PPC - I

BY: Tadesse Fisseha(MSc)

Planning+ Control = Productivity
The word Production, Planning and Control
Defines as:
Production: that transformation of raw materials to
finished goods.
Planning: looks ahead, anticipates possible difficulties and
decides in advance as to how the production, best, be carried
out.
Control: phase makes sure that the programmed production
is constantly maintained.
 Operation management
1. Introduction
Operation management(OM) is defined as the design, operation, and
improvement of the systems that create and deliver the firm primary
products and services.
Cont.…
Production function is ‘the part of an organization, which is
concerned with the transformation of a range of inputs into the
required outputs (products) having the requisite quality level’.

• 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.
 1.1 Production System
The production system is ‘that part of an organization, which produces
products of an organization. It is that activity where by resources,
flowing within a defined system, are combined and transformed in a
controlled manner to add value in accordance with the policies
communicated by management’.
• A simplified production system is shown below:
Cont.…
The production system has the following characteristics:

1. Production is an organized activity, so every production system has

an objective.

2. The system transforms the various inputs to useful outputs.

3. It does not operate in isolation from the other organization system.

4. There exists a feedback about the activities, which is essential to

control and improve system performance.
1.2 Operations Decision Making
Typically operation decision making includes:

 What (type and amount):what resource are needed and in what amount?

 When (time): when will each resource be needed? When should the
work be scheduled? When should materials and other suppliers ordered?

 Where (place): where will the work be done?

 How (method): how will the product or service be designed? How will
the work be done? How will resources be allocated?

 Who (people): who will do the work?

1.3 CLASSIFICATION OF PRODUCTION SYSTEM

• Production systems can be classified as Project, Job-shop, Batch, Mass

and Continuous production systems.

Project
Production
1.Project Production

Project Production: This deals with the provision of a unique

product requiring large scale inputs to be coordinated, so as to achieve
a consumer’s requirement.

Example: Civil engineering projects, the construction of large-scale

manufacturing or military facilities and aerospace programs.
2.Job-Shope production
• Job-shop production are characterized by manufacturing 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.
Job-shop Production is characterized by
 High variety of products and low volume.
 Use of general purpose machines and facilities.
Highly skilled operators who can take up each job as a challenge
because of uniqueness.
Large inventory of materials, tools, parts.
Detailed planning is essential for sequencing the requirements of each
product, capacities for each work centre and order priorities..
Cont..
Advantages
Following are the advantages of Job-shop Production:
Because of general purpose machines and facilities variety of products can be
produced.
Operators will become more skilled and competent, as each job gives them learning
opportunities.
Full potential of operators can be utilized.
Opportunity exists for Creative methods and innovative ideas.
Limitations
Following are the limitations of Job-shop Production:
Higher cost due to frequent set up changes.
 Higher level of inventory at all levels and hence higher inventory cost.
 Production planning is complicated.
 Larger space requirements.
3.Batch Production
• A form of manufacturing in which the job pass through the functional
departments in lots or batches and each lot may have a different
routing.
• It is characterized by the manufacture of limited number of products
produced at regular intervals and stocked awaiting sales.
Batch Production is characterized by
Shorter production runs.
 Plant and machinery are flexible.
 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.
Manufacturing lead-time and cost are lower as compared to job order
production.
Cont.…
Advantages
Following are the advantages of Batch Production:
 Better utilization of plant and machinery.
 Promotes functional specialization.
 Cost per unit is lower as compared to job order production.
 Lower investment in plant and machinery.
 Flexibility to accommodate and process number of products.
 Job satisfaction exists for operators.
Limitations
Following are the limitations of Batch Production:
Material handling is complex because of irregular and longer flows.
 Production planning and control is complex.
 Work in process inventory is higher compared to continuous production.
 Higher set up costs due to frequent changes in set up.
4.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 standardization exists and all outputs
follow the same path.
• Mass Production is characterized by
 Standardization of product and process sequence.
 Dedicated special purpose machines having higher production capacities and output rates.
 Large volume of products.
 Shorter cycle time of production.
 Lower in process inventory.
 Perfectly balanced production lines.
 Flow of materials, components and parts is continuous and without any back tracking.
 Production planning and control is easy.
 Material handling can be completely automatic.
Cont.…
Advantages
• Following are the advantages of Mass Production:
 Higher rate of production with reduced cycle time.
 Higher capacity utilization due to line balancing.
 Less skilled operators are required.
 Low process inventory.
 Manufacturing cost per unit is low.
Limitations
• Following are the limitations of Mass Production:
Breakdown of one machine will stop an entire production line.
 Line layout needs major change with the changes in the product design.
High investment in production facilities.
The cycle time is determined by the slowest operation.
5.Continuous Production
Production facilities are arranged as per the sequence of production
operations from the first operations to the finished product. Continuous
Production is characterized by:

 Dedicated plant and equipment with zero flexibility.

 Material handling is fully automated.

 Process follows a predetermined sequence of operations.

 Component materials cannot be readily identified with final product.

 Planning and scheduling is a routine action.

Cont.…
Advantages
• Following are the advantages of Continuous Production:
 Standardization of product and process sequence.
 Higher rate of production with reduced cycle time.
Higher capacity utilization due to line balancing.
Manpower is not required for material handling as it is completely automatic.
 Person with limited skills can be used on the production line.
 Unit cost is lower due to high volume of production.
Limitations
• Following are the limitations of Continuous Production:
Flexibility to accommodate and process number of products does not exist.
 Very high investment for setting flow lines.
 Product differentiation is limited
Cont.…
1.4 Functions and Operations of
Manufacturing system
The main functions of an industrial enterprise may be grouped into;

A. Manufacturing,

B. Engineering,

C. Control and

D. Support functions
A. Manufacturing Functions

 This group includes the functions directly related to the manufacturing or movement of the product:

I. Receiving: has the responsibility for accepting raw material from the carrier, presenting for
inspection ,and getting it to the plant.

II. Warehousing (or storing):has the responsibility for storing raw material until needed for
production, and storing finished goods until ready to be shipped to the customers.

III. Transportation: has the responsibility for moving all types of materials with in the plant area and
from the suppliers.

IV. Production: has the responsibility for transforming the raw material into an acceptable and
economical finished product.

V. Shipping: has the responsibility for packing and delivering the finished goods to customers.
B. Engineering Functions
This group includes those functions concerned with the engineering
aspects of a manufacturing operation.
I. Product Design: has the responsibility for the development of new and
saleable products and preparation of product description, product
drawings and product specifications.
II. Process Design: has the responsibility for the development of efficient
processes for the manufacture of the products developed by the product
design unit.
III. Plant Engineering: has the responsibility for the design and installation
of new facilities and ensuring that proper working conditions.
IV. Cost Estimation: has the responsibility for determining costs involved
in product manufacture. This includes design and development cost of
the product prior to manufacture.
C. Control Functions
This group includes those functions concerned with the controlling of
production, cost and quality.
I. Production Control: has the responsibility for establishing forecasts,
production plans, inventory levels and product distribution.
II. Quality control: has the responsibility for establishing and
maintaining the necessary control of quality for raw materials,
intermediate products, and finished goods.
III. Cost Control: has the responsibility for determining and reporting
the design cost, the manufacturing cost and comparing these costs
with the amounts allocated in the budgets.
D. Support Functions
Includes those functions which support the activities of the above
mentioned functions.
I. Purchasing: has the responsibility of buying the necessary materials
of the proper quality and quantity at the most favorable price and
securing deliveries on time according to schedules established.
II. Sales: have the responsibility for selling product of the company and
for liaison after material has been delivered.
III. Maintenance: has the responsibility for the execution of preventive
maintenance, repair of old equipment, installation of new equipment
and provision of facilities.
IV. Personnel: has the responsibility for hiring, administering and training
workers; and for the termination of employments.
1.5 PRODUCTION MANAGEMENT
Production management is ‘a process of planning, organizing, directing and
controlling the activities of the production function. It combines and transforms
various resources used in the production subsystem of the organization into value
added product in a controlled manner as per the policies of the organization’.

E.S. Buffa defines production management as follows:

‘Production management deals with decision-making related to production

processes so that the resulting goods or services are produced according to
specifications, in the amount and by the schedule demanded and out of minimum
cost’.
1.6 Objectives of Production Management

The objective of the production management is ‘to produce goods and services of
Right Quality and Quantity, at the Right time and Right manufacturing cost’.

1. Right Quality: The quality of product is established based upon the customers
need. The right quality is not necessarily being the best quality. It is determined by the
cost of the product and the technical characteristics as suited to the specific
requirements.

2. Right Quantity: The manufacturing organization should produce the products in

right number. If they are produced in excess of demand the capital will block up in the
form of inventory and if the quantity is produced in short of demand, leads to shortage
Cont.…
3. Right Time: Timeliness of delivery is one of the important parameter
to judge the effectiveness of production department. So, the production
department has to make the optimal utilization of input resources to
achieve its objective.

4. Right Manufacturing Cost: Manufacturing costs are established

before the product is actually manufactured. Hence, all attempts should
be made to produce the products at pre-established cost, so as to reduce
the variation between actual and the standard (pre-established) cost.
1.7 Manufacturing industries, services & products

Basic Industries

Industry consists of enterprises and organizations that produce and/or

supply goods and/or services . There are a wide variety of basic
industries:
EXAMPLE
 1.7.1 Classification of industries
Major businesses in this sector include agriculture, fishing, forestry
and all mining and quarrying industries

The primary sector of

industry(basic producer): take
the natural resources and
transform these in to the raw Primary industry is a larger
materials used by other sector in developing countries;
industrial-manufacturing for instance, animal
firms. husbandry is more common in
Africa than in Japan.
Cont.…
Secondary sector: * Aerospace manufacturing
• The secondary sector * Automobile manufacturing
(manufacturing): takes the * Brewing industry
output of the basic producer * Chemical industry
and transforms these raw * Clothing industry
materials into various * Electronics
industrial products and * Engineering
some consumer items. * Energy industries
* Metalworking
* Steel production
* Software engineering
* Telecommunications
Industry
* Tobacco industry
 Cont.…

• Tertiary sector:
The tertiary sector of industry: is also known as the service sector or the service
industry.it involves the provision of services to businesses as well as final consumers.
News media
Leisure industry/hotels
Consulting
Healthcare/hospitals
Waste disposal
Estate agents Goods may be transformed in the
Business services process oin the restaurant
Restaurants industry or in equipment f
Local government services providing a service, as happens
Central government services repair. However, the focus is on
Education people interacting with people
Law and order and serving the customer rather
than transforming physical goods.
Cont.…
• Quaternary sector:
The quaternary sector is the research industry.

Industrial research looks for new ways to cut costs, find new
markets, produce new ideas, new production methods and methods
of manufacture.
 Cont.…
• Relations b/n sectors:
The 4 Sectors of Industry are interrelated. An individual industry will often use
more than one sector in order to produce products. TERTIARY
PRIMARY SECONDARY

QUATERNARY: Research is carried out in to new ways of processing or growing cotton.

e.g. organic cotton.