ANNA UNIVERSITY

MBA
PRODUCTION
MANAGEMENT
UNIT-II
 UNIT II FORECASTING, CAPACITY AND
AGGREGATE PLANNING - Demand
Forecasting –Need, Types, Objectives and
Steps. Overview of Qualitative and
Quantitative methods. Capacity Planning –
Long range, Types, Rough cut plan,
Capacity Requirements Planning (CRP),
developing capacity alternatives.
Aggregate Planning – Approaches, costs,
relationship to Master Production schedule.
Overview of MRP, MRP II and ERP
 FORECASTING
Production forecasting is the
process of estimating future
demand for retail products, as
well as the resources required to
manufacture those products.
 Typically, these resources include
manual labor, money, machinery,
and raw materials
 PRODUCTION FORECAST
The production forecast is the
production planner's projection
of how many end items and
derived subassemblies to
produce in specific periods to
meet the forecasted sales.
 CAPACITY AND AGGREGATE
PLANNING
Aggregate planning is medium-term
capacity planning that typically covers
a period of two to 18 months.
Like capacity planning, aggregate
planning considers the resources
needed for production such as
equipment, production space, time
and labor.
 DEMAND FORECASTING
Demand forecasting is the process of
using predictive analysis of historical data
to estimate and predict customers' future
demand for a product or service.
Demand forecasting helps the business
make better-informed supply decisions
that estimate the total sales and revenue
for a future period of time
OVERVIEW OF QUALITATIVE AND
QUANTITATIVE METHODS.
 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.
 ROUGH-CUT CAPACITY
PLANNING
 Rough-cut capacity planning (RCCP) is a
long-term capacity planning technique.
 RCCP validates the master production
schedule (MPS).
 The goal is to ensure that companies
don't purchase or release an excess of
materials.
 CAPACITY REQUIREMENTS
PLANNING (CRP)
Capacity requirements planning
(CRP) is the process of
specifying the level of resources
(facilities, equipment and labor
force size) that best supports
the enterprise's competitive
strategy for production
 AGGREGATE PLANNING
Aggregate planning is a method for
developing an overall
manufacturing plan that ensures
uninterrupted production typically
through a 3- to 18-month period.
AGGREGATE PLANNING
 AGGREGATE PLANNING AND MASTER PRODUCTION
SCHEDULE

 The aggregate plan provides an overall

guideline for master production scheduling
which specifies the timing and volume of
the production of individual products.
 The master scheduler takes the aggregate
decisions as targets and tries to achieve
them as much as possible.
MRP MRP2 AND ERP
 MRP II is a computer-based system that
can create detailed production schedules
using real-time data to coordinate the
arrival of component materials with
machine and labor availability.
 MRP II is used widely by itself, but it's
also used as a module of more extensive
enterprise resource planning (ERP)
systems.