Title: Chapter 7 Operations Planning and Control
1Chapter 7Operations Planning and Control
2Objective
- To have an overview of the production planning
and control process in industry.
3Representation of a typical manufacturing plant
Plant
Finished Products
Raw material
Storage
Storage
Assembly
Fabrication
Storage
4- Demand forecasting
- Operations Planning
- Inventory Planning
- Inventory Control
- Operations scheduling
5Demand forecasting
- Inputs
- Product markets Historical demand
- Marketing programs variation in demand because
of promotions - External economics The health of the economy
- Actual demand coming from sales
- Outputs
- A statement of the expected demand quantities for
all products over some planning period - Recognition of declining demand for a product.
6Operations Planning
- Inputs
- Demand forecasting
- Engineering new or modified product designs
- Financial control budget limitations and
monetary constraints - External perturbations emergency orders,
canceled orders, labor strikes, unavailability of
resources, etc. - Outputs
- Long range plans plant expansions and new
facility acquisition - Short term plans allocation of resources to
production requirements
7Inventory Planning and Control
- Inventory planning determines the material
requirements to satisfy operations planning needs - Inputs
- The time-phased Operations plan
- Output
- Time-phased requirements for components, parts,
raw material, assemblies, and supplies forward to
inventory control
8Inventory control
- Determines the proper inventory levels, reorder
points, and safety stocks. - Inputs
- Time-phased requirements
- Sales orders
- Output
- Order quantities
- Order points
- Safety stock of raw material, assemblies,
fabricated parts and raw finished products
9Operations scheduling
- Inputs
- Request for fabrication and assembly
- Corrective actions updated priorities and
adjustments of orders - Outputs
- Operations sequence and start and stop times
10Techniques for Demand Forecasting
- Moving Average The average of the actual demand
values for the last n time periods is used to
forecast the demand for the next period. - n is determined by experimentation.
11Example of Three- and Five-Period Moving Average
12- Waited moving average gives more weight for more
recent data. - The choice of n and the weighting coefficients
are determined by experimentation.
13 (Let us continue with the same problem as we
had in Example 1.) Market Mixer, Inc. sells can
openers. Monthly sales for an eight-month period
were as follows Month Sales Month Sales
1 450 5 460 2 425 6
455 3 445 7 430 4 435
8 420 Forecast next months sales using a
3-month weighted moving average, where the weight
for the most recent data value is 0.60 the next
most recent, 0.30 and the earliest,
0.10. Solution Period Sales Weighted Moving
Average Forecast 1 450 2 425 3
445 4 435 (450.10) (425.30)
(445.60) 440 5 460 (425.10)
(445.30) (435.60) 437 6 455
(445.10) (435.30) (460.60) 451 7
430 (435.10) (460.30) (445.60)
455 8 420 (460.10) (455.30)
(430.60) 441 9 (455.10)
(430.30) (420.60)
Weighted Moving Average Illustration
Comments 1. Any forecasts beyond Period 9 will
have the same value as the Period 9 forecast,
i.e., 427. 3. WMA gives greater weight to more
recent values in the moving average and is more
responsive to recent changes in the data.
427
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