DRIVE

PROGRAM
SEMESTER
SUBJECT NAME
SUBJECT CODE
STUDENT NAME
ROLL NO.

ASSIGNMENT
WINTER 2015
MBA
FOURTH
OM0017
ADVANCED PRODUCTION PLANNING
AND
CONTROL
CHETAN ANAND
1405003452

Q1. Describe why information flow is critical in production planning with a

help of an example, describe the flow of information in a production
process List the factors that need to considered in a flow of information in
a production process.
Answer:
Flow of Information
Communication plays an important role in an organisation and so does in the
production processing. The organisational goals, strategies, and plans need to be
communicated well within the organisation, so that the right procedure can be
followed to produce the right product at the right time in the right quantity. Thus, in
production planning, information flow is critical.
Consider an example of an organisation where the production department,
marketing department, and packaging departments are all functioning well
separately. However, the production department is not informing the packaging
department when goods are ready to be packed and the marketing department is
unable to report in time for the increased demand for the product. The result is lack
of communication will block the flow of information making organisation unable to
meet the organisational goals of
delivering a quality product on time.

we can observe the flow of information begin with demand forecasting, where the
demand of the product is predicted using various methods and stock inventory to

forecast demand. On the basis of this

prediction, an inventory is prepared, which further helps in scheduling purchase and
production. There is a stock of products that are left after dispatching and kept as
production in stock.These products are the
inventory for demand forecast, which is further considered at the time of
subsequent forecasting of demand. There are certain factors, which need to be
considered in a flow of information in a production process.
The production process is viewed as system, wherein output of one process
becomes input to another process. Hence, there should be a smooth and clear flow
of information between the two processes, so that there is proper coordination and
no process is over-loaded or idle.
Information about the operating details of the process must be made available to
the production manager, so that he is in a position to take corrective and preventive
actions accordingly.
Information flow must be maintained accurately to remain aware of the market
dynamics. Also, that the manager is able to think and plan ahead to meet the
competition.
Information flow provides management of the grey areas, wherein most defects
are creeping into the process. This assists management to schedule things
accordingly.
Q2. List the various techniques of costing, explain the 6 techniques of
costing.
Answer:
Standard costing: The Chartered Institute of Management Accountants defines
standard costing as a control technique that reports variances by comparing actual
costs to pre-set standards so facilitating action through management by exception.
In other words, standard cost can be explained as a predetermined unit of cost
prepared for each cost unit. Standard costing consists of direct material cost, direct
labour cost, and overhead costs. Though it is an important factor in decision making
and cost control, it cannot be the only factor.
Benchmarking: Benchmarking can be defined as the process of identifying certain
practices or standards within and outside the organisation. These set practices or
standards are referred as benchmarks and are used for comparison of on-going
business activities and costs. The comparison with past figures helps in keeping
check on various processes that affect and influence different costs.
Budgeting: In simple words, budgeting can be defined as the process of
implementing the budget. For a business,budgeting is about spending less than
what is being earned as profit. To control cost, it is essential for an organisation to
have a budget and its successful implementation. Budgeting helps a business in
managing both short-term and long-term processes, preventing crisis, earning
maximum profits and planning major changes.
Target Costing: Target costing can be referred as the technique where the product
and its production process are designed in a way that production can be done within
particular cost limits. In this technique, a particular amount of cost is targeted
within which the production must be completed. The use of this technique not only
allows an organization to control the cost but also enables it to make a certain
amount of profit.
Kaizen Costing: In this technique, cost reduction is done at the manufacturing

stage. The term Kaizen is a Japanese term meaning a continuous and gradual
improvement with the help of a number of small
activities. Cost is being reduced at the manufacturing stage, thus, it becomes easier
to control costs.
Just-In-Time (JIT) system: The JIT system is similar to target costing. Just
like in target costing, a cost is targeted, similarly, in this technique, a particular
quantity of the product is targeted within a particular time. This means a particular
quantity of product is produced within a particular period of time. This reduces the
inventory cost and hence helps in cost control.
Q3. List and describe any TEN features of the Advanced Planning and
Scheduling (APS) system.
Answer:
Features of APS
The demand and interest of the APS system have gradually increased among the
organizations. APS system has resident memory servers. This server has the entire
data system, model and planning in memory. This allows the storage of complex
manufacturing and supply chain operation models. The storage of models and
planning data in memory provides speed to the APS system which not only reduces
the processing time of large database but also reduced the problem solving time.
APS also helps the co-ordination between the different supply chains of the
company.
1. Concurrent planning: The traditional planning and scheduling system uses the
waterfall approach where a sequence is followed in production processing. For
example, the production process starts with MPS then MRP is performed followed by
CRP, while APS system uses cohesion of three processes.
2. Constraint-based planning: There are different constraints present in the
organisation such as material availability, capacity, enterprise policy, cost and
distribution requirement. The APS system considers these constraints while planning
the production process so that maximum performance can be achieved.
3. Speed: The speed here refers to the speed of planning and execution of the
production process, which is an important characteristic of a system. The use of
computers and new software in APS system enables fast planning and processing of
the production system. This also allows the manufacturer to be able to inform the
customer about the most probable delivery time of their orders. When the person,
who is dealing with the customers, is aware of the speed with which the production
takes place, he would be able to negotiate the delivery time in a better way with the
customers.
4. Preferences: APS system is open about giving and setting preferences. This is
the part of the strategic decision making where certain customers are given
preferences meaning their orders are met at the priority.This depends upon the
business relation of the customer with the organisation. In order to fulfil these
priorities, the priorities are incorporated into the system at the time of its planning.
5. What-if stimulation: It is one of the most common applications of advanced
planning and scheduling where the simulation of a what-if situation is stimulated
and various alternatives are tried before finalising the system. This stimulation
works on the belief that there are many possibilities or alternatives of the system
which can increase the profit and reduce the cost while making on-time delivery of
customer orders.

6. Available to Promise (ATP): Inventory is the unconsumed supply accumulated

over time. The rolling balance of this unconsumed supply is referred as Available to
Promise (ATP). This ATP helps the organisation in finding out what can be done with
the unconsumed supply with the existing customers for a specific time period. When
ATP function receives the order, different slots are given to the order.These slots are
in a single day or more than one day depending upon the sufficient supply
available. Based on the slotting dates, the ATP system proposes the delivery date of
the order to the customers.
7. Capable to Promise (CTP): Capable to Promise (CTP) is the next supply chain
planning after ATP. Capable to Promise integrate the order promising with supply
chain planning. In CTP, the order-taker not only considers the uncommitted
available stock, but also production capacity and material availability. CTP derives
the delivery date from the APS system by adding the customer order in the system.
Next, the APS system determines when the order will be scheduled and produced. In
this manner, the CTP system
is able to fulfil the promise of meeting the demand.
8. Profitable to Promise (PTP): ATP and CTP look at the possibility of meeting the
delivery dates of the orders but profitable to promise accepts the order for the
financial benefits of the organisation. The concept behind the development of this
feature is the idea that the order may get rejected sometimes and the raw material
bought for it may be kept as inventory. This inventory has the cost which has
already been incurred. Profitable to promise believed in using this inventory in
meeting new orders so that the
material may not be left unutilised.
9. Bucketless planning: The traditional system uses the concept of time buckets
where scheduling is done for a particular time period referred as time bucket. The
APS system uses the actual orders for planning rather than based on forecasts and
hence both short term and long term planning is done depending upon the size of
the order. Therefore, APS system planning is also referred as bucketless planning.
10. Reliability: APS system is reliable in terms of meeting delivery dates of the
customer orders as the system enables the manufacturer to calculate the most
accurate delivery date for the order. When a customer placed an order, he is
communicated of the most probable delivery date and the APS
system allows the production process to adhere to that promise.
Q4. List rules for scheduling Kanban production, Explain the 6 rules for
scheduling Kanban production.
Answer:
A successful kanban implementation requires stable processes and a discipline of
following procedures and rules. Kanban works only if you have reliable equipment,
good quality, a stable workforce, even demand, and the practice of following
standard and procedures. A kanban system can be made to work where these
problems exist but at higher inventory levels unless some of these problems are
addressed. The six prerequisites for using kanban are:
1. downstream pull of material. The downstream process takes material when
needed from the upstream process. If the producer process delivers finished
materials downstream, this is push. If the supermarket is located at the consumer
process (downstream) instead of the producer process (upstream) this is not a true

pull system.
2. Upstream replenishment of the quantity the customer process withdraws. This
rule prevents overproduction. No parts can be produced or moved without kanban
providing the signal. The actual quantity in the container must equal the kanban
quantity total. The upstream process only produces what the downstream process
takes away.
3. Zero defects passed on downstream. Built-in quality is a must, rather than
inspect-in quality or rework-in quality. Calculating the kanban quantities means
taking out the slack in the system. Defective materials passed downstream will
create line stops and confusion. This must be avoided to have a smoothly flowing
operation.
4. Heijunka scheduling. Smoothing the schedule by averaging the volume and mix
allows for lower safety factors in the kanban calculation. Without this you may end
up carrying more inventory. A kanban system only functions when you know what
you will produce tomorrow. There must be a daily schedule based on monthly
production requirements.
5. Kanban attachment to the actual part or actual container. The kanban card must
be attached to the actual part in order to promote visual management.
6. Reduce kanbans to identify problems and drive kaizen activity. Removing kanban
cards from the system exposes part shortages, line stoppages, and other problems
that can help encourage further kaizen activity.
Q5. What are factors must be considered while implementing a production
planning and control system?
Answer:
Market Forecast It will indicate future trends in demand for manufactured
products. Work shift policies, plans for an increase or decrease in manufacturing
activity are based upon the market forecast and in turn affect the production
planning and control.
Sales Order It is a rewrite of the customer order specifying what has been
purchased (product, quantity and authorizing shipment of the goods to the
customer). Variation or changes in sales order will drastically affect production
planning and control.
Standard Process Sheet It is prepared by process engineering group or process
owner and it is the source of basic data which may include type of machine to be
used, time required for processing, etc. For e.g. if any machine is under breakdown,
the standard process sheet will be disturbed which in turn affect production
planning and control.
Load Charts These charts are prepared for each workstation or machine in the
plant or may be for groups of machines or departments.
Project Planning Method The product to be produced are manufactured in
quantities and their total processing time can be measured. The best known
methods are Critical Path Method (CPM) and Program Evaluation and Review
Technique (PERT).

Planning is the process of selecting and sequencing activities such that they achieve
one or more goals and satisfy a set of domain constraints. Schedules should reflect
the temporal relationships between activities and the capacity limitations of a set of
shared resources. Master Production Schedule is main driver and information source
for further material requirements planning and accompanying calls or supplies and
allows making detailed production schedules for production system. The high replanning frequency in order to overcome the uncertainty induces the system
nervousness. The system nervousness can be defined as State of a system when
a minor changes in Master Production Schedule creates significant changes in
Materials Requirement Planning (MRP).
The following critical points can be considered in Master Production Schedule:
Frequent changes in MPS result in due-date changes in open orders, quantity and
timing for planned order of end products.
Mentioned changes are translated into gross requirements changes for products and
timing of their delivery.
Unexpected changes in MPS effect that materials, needed for a particular order may
not be available. The availability of materials is often limited due to the fact that
suppliers have similar bottlenecks and schedules variations transmitted from subtier suppliers.
Q6. Mention the reasons why manufacturing organizations choose Excel
and Visual Basic prototype as planning and scheduling tools.
Answer:
Reasons for choosing Excel &Visual Basic are as below:
1. These tools helps for gathering data, the inputs and outputs of the system and
also for creating mock-ups of reports. With it, vendor can see what is available &
what needs to be arranged.
2. These tools helps for report generation, secondary data repositories, &
calculators. These tools can easily import the data from ERP & APS tools formats.
Planners & schedulers can easily keep and read spreadsheets generated
.Spreadsheets use cell formulas that are easy, straight and logical.
3. These tools helps to generate slightly functional prototype, which can explore any
sophisticated relation between the two tools. This ensures the needs before building
the entire planning and scheduling tool. Both uses the simple data and simple
formulas to create the schedule for a period of 24 hours.
4. Both can build large tools though this requires a joint effort from a VB
programmer and an excel spreadsheet user.
5. Using both can offer every type of commercial support to the manufacturing
organizations.
6. Most schedulers and planners feel comfortable while using this prototype.
7. Both also aid in preparing reports & reduces paperwork and saves a lot of time.
Initial reports can be prepared using the spreadsheet within a few minutes and
editing can also be done before the final printing and distribution of reports.
8. The structure of the prototype is easy to understand even for the new scheduler.
This reduces the dependency on the programmer & users can guide each other
about the functioning of the tool.