Learning Outcomes
After completing this lesson, learners will be able to:
- Explain production-capacity planning.
- Describe production-operations optimisation.
- Identify important production regulatory considerations.
- Explain personnel-planning principles.
- Describe short-term scheduling and job-assignment decisions.
- Assess production performance using suitable measures.
- Explain production control towers and command centres.
- Describe production interfaces with sales, orders, transport and maintenance.
1. Production Operations Planning
Production operations planning coordinates demand, capacity, materials, employees and equipment to achieve production requirements.
The primary objective is to meet customer demand while controlling:
- Cost
- Quality
- Time
- Inventory
- Capacity
- Risk
- Waste
Production planning determines:
- What must be produced
- How much must be produced
- When it must be produced
- Which resources are required
- How the work will be sequenced
- How performance will be measured
2. Production-Planning Process
A production-planning process may include:
- Analyse demand.
- Confirm customer and inventory requirements.
- Determine the required output.
- Assess production capacity.
- Prepare the master production schedule.
- Determine material requirements.
- Allocate equipment and labour.
- Develop detailed production schedules.
- Identify operational risks.
- Communicate the plan.
- Monitor production.
- Adjust the plan when necessary.
3. Demand Forecasting
Production plans use information from:
- Customer orders
- Historical sales
- Demand forecasts
- Seasonal patterns
- Promotions
- Customer projects
- Finished-goods inventory
- Market conditions
Forecast demand supports longer-term planning, while confirmed orders guide immediate production priorities.
4. Production-Capacity Planning
Production-capacity planning determines whether the organisation has sufficient resources to achieve the required output.
Capacity may include:
- Machine hours
- Labour hours
- Work-centre capacity
- Facility space
- Materials
- Tools
- Utilities
- Supplier capacity
- Available operating time
5. Capacity Requirements
Capacity requirements depend on:
- Required production volume
- Production process
- Product mix
- Processing time
- Setup time
- Shift structure
- Equipment availability
- Maintenance
- Employee competence
- Quality requirements
- Expected downtime
Required Production Time
Required production time = Required quantity × Time per unit
Example
A production order requires 2,000 units. Each unit requires three minutes of machine time.
Required time = 2,000 × 3 minutes
Required time = 6,000 minutes
Required time = 100 hours
The planner must confirm whether 100 suitable machine hours are available before the completion date.
6. Capacity Utilisation
Capacity utilisation measures the proportion of available capacity being used.
Capacity utilisation = Actual output ÷ Available output capacity × 100
Example
A production line has a weekly capacity of 12,000 units and produces 9,600 units.
Capacity utilisation = 9,600 ÷ 12,000 × 100
Capacity utilisation = 80%
Very high utilisation may reduce flexibility and increase the effect of equipment failure or urgent orders.
7. Capacity Shortages
When required capacity exceeds available capacity, possible responses include:
- Overtime
- Additional shifts
- Temporary employees
- Subcontracting
- Alternative equipment
- Rescheduling
- Process improvement
- Additional machinery
- Negotiated delivery dates
The selected response should consider cost, quality, safety and customer requirements.
8. Master Production Scheduling
The Master Production Schedule, or MPS, specifies:
- What finished products will be produced
- How many will be produced
- When they will be produced
The MPS connects demand information with detailed production and material planning.
It must consider:
- Forecast demand
- Confirmed orders
- Available inventory
- Production capacity
- Lead times
- Customer priorities
9. Material Requirements Planning
Material Requirements Planning, or MRP, calculates the materials and components required to support the production schedule.
MRP uses:
- Master production schedule
- Bill of materials
- Inventory records
- Lead times
- Existing purchase and production orders
It determines:
- What materials are required
- How much is required
- When each material is required
- When replenishment should be initiated
Incorrect inventory records or bills of materials can produce unreliable material plans.
10. Resource Allocation
Resource allocation assigns available resources to production work.
Resources may include:
- Employees
- Machines
- Tools
- Materials
- Work areas
- Time
- Utilities
- Budget
Allocation should consider:
- Employee competence
- Equipment capability
- Job priority
- Due date
- Setup requirements
- Product compatibility
- Maintenance
- Safety
11. Production Scheduling
Production scheduling establishes the timing and sequence of production activities.
A detailed schedule may show:
- Job or order number
- Product
- Quantity
- Work centre
- Machine
- Assigned employees
- Start time
- Completion time
- Material availability
- Quality checks
- Due date
12. Scheduling Objectives
Production scheduling aims to:
- Meet customer due dates
- Use resources efficiently
- Reduce waiting
- Reduce work in progress
- Avoid bottlenecks
- Coordinate materials
- Minimise setup time
- Support quality and safety
13. Job Sequencing
Job sequencing determines the order in which production work will be performed.
Possible rules include:
First Come, First Served
Orders are processed in the order received.
Earliest Due Date
The order with the nearest due date is processed first.
Shortest Processing Time
The job requiring the least processing time is completed first.
Priority Order
Urgent, critical or strategically important work is processed first according to approved criteria.
No sequencing rule is suitable for every situation. The decision should consider customers, capacity and operational consequences.
14. Job Assignments
Job assignment allocates specific production activities to employees, teams or machines.
Assignments should consider:
- Competence
- Authorisation
- Availability
- Workload
- Equipment requirements
- Safety
- Product quality
- Shift arrangements
- Supervision
Employees should not be assigned work for which they are not competent or authorised.
15. Short-Term Operational Decisions
Short-term decisions may include:
- Rescheduling a delayed order
- Reallocating employees
- Changing the production sequence
- Authorising overtime
- Moving work to another machine
- Adjusting batch size
- Prioritising urgent orders
- Responding to material shortages
- Coordinating maintenance
- Addressing quality failures
Decisions should be recorded and communicated to all affected functions.
16. Production Operations Optimisation
Production optimisation improves overall output, flow, quality, cost and resource use.
It may involve:
- Removing bottlenecks
- Reducing setup time
- Balancing workloads
- Improving equipment reliability
- Reducing defects
- Improving material flow
- Standardising work
- Reducing work in progress
- Improving production schedules
- Introducing appropriate automation
Optimising one activity should not reduce overall performance.
For example, producing larger batches may reduce setup time but increase inventory and customer lead time.
17. Bottlenecks
A bottleneck is a process or resource whose capacity limits the output of the wider production system.
Signs include:
- Work accumulating before one operation
- Employees or machines waiting after the operation
- Repeated late completion
- Excessive overtime
- Low overall output despite high activity
Improvement should focus on the constraint that limits the entire system.
18. Lead-Time Reduction
Production lead time may be reduced by:
- Improving material availability
- Reducing waiting
- Reducing setup time
- Improving layout
- Balancing work
- Preventing equipment failure
- Improving quality at source
- Reducing unnecessary approvals
- Improving information flow
Lead-time reduction should not compromise safety or quality.
19. Production Operations Control
Production control monitors the execution of the production plan and corrects deviations.
It ensures that:
- Work begins as scheduled.
- Materials are available.
- Resources are correctly allocated.
- Output meets the plan.
- Quality standards are maintained.
- Delays and disruptions are addressed.
- Performance information is recorded.
20. Production-Control Process
- Confirm production readiness.
- Release authorised work.
- Monitor materials and resources.
- Track output and progress.
- Compare actual performance with the schedule.
- Identify deviations.
- Investigate causes.
- Implement corrective action.
- Communicate changes.
- Confirm completion.
- Evaluate results.
21. Production Deviations
Common deviations include:
- Material shortages
- Equipment breakdown
- Employee absence
- Quality failure
- Lower-than-planned output
- Excessive scrap
- Unplanned downtime
- Utility interruption
- Supplier delay
- Urgent customer changes
A deviation should be assessed according to its effect on:
- Safety
- Quality
- Output
- Cost
- Inventory
- Customer delivery
22. Corrective Action
Corrective actions may include:
- Reallocating resources
- Repairing equipment
- Obtaining alternative materials
- Revising the sequence
- Rescheduling production
- Increasing inspection
- Retraining employees
- Correcting procedures
- Informing affected customers
- Updating the production plan
The organisation should confirm that corrective action has resolved the underlying problem.
23. Production Regulations
Production operations must comply with requirements applicable to:
- Occupational health and safety
- Machinery and equipment
- Hazardous materials
- Environmental protection
- Waste management
- Product safety
- Quality
- Employee working conditions
- Fire prevention
- Emergency response
- Incident reporting
The exact requirements depend on the industry, process and product. Current authorised legal and regulatory information must be used.
24. Personnel Planning
Personnel planning should consider:
- Required skills
- Staffing levels
- Shift structures
- Workload
- Employee availability
- Training
- Supervision
- Medical fitness, where applicable
- Safety competence
- Leave and absence
- Overtime
- Backup personnel
Production planning should provide adequate rest and safe working conditions.
25. Production Performance Management
Performance management involves:
- Set production targets.
- Collect accurate data.
- Compare actual and planned results.
- Identify deviations.
- Analyse root causes.
- Implement improvements.
- Monitor whether results are sustained.
26. Production Performance Measures
| Measure | What it evaluates |
|---|---|
| Output | Quantity produced |
| Throughput | Rate at which acceptable output is completed |
| Capacity utilisation | Proportion of capacity used |
| Schedule adherence | Extent to which production follows the schedule |
| Cycle time | Time required to complete a process or unit |
| Lead time | Total time from requirement to completion |
| Defect rate | Percentage of output failing quality standards |
| Yield | Acceptable output obtained from inputs |
| Scrap rate | Material or output discarded |
| Downtime | Time equipment or processes are unavailable |
| Labour productivity | Output relative to labour input |
| Cost per unit | Production cost for each unit |
| On-time completion | Orders completed by their due dates |
27. Overall Equipment Effectiveness
Overall Equipment Effectiveness, or OEE, combines:
- Availability: Was the equipment available when required?
- Performance: Did it operate at the expected speed?
- Quality: How much acceptable output was produced?
A low OEE result should be investigated to determine which factor caused the loss.
28. Control Towers and Command Centres
A production control tower provides central visibility across production activities.
A command centre supports real-time operational coordination and incident response.
Information may include:
- Customer demand
- Production schedules
- Material availability
- Work in progress
- Equipment status
- Quality results
- Employee availability
- Output
- Delays
- Operational risks
29. Control-Tower Functions
A production control tower may:
- Consolidate operational information
- Identify bottlenecks
- Monitor schedule adherence
- Detect material shortages
- Track equipment availability
- Prioritise urgent work
- Coordinate responses
- Update stakeholders
- Support data-based decisions
Example
A control tower identifies that a production line has stopped because of an equipment fault.
The production team may:
- Notify maintenance.
- Assess work awaiting the line.
- Move suitable work to another line.
- revise the production schedule.
- Inform inventory and customer-order teams.
- Monitor repair progress.
30. Interface with Marketing and Sales
Marketing and sales provide production with:
- Market information
- Promotions
- Expected demand
- New-product information
- Customer priorities
Production provides:
- Capacity information
- Product availability
- Production lead times
- Completion estimates
- Operational constraints
Sales commitments should reflect realistic production capacity.
31. Interface with Customer-Order Management
Order management provides:
- Confirmed orders
- Required quantities
- Specifications
- Due dates
- Priority
- Customer changes
Production provides:
- Available-to-promise information
- Capable-to-promise information
- Production progress
- Expected completion
- Delay information
Uncontrolled order changes can disrupt schedules and affect other customers.
32. Interface with Transport Operations
Transport requires:
- Completion dates
- Product quantities
- Shipment dimensions
- Loading times
- Dispatch priorities
Production requires:
- Vehicle schedules
- Collection times
- Transport capacity
- Delay notifications
Transport should not be scheduled before the product is expected to be ready.
33. Interface with Technical Maintenance
Maintenance provides:
- Preventive-maintenance schedules
- Equipment-condition information
- Repair estimates
- Planned downtime
- Equipment-release confirmation
Production provides:
- Operating schedules
- Equipment priorities
- Fault reports
- Access windows
- Production consequences of downtime
Production pressure should not lead to unsafe equipment being used.
34. Interface with Procurement and Inventory
Although not separately listed in the topic criteria, production planning depends directly on procurement and inventory.
The interface includes:
- Material requirements
- Inventory availability
- Supplier lead times
- Purchase-order status
- Material shortages
- Quality problems
- Alternative materials
Accurate inventory and procurement information are essential for a reliable production schedule.
35. Lesson Summary
- Production planning coordinates demand, materials, capacity, people and equipment.
- Capacity planning determines whether sufficient resources are available.
- The MPS defines finished-product quantities and timing.
- MRP determines which materials are required and when.
- Scheduling establishes the timing and sequence of work.
- Short-term decisions respond to changes in materials, capacity, quality and customer priorities.
- Production optimisation improves overall flow, cost, quality and resource use.
- Production control compares actual results with the plan and corrects deviations.
- Performance measures include output, utilisation, schedule adherence, quality, cost and downtime.
- Control towers provide central visibility and support coordinated decisions.
- Production must exchange accurate information with sales, order management, transport, maintenance, procurement and inventory.