant and machinery set up is used for the production of item in a batch and change of set up is required for processing the next batch. d) When manufacturing lead time and cost are lower as com pared to job order production. Advantages Following are the advantages of batch production: a) Better utilization of plant and machinery. b) Promotes functional specialization. c) Cost per unit is lower as compared to job order production. d) Lower investment in plant and machinery. e) Flexibility to accommodate and process number of products. f) Job satisfaction exists for operators. Limitations Following are the limitations of batch production: a) Material handling is complex because of irregular and longer flows. b) Production planning and contro! is complex.14 | Noble Study Material c) Work in process inventory is higher compared to continuous production. d) Higher set up costs due to frequent changes in set up. 3. Mass Production: Manufacture of discrete parts or assemblies using a continuous process are called mass production. This production system is justified by very large volume of production. The machines are arranged in a line or product layout. Product and process standardisation exists and all outputs follow the same path. Characteristics Mass production is used under the following circumstances: a) Standardization of product and process sequence. b) Dedicated special purpose machines having higher production capacities and output rates. c) Large volume of products. d) Shorter cycle time of production. ¢) Lower in process inventory. f) Perfectly balanced production lines. g) Flow of materials, components and parts is continuous and without any back tracking. h) Production planning and control is easy. i) Material handling can be completely automatic. Advantages Following are the advantages of mass production: a) Higher rate of production with reduced cycle time. b) Higher capacity utilisation due to line balancing. c) Less skilled operators are required. d) Low process inventory. €) Manufacturing cost per unit is low. Limitations Following are the limitations of mass production: a) Breakdown of one machine will stop an entire production line. b) Line layout needs major change with the changes in the product design. c) High investment in production facilities. : d) The cycle time is determined by the slowest operation. aw :Noble Study Material | 15 4, Continuous Production: Production facilities are arranged as per the sequence of production operations from the first operations to the finished product. The items are made to flow through the sequence of operations through material handling devices such as conveyors, transfer devices, etc. Characteristics Continuous production is used under the following circumstances: a) Dedicated plant and equipment with zero flexibility. b) Material handling is fully automated. c) Process follows a predetermined sequence of operations. d) Component materials cannot be readily identified with final product. e) Planning and scheduling is a routine action. Advantages Following are the advantages of continuous production: a) Standardization of product and process sequence. b). Higher rate of production with reduced cycle time. c) Higher capacity utilization due to line balancing. d) Manpower is not required for material handling as it is completely automatic. e) Person with limited skills can be used on the production line. f) Unit cost is lower due to high volume of production. Limitations Following are the limitations of continuous production: a) Flexibility to accommodate and process number of products does not exist. b) Very high investment for setting flow lines. c) Product differentiation is limited. - Q 2. What do you understand Production planning and control? Discuss its objective and factors affecting production planning and control. Ans Introduction: The set of interrelated management activities, which are involved in manufacturing certain products, is called as production management. If the saine concept is extended to services man. zement, then the corresponding set of management activities is called as operations management.16 | Noble Study Material : Production planning and control can be viewed as nervous system of the production operation. This fonction aims at efficient utilization of material resources, people and facitities in any undertaking through planning. coordinating and controlling the production activities that transform the raw material into finished products or components as a most optimal manner. All the activities in manufacturing or production cycle must be planned, coordinated, organized and controlling to its objectives. Production planning and control as a department plays a vital role in manufacturing organ‘zations. It is clear from name that it is something about planning. Planning is defined as setting goals. Production planning and control provides different kinds of information to different departments. It provides information about available manufacturing resources to marketing department. Marketing department receives orders according to that information. Similarly, it coordinates with other departments and provides relevant information. Objectives of Production Planning and Control: 1. Nature of Inputs: To manufacture a product, different types of inputs are used. The quality of the product depends upon the nature of the inputs are used. Hence the planning is done to determine the nature of various types of inputs which is a complicated process. Quantity of Inputs: To achieve a level of production, determination of quantity of the input_ and their composition is very important. A product can be prepared only when there is an estimate of the required composition of inputs. Proper Coordination: It ensures the Proper coordination among the workforce, machines and equipment. This leads to avoidance of wastages and smooth flow of production. . Better Control: Production Planning is the method of control. For a better control, planning is a precondition. Only then. one can compare the performance and calculate the deviations which lead control of the production. Ensure Uninterrupted Production: The planning of materials ensures the regular supply of raw materials and other components. The regular flow of materials and supplies are helpful in the uninterrupted production.6. VA Noble Study Material | 17 Capacity Utilization: There is a need to use the available resources effectively. It is helpful in bringing down various costs of roduction, Timely Delivered: If there is good production planning and control, there will be timely production and the finished product will be rushed to the market in time. This also ensures the better relationship with the customers. Factors Affecting Production Planning and Control: 1. 4. Use of Computers: Modern factories are using office automation equipment like PC, punch cards etc. It helps accurate computation of required of men and machine. : Seasonal Variations: Demand of certain products is affected by seasons, for instance umbrellas and raincoats during the monsoons and outputs. Production planning and control must take such changes into consideration while planning and control activities of inputs and outputs. Test Marketing: In an aggressive marketing strategy new product are to be test marketed in order to know the trends. This is a short- cycle operation, intermittent in nature and often upsets regular production After Sales Service: This has become an important parameter for success. In after sales services, many items are returned for repair. These are unscheduled work and alsé overload the production line. Losses due to Unpredictable Factors: Losses occur due to accidents, fire and theft of production inputs, mainly materials and components. These are unpredictable. Shortage of input due to such factors upset the planned production schedule in time and quantity. Losses due to Predictable Factors: There are losses of inputs. due to natural dengineering phenomena like production losses and changes in consumption of materials and occurrence of defectives. Production of Order: There are occasions when last minute prioritization of existing orders due to external pressure takes place. Hiss in priority are often decided by sufficiently high agement. ee Design changes are issued by R & D and the re ie partment. This will necessarily force production planning contro! change the input materials and process. RMB OP 03 (2) ¥i 18 | Noble Study Material 9. Rejection and Replacement: There are Occasions when sub. assemblies or finished goods are rejected during stage or inspection. Production planning and control must cate : v for Contingent plans to take care of rework without affecting scheduleq quality. final Q 3. Explain functions of production planning and control. Ans. Functions of Production Planning and Control: Production Planning Functions:- 1. Estimating: Estimating involves deciding the quantity of products to be produced and cost involved in it on the basis of sales forecast. Estimating manpower, machine capacity and materials required to) meet the planned production targets are the key activities before) budgeting for resources. ‘ Routing: Routing means, determination of path or route on which manufacturing operations will travel, establishing the sequence of operations to be followed in manufacturing a particular product This route path is determined in advance. Routing information is} provided by product or process engineering function and it is useful] to prepare machine loading charts and schedules. Scheduling: Scheduling involves fixing priorities for each job and determines the starting time and finishing time for each operation, the starting dates and finishing dates for each part, sub assembly and final assembly. Scheduling lays down a time table for production, indicating the total time required for the manufacture of a product and also the time required for carrying out the operation for each part on each machine or equipment. 4. Loading: Facility loading means loading of facility or work center and deciding which jobs to be assigned to which work center or machine. Loading is the process of converting operation schedules into practice. Loading ensures maximum possible utilization of productive facilities and avoids bottleneck in production. Production Control Functions:- ; : 1. Dispatching: The functions of routing and scheduling as discussed above are paper work only. No actual production has yet been \ started. Dispatching is the part of production control that translates the paper work into actual production in accordance with the details RMB OP 03 (2) ._f:Noble Study Material | 19 worked out under routing and scheduling functions. Dispatching deals with setting the production activities in motion through the release of orders and instructions in accordance with the.previously planned timings as embodied in production schedules. : 2. Expediting/ Follow-up/ Progressing: Expediting or progressing ensures that, the work is carried out as per the plan and delivery schedules are met. Expediting includes activities such as status reporting, attending to bottlenecks or holdups in production removing the same, controlling variations or deviations from planned performance levels, following up and monitoring progress of work through all stages of production, coordinating with purchase, stores, tool room and maintenance departments and modifying the production plans and re-plan if necessary. 3. Inspection: Inspection is the process of examining an object for identification or checking it for verification of quality and quantity in any of its characteristics. It is an important tool for ascertain and controlling the quality of a product. Inspection is an appraisal activity that compares goods or services to a standard. Conclusion: Production planning and control provides different kind of information to different departments. It provides information about available manufacturing resources to marketing department. Marketing department receives orders according to that information. Employment in production planning and control depends upon education and experience. Working in production planning and control is challenging task. It requires analytical skills and understanding of manufacturing process. Production planning and control is an essential part to run any business in the market because it can affect the quality of the product. Q 4. What do you mean by forecasting? Explain its methods. Ans. Forecasting: Introduction The growing competition, frequent changes in customer’s demand and the trend towards automation demand that decisions in business should not be based purely on guesses rather on acareful analysis of data concerning the future course of events. More time and attention should be given to the future than to the past, and20 | Noble Study Material the question ‘what is likely to happen?’ should take precedence over ‘what has happened?’ though no attempt to answer the first can be made without the facts and figures being available to answer the second, When estimates of future conditions are made ona systematic basis, the process is called forecasting and the figure or statement thus obtained is defined as forecast. In a world where future is not known with certainty, virtually every business and economic decision rests | upon a forecast of future conditions. Forecasting aims at reducing the area of uncertainty that surrounds | management decision-making with respect to costs, profit, sales, production, pricing, capital investment, and so forth. If the future were known with certainty, forecasting would be unnecessary. But uncertainty does exist, future outcomes are rarely assured and, therefore, organized system of forecasting is necessary. The following are the main functions of forecasting: Q_ The creation of plans of action. Q The general use of forecasting is to be found in monitoring the continuing progress of plans based on forecasts. Q_ The forecast provides a warning system of the critical factors to be monitored regularly because they might drastically affect the performance of the plan. It is important to note that the objective of business forecasting is not to determine a curve or series of figures that will tell exactly what will happen, say, a year in advance, but it is to make analysis based on definite statistical data, which will enable an executive to take advantage of future conditions to a greater extent than he could do without them. In forecasting one should note that it is impossible to forecast the future precisely and there always must be some range of error allowed for in the forecast. Forecasting Fundamentals: Forecast: A prediction, projection, or estimate of some future activity, event, or occurrence. Types of Forecasts Q Economic forecasts - O Predict a variety of economic indicators, like money supp! inflation rates, interest rates, etc. ld__ Noble Study Material | 21 Q Technological forecasts Q Predict rates of technological progress and innovation. Q Demand forecasts Q Predict the future demand for a company’s products or services. Since virtually all the operations management decisions (in both the strategic category and the tactical category) require as input a good estimate of future demand, this is the type of forecasting that is emphasized in our textbook and in this course. Types of Forecasting Methods: 1. Qualitative methods: These types of forecasting methods are based on judgments, opinions, intuition, emotions, or personal experiences and are subjective in nature. They do not rely on any rigorous mathematical computations 2. Quantitative Methods: These are forecasting techniques that make use of historical quantitative data. It is also called as a statistical method. 1. Trend projection Method: Trend projection method is a classical method of business forecasting. This method is. essentially concerned with the study of movement of variable through time. The use of this method requires a long and reliable time-series . data, There are two techniques of trend projection based on time- series data: Q Graphical Method: A trend line can be fitted through a series graphically. Old values of sales for different areas are plotted on a graph and a free hand curve is drawn passing through as many points as possible. The direction of this free hand curve shows the trend. Q Fitting Trend Equation or Least Square Method: The least squares method is a form of mathematical regression analysis that finds the line of best fit for a dataset, providing a visual demonstration of the relationship between the data points. Each point of data is representative of the relationship between a known independent variable and an unknown dependent variable. 2. Barometric methods of forecasting: The barometric method of forecasting follow the method meteorologists use in weather forecasting. Meteorologists use the barometer to forecast weather conditions on the basis of movements of mercury in the barometers.22 | Noble Study Material Following the logic of this method, many economists use economic indicators as a barometer to forecast trends in business activities, This method was first developed and used in the 1920s by the Harvard Economic Service. ‘The basic approach of barometric technique is to construct an index | of relevant economic indicators and to forecast future trends on — the basis of movements in the index of economic indicators. The indicators used in this method are classified as: Q Leading Indicators Q) Coincidental Indicators Q Lagging Indicators 3. Econometric methods: The econometric methods combine statistical tools with economic theories to estimate economic variables and to forecast the intended economic variables. The forecasts made through econometric methods are much more reliable than those made through any other method. The econometric methods are therefore most widely used to forecast demand for a product for a group of products and for the economy as a whole. The econometric methods are briefly described under two basic methods: a) Regression analysis: Regression analysis is the most popular method of demand estimation. This method combines economic theory and statistical techniques of estimation in regression technique of demand forecasting, the analysts estimate the demand function for a product. In the demand function, the quantity to be forecast is a dependent variable and the variables that affect or determine the demands are called independent variables. 1 Simple regression technique: In simple regression technique a single independent variable is used to estimate a statistical value of the dependent variable. Q Multi-variate regression: i-va The multi-variate regression equation is used where demand for a commodity is deemed t0 be the function of many variables or in cases in which tho number of explanatory variables is greater than one. b) Simultaneous Equation Model: In explaining this model, it will be helpful to begin with a Comparison of simultaneous equation method with regression method. Regression techniqueNoble Study Material | 23 of demand forecasting consists of a single equation. In contrast, the simultaneous equations model of forecasting involves estimating several simultaneous equations. These equations are, generally: QO Behavioural Equations QO Mathematical Identities. £8 24 Es >-3ssyu g-_ ese _— ie ans ot Sav 99 32s ae Eg wa : 23 g ge Ss 2 LEE es =z es 2s = o be S ao es s Oe 2 & -—4 $s 5 Ss < = B s oz = et a 3 as Co aoe § 1 a 3 2 S & o 3 £3 Z =e ae) c= op 3 as ec % 3 . Ss 2 12 o = ffenz = zp ecuse Ss 2 Bers a ze Eis 5 $BS2 a Bo Qualitative Techniques | Sample Survey Method Zz 2 a7 Es ge < ge 23, = Los gee2 £2 eects eo Dn a - =—§ 24e a w24 | Noble Study Material NUMERICAL PROBLEMS Illustration 1. From the following time series data of sale project the sales for the next three years : | Year 2001 | 2002 | 2003 [2004 | 2005 | 2006 [2007 Sales ('000 units) | 80 | 90 | 92 | 83 | 94 | 99 | 92 Sol. Computation of Trend Values Years | Time deviation | Sales in Squares of | Product of time from 2004 (7000 units) | time dev. | deviations and sales, x Y xX? XY 2001 =3 80 9 ~~ 240 2002 -2 90 4 ~ 180 2003 -41 92 1 -92 | 2004 0 83 0 0 2005 +1 94 1 +94 2006 +2 99 4 + 198 | 2007 +3 92 9 +276 n=7[ EX=0 | tY¥=630 | =x?=28 [ Exy=+56 | Regression equation of Y on X | Y = a+bx To find the value‘of and b. SY 630u an n 7 SXY_ 56 b= == == SY 28 | Hence regression equation comes to Y = 90 +2 1 X. With the help of this equation we can project the trend values for the ne: xt three years. i.e. 2008. 2009 and 2010. Yong = 90+2(4)=90 +8 =98 (000) units, Yoo» = 90+2(5)=90+ 10= 100000) units. Yano = 90+2(6)= 90+ 12= 102 (000) units, Iustration 2. With the help of following project the trend of sales for the next five years :Noble Study Material | 25 Computation of Trend Values of Sales Time deviation Sales Squares of Product of time from the middle | (inlakh 2) | timedev. | deviations and sales| of 2004 and 2005 assuring 5 years =1 § Y x XY -5 100 3B —500 -3 110 9 -330 -1 115 1 —115 +1 120 1 +120 +3 135 9 +405 +5 140 2 +700 =X=0 xY=720 rxX7=70_| IXY =+280 Regression equation of Y on X Y = a+bX To find the values of a and b. a= x. 2. 120 SXY_ 280_, b= Sx? 70 Sales forecast for the next years, ie., 2008 to 2012 Yq = 120+ 4(+7)= 120+ 28= & 148 lakhs. Y,., = 120+4(+9)=120+36= & 156 lakhs. Yn, = 120+4(+11)=120+44= @ 164 lakhs. Yoo, = 120+4(+ 13)= 120452 @ 172 lakhs. Y_. = 120+4(+15)=120+60= & 148 lakhs. Illustration 3. An investigation into the demand for colour TV sets in 5 towns has results in the following date : Population of the town (in lakhs) No. of TV sets demanded (in thousands) Fita linear regression of Y on X and estimate the demand for CTV two towns with a populatiorl of 10 alkhs and 20 takhs. sets for26 | Noble Study Material Sol. Computation of Trend Valucs Population SalesofTV | Squares ofthe Product of popu- (in lakhs) (in thousands) population lation and sales \ of colour TV 45 0 | 91 a | 88 ri) | 165 1% 266 | =xt=455 | SXY=665 Regression equation of Y on X Y = a+bX To find the value of a and 6, the following two equations are to be solved ZY = -na+b=X -) IXY = —a=X+ brx? -Cil) By putting the values we get 67 = 5a+45b (iii) 655 = 45a+455b ~ --fiv) Multiplying equation (iii) by 9 and putting it as no. (v) we get, 603 = 45a+405b --(V) By deducting equation (v) from equation (Iv); we get 52= 506 52 = 0° 1:04 By putting the value of b in equation (iii), we get 67 = Sa+45x 1-04 or, 67 = 5a+46-80 or, 67-46-80 = 50° or, Sa = 20-20 _ 2020 os an or, a= 404 Now by putting the values of c, b and X [10 lakhs] in regression equation of Y an X, we get. Weed or or, Y = 4-04 +1-04(10)Noble Study Material | 27 or, Y = 4:04 + 10-40 or 14-44 thousand CTV sets. Similarly sales estimates for town having population of 20 lakhs, by put- ting the values of X, a and in regression equation can be found as : Y = 4:04 + 1-04 (20) = 4:04 + 20-80 = 24-84 thousands CTV sets. Hence expected demand for CTV for two towns will be 14-44 thousads and 24-84 thousand CTV sets. Illustration 4. An investigation into the use pf secooters in 5 towns has resulted in the following data : Population in town : Population in town (in lakhs] 4 | 6 | 7 | 10 | 13 ‘| No. of Scooters : Y) | 4,400 | 6.600 | 5,700 8,000/ 10,300 Fit a linear regression of Y on X and estimate the number of scooters to be found in a town with a population of 16 lakhs. Sol. Computation of Trend Values Population “|_No. of Scooters | Squares of | Product of popu- (in lakhs) demanded -| population lation and No. of scooters demanded x i” x? XY 4 4,400 16 17.600 | 6 6,600 36 39,600 7 5,700 49 39,900 10 8,000 100 80,000 13 10,300 169 1,33,900 =X = 40 LY = 35,000 =X? = 370 EXY = 3,11,000 Regression equation of Y on X Y = a+bx To find the value of a and 4, we will have to solve the following two equations : SY = nat bux wi) IXY = a=X+ bxX? .. Adi) By putting the values we get, 35,000 = 5a+40b (iii) 3,11,000 = 40a+ 370b iv) By multiplying equation no. (iii) by 8 putting as equation (v) we get, 280,000 = 40a +3206 AV)28 | Noble Study Material By subtracting equation (v) from equation (iv); we get 31,000 = 506 or, 506 = 31,000 31,000 = > -620 Md e 50 By substituting the value of 6 in equation no. (iii), we get. 35,000 = 5Sa+40b or, 35,000 = 5a+40x620 or, 35,000 = 5a+24,800 or, 10200 = Sa “ _ 10,200 | Or, a> 5 = Now putting the viaue of a, b and X (16 lakhs) in regression equation of Y on X, we get Y = a+6X or, Y = 2040 +620 (16) or, Y = 2040 +9920 or, Y = 11,960 Hence, the expected demand of scooters for a town with a population of 16 lakhs will be 11,960 scooters. ooProcess of PPC Q 1. What do you meaning Routing? Ans. Meaning of Routing: Routing is the first but the most important and difficult task of the production planning. Routing means determination of path or route on which manufacturing operations will travel, establishing the sequence of operations to be followed in manufacturing a particular product. This route path is determined in advance. Q 2. What do you meaning Routing Procedure? Ans. Routing Procedure: Routing procedure consists of the following steps”! a) An analysis of the product to determine the various requirements for its manufacture. b) Determination of the manufacturing operations required and sequence of those operations. c) Determination of the units to be manufactured in each lot or order. d) Deciding scrap or residual for each step of production. e) Preparing production orders, job cards, labor cards, inspection cards, tool tickets and other forms. f) Determination of the estimated cost of production. Q 3. What do you meaning Scheduling? Ans. Meaning of Scheduling: It may be defined as the assignment of work to the facility with the specification of items, and the sequence in which the work is to be done. Scheduling is actually time phasing of loading. The facility may be manpower, machine or both. Scheduling deals with orders and machines. It determines which order will be taken up on which machine in which department, at what time and by which operator.30 | Noble Study Material Q. 4 Explain in detail Master Production Scheduling (MPS)? Ans. Master Production Scheduling: — A master production schedule is a product-wise plan for manufacturing products. When a firm uses an MRP (Material Requirement Planning) system, the MPS provides the top-level input requirements. This gives the volume of production during various periods in the planning horizon. Q. 5 Explain in detail Material Requirement Planning (MRP)? Ans. Meaning: — MRP isa technique for determining the quantity and timing for the acquisition of dependent items needed to satisfy master schedule requirements. Q 6. What @o you meaning Flow Production? Ans. Flow or Continuous Production: It is most useful for product of repetitive nature. Each work is passed to the next stage immediately after the previous Operation is completed without waiting for the finishing of work as a total batch. Since, the whole system is balanced, any fault or error at a particular stage affects not only that stage but also all other stages in the flow line. Q7. What do you meaning Process Production? Ans. Process Production: In this, various processes are inter-linked and production is carried on continuously through a uniform and standardized sequence of operations. This type of production is used in bulk Processing of those products whose demand is continuous like petroleum, chemical, medicines, Soaps, etc. Single raw material can be transformed into different kinds of product or many raw materials can be transformed into one product. It involves two types of processes. Q 8. What do you meaning Intermittent Production? Ans. Intermittent Production: Here, the production is not continuous and is designed only when it is required. There is not a single procedure and the production usually is not uniform and the basic product design changes from time to time. The facilities are flexible to adjust production according to the order‘or time.Noble Study Material | 31 ——_—E xz —¥—— Q 1. What do you meaning Routing? Explain its procedure. Ans. Meaning of Routing: Routing is the first but the most important and difficult task of the production planning. Routing means determination of path or route on which manufacturing operations will travel, establishing the sequence of operations to be followed in manufacturing a particular product This route path is determined in advance. Objectives of Routing: |. Determining the most feasible sequence of operations and ensuring that this sequence must be followed. 2. Utilizing the physical human resources, materials and machines employed in the production to the best. 3. Exercising the influence upon the design of the factory building and the machines. Activities In Routing: 1. Determination of what to make and what to buy : Decision is made whether to manufacture all these parts in the factory, or purchase some from outside. 2. Determination of materials Requirement : Route sheets for the manufacturing of various parts are accompanied by a master bill of materials specifying various components parts and their quantities required for production. 3. Determination of manufacturing operations and their sequence: Routing section now analyses the product in order to determine the operations involved in the manufacturing of each of its parts, subassemblies and assemblies. These operations are then analyzed to determine which of them are to be performed sequentially, and which concurrently. 4. Determination of Lot Sizes : Routing section also determines the number of units to be produced in any one lot. If products are made to customers order, the lot size is generally equal to it. On the other hand, if production is done for stocking as in case of standardized, mass production items, the lot size is generally determined by economic order quantity.32. | Noble Study Material ; ; 5. Determination of Scrap Factors : The number of pieces which come out of the production line is usually less than that which should come out. This happens because of manufacturing defects and failure of at least a portion of them to meet quality specifications. These defective pieces are called scrap. Routing should take this scrap factor into account when determining the lot size of various component parts, sub-assemblies and final assembly. It is generally done by establishing a standard scrap factor at every stage of manufacturing. Determination of Cost : Cost of the component parts and final product largely depends on the materials and manpower required for manufacturing. Although cost analysis is the responsibility of the accounting department, routing is involved in it as it determines the component parts and material requirements. Organization of production control forms : The type of production control forms largely depends on the type of manufacture. Production control is organized around schedule form in case of mass manufacturing. Job order manufacturing requires the use of a number of control forms such as work order, factory order or production order. It also needs other documents such as job tickets, move tickets, inspection cards, material cards and labor cards, for performing and reporting the completion of operations. Routing Procedure: Routing procedure consists of the following steps : a) An analysis of the product to determine the various requirements for its manufacture. b) Determination of the manufacturing operations required and sequence of those operations. c) Determination of the units to be manufactured in each lot or order. d) Deciding scrap or residual for each step of production. e) Preparing production orders, job cards, labor cards, inspection cards, tool tickets and other forms. f) Determination of the estimated cost of production.ee SG ao meer cree ; Noble Study MateNat {33 The overall sequence of operations of routing has been shown in fig: Sub Assembly A Final Assembly Part No. 3 PartNo. 4 Sub Assembly B Advantages of Routing: 1. Efficient use of available resources. 2. Reduction in manufacturing costs. 3. Improvement in quantity and quality of the output. 4. Provides a basis for scheduling and loading. Q 2. What do you meaning Scheduling? Explain its procedure. Ans. Meaning of Scheduling: It may be defined as the assignment of work to the facility with the specification of items, and the sequence in which the work is to be done. Scheduling is actually time phasing of loading. The facility may be manpower, machine or both. Scheduling deals with orders and machines. It determines which order will be taken up on which machine in which department, at what time and by which operator. Objectives: 1. To achieve the required rate of output with a minimum of delay, and disruption in processing. 2. To provide quantities of goods necessary to maintain finished inventories at levels predetermined to meet delivery commitments. 3. To have maximum utilization of men, machines and materials by maintaining a free flow of materials along the production line. To prevent unbalanced allocation of time aiong production departments or work centre with a view to eliminate idle capacity. To keep the production cost to a minimum. RMB OPUSG) 5.