Sanjivani College of Engineering, Kopargaon

Department of MBA

203- Operation Management

Production Planning & Control

Presented By

Dr. Niraj Chaudhari

Assistant Professor,
Sanjivani College of Engineering ,
Dept.of MBA,
Kopargaon

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 Unit –III Production Planning & Control (PPC)
– Role and Functions of PPC Demand Forecasting:
Forecasting as a Planning Tool, Forecasting Time Horizon,
Sources of Data for forecasting, Accuracy of Forecast,
Capacity Planning.
– Production Planning: Aggregate production Planning,
Alternatives for Managing Demand and Supply, Master
Production Schedule, Capacity Planning- Overview of
MRP, CRP, DRP, MRPII.
– Production Control: Scheduling, Loading, Scheduling of
Job Shops and Floor Shops, Gantt Charts
– Demand Responsiveness Improvement: Introduction,
Need, Importance, Advantage & Disadvantages
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Production Planning & Control (PPC)

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Three Stages of PPC

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Production Planning & Control (PPC)

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Role of Production Planning & Control (PPC)

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 Function of Production Planning & Control (PPC)

• Materials
• Methods
• Machine & Equipment
• Manpower
• Process planning
• Estimating
• Loading & Scheduling
• Dispatching
• Inspection
• Evaluation
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 Demand Forecasting
• Forecasting is a process of making statements about
events whose actual outcomes have not yet been
observed.
• Demand forecasting is the activity of estimating the
quantity of a product or service that consumers will
purchase or not .
• Demand forecasting is used in making pricing decisions,
assessing future capacity requirements, or in making
decisions on whether to enter a new market or not

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 Demand Forecasting
Short-term forecasts:-
are needed for the scheduling of personnel, production and
transportation. As part of the scheduling process, forecasts of
demand are often also required.
Medium-term forecasts:-
are needed to determine future resource requirements, in order to
purchase raw materials, hire personnel, or buy machinery and
equipment.
Long-term forecasts:-
are used in strategic planning. Such decisions must take account of
market opportunities, environmental factors and internal
resources.

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Forecasting Process

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Importance of Forecasting

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 Forecasting as a Planning Tool

• An estimation tool
• A way of addressing the complex and
uncertain environment surrounding business
decision making.
• A tool for predicting event related to
operation planning & control
• A vital prerequisite for the planning process
in organizations.

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 Forecasting Time Horizon

1) Short Term Forecasting

2) Medium Term Forecasting
3) Long Term Forecasting

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 Design Disciplines
Particulars Short terms Medium term Long term
forecasting forecasting forecasting
Normal duration 1 to 90 days 1 to 5 years 5 to 10 years
Nature of Purely tactical Tactical & Purely strategic
decision strategic
Important Random effect Seasonal and Long term trends
consideration cyclical effects and business
cycles
Nature of data Mostly Subjective and Largely subjective
required quantitative quantitative
Degree of Low Significant High
uncertainty
Examples Quarterly Annual New business
production plans production development
planning planning

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 Source of Data for Forecasting

• Sales Personnel Estimates

• Point of sales (POS) Data systems
• Forecasts from supply chain partners
• Trade/Industry association Journals
• B2B Portals /Marketplaces
• Economic Surveys and Indicators
• Subjective Knowledge

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 Accuracy of Forecast

• It is important to evaluate forecast accuracy

using genuine forecasts. Consequently, the
size of the residuals is not a reliable
indication of how large true forecast errors
are likely to be. The accuracy of forecasts can
only be determined by considering how well
a model performs on new data that were not
used when fitting the model.

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 Capacity Planning

• Capacity planning is the process of

determining the production capacity
needed by an organization to meet
changing demands for its products. In the
context of capacity planning, design capacity
is the maximum amount of work that an
organization is capable of completing in a
given period

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Capacity Planning

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