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WHAT IS PRODUCTION

PLANNING?

Production planning is simply a group of processes that start in market and ends in market in a cycle manner.

MARKET

Planning for future in most manufacturing cases depends on past history (MARKET).

First step of planning is to forecast the demand for future. If the demand for future is known, every thing in the factory can be adjusted to reach the demand.

Demand forecasting is the (MARKET) state in the last recent period represented by data, then the data is plotted and appropriate forecasting method is applied according to it.

SOME FORECASTING METHODS:FORECASTING METHODPAST DATA SHAPEMOVING AVERAGE

ORSTATIONARYEXPONENTIAL SMOOTHINGDOUBLE EXPONENTIAL SMOOTHINGTRENDSEASONAL FACTORSSEASONAL

PLAN

After demand forecasting, the objective ( plan aim ) is to meet that demand with minimum costs ( holding, order and penalty).

Definition of costs:DEFINITIONCOSTCOST OF HAVING EXTRA RAW MATERIALS OR PRODUCTSHOLDING COSTCOST OF MAKING AN ORDERORDER COSTCOST OF HAVING LESS RAW MATERIALS OR PRODUCTS THAN THE NEEDEDPENALTY COST

To get the minimum costs, EOQ and EPQ have to be founded.

EPQEOQTHE OPTIMAL QUANTITY OF PRODUCTIONS TO GET MINIMUM COSTSTHE OPTIMAL QUANTITY OF RAW MATERIAL TO GET MINIMUM COSTS

INVENTORIES

Factories usually have three types of inventories: raw material, work in process and fish product inventory. The optimal plan has to be applied to all inventories.

RAW MATERIAL INVENTORY

According to the conditions of raw material inventory, appropriate EOQ model is applied, and the same thing for finish product inventory. For work in process inventory aggregate planning can find the optimal plan.

SOME EOQ MODELS:VARIABLES DEFINITIONMODELCONDITIONSK:fixed order cost

: demand rate / time unit

h: holding cost/ unitEOQ =GENERAL MODEL: average total cost

: area taken by raw material

: EOQ

W: total inventory areaNONLINEAR MODEL:

min

s.t.

multiple RAW MATERIALS AND LIMTD AREADi: demand in period i

Ii: inventory carried during period i

Qi: order size in period i

Ki : order setup cost

h: holding cost/ unit

M: big number

10* max demandLINEAR MODEL:

Min

s.t.

FIXED ORDER COST IS GREATER THAN INVENTORY HOLDING COST + LARGE INVENTORY AREA discount model

( PROCESS )OFFER ON RAW MATERIAL

WORK IN PROCESS INVENTORY

Applying aggregate planning model, gives the optimal solution for this inventory.

Min

s.t.

Where

: cost of hiring one worker

: cost of lay off

: cost of holding one unit for one period

: cost of production one unit on overtime

: Idle cost per unit

: number of production day per t

K: number of aggregate unit produced by one worker in one day

: Initial inventory at the start of T

: Initial number of worker

: forecasted demand

FINISH PRODUCT INVENTORY

The general model:

EPQ =

Where:

K: fixed order cost

: demand rate / time unit

h: holding cost/ unit

p: production rate/unit

MARKET

After taking data form market, optimal plan (MINIMUM COSTS) for inventories is made and applied, the products are taken to the market. That is simply what does production planning mean.

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