Production managers are required to forecast future events, which have potential effects on their activities. Such forecasting may either be a long-run estimates or short-run estimates of demand. We have already detailed about the forecasting function. All the forecasting tools hold good for production forecasting. Difference between Production Plan and Production Control are given below:
Hence, in this chapter, we would not discuss the forecasting details here. From production managers’ point of view, forecasting is important for planning, scheduling and controlling the system to achieve efficient output of goods and services.
Planning of the system is done by the production managers by forecasting aggregate demand, and it helps to design or redesign processes to keep pace with the demand. To take an example, what should be the degree of automation (semi-automated or fully automated), types of production facilities (assembly line, job-shop or intermittent), etc., can be accessed through aggregate demand analysis. Similarly, using long-run estimates, capacity planning is also done to decide about expansion of capacity.
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Scheduling the system is done to ensure the best use of the existing conversion process. It requires a short-run demand estimate. Scheduling of job can be more effective once we are able to forecast demand accurately. Similarly, optimum manpower requirement, rate of production, etc., can also be assessed using forecasting technique. Demand forecasting is also necessary to control the system as it helps to control inventory, production, manpower and total costs.
However, demand forecasts alone may not always be effective in planning and controlling operational decisions. Some organizations also use technological and economic forecasts to combine with their demand forecasts for achieving accuracy in their decisions. Such forecasts are usually done by retaining experts, and these will not be within the purview of our discussion.
To secure orders and to execute those to the customers’ satisfaction are the two primary objectives of a manufacturing organization. Production planning has been discussed in detail in this chapter.
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Planning involves the decision on how the production is to be carried out. Scheduling assists in creating a timetable and routing production tasks. Dispatching gives the authority to start the work by obtaining the required tools, materials and items for production. Loading work timetables are created for an operator or machine according to the plan. This is also a control function, which ensures that plan objectives are met by the production department.
In the preceding chapter, we have discussed the basics of the production management function, clearly identifying the production planning and control as a vital element of the entire process. The scope of production planning and control goes far beyond the activities of the production department.