Page 264 - DMGT206_PRODUCTION_AND_OPERATIONS_MANAGEMENT

Unit 13: Production Planning and Control

For a long time it was all uncomplicated and straight-jacketed. Production/operations had to Notes
have a long-range plan- a plan of activities for say 5 to 10 years. This plan had to be brought
down to the controllable yearly, and then quarterly or monthly plans. This would help in wide
allocation of facilities. This was the intermediate range plan or aggregate plan. Then, foundational
on these plans, the weekly/daily work schedules had to be made-as to which particular machine
and which person will work on which exacting job. This planning was and is good. It is necessary
to plan future work so that the demand and available capacity can be matched. Work has to be
prearranged in terms of the long term future (mostly forecasted) requirements on the production
or operations facility, the intermediate term real loads on it and the definite production in the
short term. This line of thinking is valid even today. However, one needs to understand that this
is only one dimension of time. It is a view that treats time as a constraint posed by the market.
It is a quantitative outlook.

13.5.1 Importance of Time-Horizon

Plans have a time dimension and to the extent the time-span is restricted, the scope of functional
plans also remains limited with less interaction from further functional plans. The longer the
time span of the plan, the more integrative, organisation-wide the plan has to be. The wider
time prospect plans cover a wider organisational perspective. That is why very frequently the
corporate planning process is identical with long-range planning.
Since the time horizon of the production plan widens, from a short range plan (day to day
scheduling), to a middle range (monthly, or quarterly or annual), to a long range plan (annual
or five-yearly), the elasticity available- to change the variables and allow modifications when
found necessary-also increases. The five year range plan allows a corporation the flexibility of
increasing the production capacity by purchasing fresh equipment, locating new plants, acquiring
new technology, or recruiting adequate technical manpower.
This is not applicable for a one year plan. Here much of the flexibility in procuring latest plants
and machinery or acquiring the technology or know-how is lost. Approaching to the weekly or
daily plans, hardly any flexibility is left apart from to assign different jobs to the available
machines and manpower. As the flexibility lessens the strategic or tactical options also decrease
and the nature of planning itself assumes a different character. The planning problem for diverse
time horizons are therefore different and the solutions are too different.

13.5.2 Dovetailing of Plans

One significant fact is that the short, medium and long-range plans have to dovetail into one
another. Shorter range plans are for all time made within the framework of the longer range
plans. Production planning as it is usually understood is really the intermediate-range and
short range plan. The long range production plan has lost its individuality with the overall
corporate planning process. That is why, production planning is said to go after from the
marketing plan. Or, as is usually said, the production plan is the paraphrase of the market
demands into production orders. The market demand has to be coordinated with the production
capacities.

Figure 13.2: Production Planning

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