Presentations on Production Capacity Planning
Production planning ensures that a company provides the product or service to the customer in a cost-effective and on-time manner. Production planners balance the amount of product a company can make (or capacity) with the amount of product in inventory, the costs of production and customer demand.
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Planning Schedules
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A master planning schedule is used for short term planning. It is fixed in the first week or two with more flexibility in later weeks. Intermediate or aggregate planning covers a period of six to 18 months uses adjustments in such things as staffing and process changes. Long range or strategic planning is for one year or longer and requires top management involvement due to possible changes in such things as facilities and equipment.
Planning Strategies
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One traditional production planning strategy involves utilizing significant inventory. The push system manages production with schedules that balance materials available, customer demands, capacity and costs. A newer system pulls production to finished goods from the first production step when demanded by the customer.
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Planning Tools
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Informal planning methods include trial-and-error and rule of thumb. Approaches include buffering with inventory, overtime, a backlog or overtime. Mathematical methods include break-even analysis and decision trees. Break-even analysis determines how costs and profits are affected by volume changes. Decision trees assists with determining the results of the available alternatives.
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References
- Photo Credit Airline Schedule image by Nikolay Okhitin from Fotolia.com
