{"id":10288,"date":"2017-02-24T19:01:08","date_gmt":"2017-02-24T19:01:08","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/masterybusiness2xngcxmasterspring2016\/?post_type=chapter&#038;p=10288"},"modified":"2019-01-05T01:41:47","modified_gmt":"2019-01-05T01:41:47","slug":"reading-components-of-production-planning","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/chapter\/reading-components-of-production-planning\/","title":{"raw":"Reading: Components of Production Planning","rendered":"Reading: Components of Production Planning"},"content":{"raw":"<a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/02\/24191117\/7481166880_926b9bee8d_k.jpg\"><img class=\"aligncenter wp-image-10292\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/02\/24191117\/7481166880_926b9bee8d_k-300x199.jpg\" width=\"600\" height=\"397\" \/><\/a>\r\n<h2>Introduction<\/h2>\r\nAll this production doesn\u2019t happen by magic. Much of an operation manager's time is spent planning the production process. Think about hosting a large party for your parents\u2019 anniversary. The first thing you have to\u00a0do is find a location that is large enough to accommodate\u00a0all the people you will be inviting. Once you have identified\u00a0the location, you then need to visit the site and decide how it will be laid out. Where should the tables and chairs go, where will you set up refreshments, and what about a gift table? Once you've decided on the layout, then you need to start making a list of the materials you\u2019ll need for the party. This includes everything from plates, cups, and napkins to hiring a DJ and a caterer. Lastly, based on the number of guests, you'll need to calculate\u00a0how much of everything\u2014food, drinks, etc.\u2014to order.\r\n\r\nOperations managers engage in similar planning, but they use different terminology\u00a0to describe the different parts of the plan.\u00a0In production planning, the components are facility location, facility layout, materials-requirement planning (MRP), and inventory control.\r\n<h2><strong>Facility Location<\/strong><\/h2>\r\nOf all the pieces of the planning puzzle, facility location is the most strategic and critical. Once you build a new manufacturing facility, you have made a substantial investment of time, resources, and capital that can't\u00a0be changed for a long time. Selecting the wrong location can be disastrous. Some of the key factors that influence facility location are the following:\r\n<ul>\r\n \t<li>Proximity to customers, suppliers, and skilled labor<\/li>\r\n \t<li>Environmental regulations<\/li>\r\n \t<li>Financial incentives offered by state and local development authorities<\/li>\r\n \t<li>Quality-of-life considerations<\/li>\r\n \t<li>Potential for future expansion<\/li>\r\n<\/ul>\r\nThe next step, after planning the production process, is deciding on plant layout\u2014how equipment, machinery, and people will be arranged to make the production process as efficient as possible.\r\n<h2><strong>Facility Layout<\/strong><\/h2>\r\nThe primary aim of facility layout is to design a workflow that maximizes worker and production efficiency.\u00a0Facility layout is complex\u00a0because it must take into account the available space, the work\u00a0processes, the delivery of components and parts, the final product, worker safety, and operational efficiency. A poorly laid-out production facility creates inefficiencies, increases costs, and leads to employee frustration and confusion.\r\n\r\nThe four most common types of facility layout are process, product, cellular, and fixed position.\r\n<h3><strong>Process Layout<\/strong><\/h3>\r\nA <strong>process layout<\/strong>\u00a0aims to improve\u00a0efficiency\u00a0by arranging equipment according to its function. Ideally, the production line should be designed to eliminate waste in material flows, inventory handling, and management. In process layout, the work stations and machinery are not arranged according to the production sequence. Instead, there is an assembly of similar operations or similar machinery in each department (for example, a drill department, a paint department, etc.)\r\n<h3><strong>Product Layout<\/strong><\/h3>\r\nIn a <strong>product layout<\/strong>, high-volume goods are produced efficiently by people, equipment, or departments arranged in an assembly line\u2014that is, a series of workstations at which already-made parts are assembled.\r\n\r\nIn the following video, Jansen, a Swiss steel maker, describes how the company's\u00a0offices were designed to maximize the productivity and creativity of its engineers:\r\n\r\nhttps:\/\/youtu.be\/aT-eZXDLQl0\r\n<h3><strong>Cellular Layout<\/strong><\/h3>\r\nA <strong>cellular layout<\/strong> is a lean method of producing similar products using cells, or groups of team members, workstations, or equipment, to facilitate operations by eliminating set-up and unnecessary\u00a0costs between operations. Cells might be designed for a specific process, part, or a complete product. The goal of cellular manufacturing is to move as quickly as possible and make a wide variety of similar products with\u00a0as little waste as possible. This type of layout\u00a0is well suited for single-piece and one-touch production methods. Because of increased speed and minimal handling of materials, cells can result in great cost and time savings and reduced inventory.\r\n<h3><strong>Fixed Position<\/strong><\/h3>\r\nIt\u00a0is easy to move marshmallow candies around the factory while you\u00a0are making them, but what about airplanes or ships? For the production of large items, manufacturers use <strong>fixed-position layout<\/strong> in which the product stays in one place and the workers (and equipment) go to the product. To see an excellent example of fixed-position layout, watch the following video that shows\u00a0how Boeing builds an airplane.\r\n\r\nhttps:\/\/youtu.be\/-ovNi1cB7a4\r\n\r\nAfter the facility location has been selected and the best layout has been determined,\u00a0the next stage in production planning is to determine our material requirements.\r\n<h2><strong>Material-Requirements Planning (MRP)<\/strong><\/h2>\r\n<strong>Material-requirements planning\u00a0(MRP)<\/strong> is a\u00a0production planning,\u00a0scheduling, and\u00a0inventory\u00a0control system used to\u00a0manage\u00a0manufacturing\u00a0processes. Most MRP systems are\u00a0software-based, but it is possible to do\u00a0MRP by hand, as well.\r\n\r\nAn MRP system is intended to meet the following objectives simultaneously:\r\n<ul>\r\n \t<li>Ensure that materials are available for\u00a0production\u00a0and\u00a0products\u00a0are available for\u00a0delivery\u00a0to customers<\/li>\r\n \t<li>Maintain the lowest possible material and product levels in store<\/li>\r\n \t<li>Plan manufacturing activities, delivery schedules, and\u00a0purchasing\u00a0activities<\/li>\r\n<\/ul>\r\nSome manufacturing firms have moved beyond MRP systems and are now using enterprise resource planning (ERP) systems. ERP systems provides an integrated and continuously updated view of core business processes using shared\u00a0databases\u00a0maintained by a\u00a0database management system. ERP systems track business resources\u2014cash,\u00a0raw materials,\u00a0production capacity\u2014and the status of business commitments\u2014orders,\u00a0purchase orders, and\u00a0payroll. The applications that make up the system share data from and between various departments (e.g., manufacturing, purchasing, sales,\u00a0accounting, etc.).\u00a0ERP facilitates information flow between all business functions and manages connections to outside\u00a0stakeholders.\r\n\r\nEven with the implementation of highly integrated planning software, operations managers still need to plan for and control inventory.\r\n<h2><strong>Just-in-Time (JIT) Manufacturing<\/strong><\/h2>\r\n<strong>Just-in-time (JIT) manufacturing <\/strong>is strategy that companies employ to increase efficiency and decrease waste by receiving goods only when\u00a0they are needed in the production process, thereby reducing inventory costs. In theory, a JIT system would have parts and materials arriving on the warehouse dock at the exact moment they are needed in the production process. To make this happen, manufacturers and suppliers must work together closely to prevent just-in-time from becoming just-isn\u2019t-there. Operations managers must accurately forecast the need for materials, since even the slightest deviation can result in a slowdown of production.","rendered":"<p><a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/02\/24191117\/7481166880_926b9bee8d_k.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-10292\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/02\/24191117\/7481166880_926b9bee8d_k-300x199.jpg\" width=\"600\" height=\"397\" alt=\"image\" \/><\/a><\/p>\n<h2>Introduction<\/h2>\n<p>All this production doesn\u2019t happen by magic. Much of an operation manager&#8217;s time is spent planning the production process. Think about hosting a large party for your parents\u2019 anniversary. The first thing you have to\u00a0do is find a location that is large enough to accommodate\u00a0all the people you will be inviting. Once you have identified\u00a0the location, you then need to visit the site and decide how it will be laid out. Where should the tables and chairs go, where will you set up refreshments, and what about a gift table? Once you&#8217;ve decided on the layout, then you need to start making a list of the materials you\u2019ll need for the party. This includes everything from plates, cups, and napkins to hiring a DJ and a caterer. Lastly, based on the number of guests, you&#8217;ll need to calculate\u00a0how much of everything\u2014food, drinks, etc.\u2014to order.<\/p>\n<p>Operations managers engage in similar planning, but they use different terminology\u00a0to describe the different parts of the plan.\u00a0In production planning, the components are facility location, facility layout, materials-requirement planning (MRP), and inventory control.<\/p>\n<h2><strong>Facility Location<\/strong><\/h2>\n<p>Of all the pieces of the planning puzzle, facility location is the most strategic and critical. Once you build a new manufacturing facility, you have made a substantial investment of time, resources, and capital that can&#8217;t\u00a0be changed for a long time. Selecting the wrong location can be disastrous. Some of the key factors that influence facility location are the following:<\/p>\n<ul>\n<li>Proximity to customers, suppliers, and skilled labor<\/li>\n<li>Environmental regulations<\/li>\n<li>Financial incentives offered by state and local development authorities<\/li>\n<li>Quality-of-life considerations<\/li>\n<li>Potential for future expansion<\/li>\n<\/ul>\n<p>The next step, after planning the production process, is deciding on plant layout\u2014how equipment, machinery, and people will be arranged to make the production process as efficient as possible.<\/p>\n<h2><strong>Facility Layout<\/strong><\/h2>\n<p>The primary aim of facility layout is to design a workflow that maximizes worker and production efficiency.\u00a0Facility layout is complex\u00a0because it must take into account the available space, the work\u00a0processes, the delivery of components and parts, the final product, worker safety, and operational efficiency. A poorly laid-out production facility creates inefficiencies, increases costs, and leads to employee frustration and confusion.<\/p>\n<p>The four most common types of facility layout are process, product, cellular, and fixed position.<\/p>\n<h3><strong>Process Layout<\/strong><\/h3>\n<p>A <strong>process layout<\/strong>\u00a0aims to improve\u00a0efficiency\u00a0by arranging equipment according to its function. Ideally, the production line should be designed to eliminate waste in material flows, inventory handling, and management. In process layout, the work stations and machinery are not arranged according to the production sequence. Instead, there is an assembly of similar operations or similar machinery in each department (for example, a drill department, a paint department, etc.)<\/p>\n<h3><strong>Product Layout<\/strong><\/h3>\n<p>In a <strong>product layout<\/strong>, high-volume goods are produced efficiently by people, equipment, or departments arranged in an assembly line\u2014that is, a series of workstations at which already-made parts are assembled.<\/p>\n<p>In the following video, Jansen, a Swiss steel maker, describes how the company&#8217;s\u00a0offices were designed to maximize the productivity and creativity of its engineers:<\/p>\n<p><iframe loading=\"lazy\" id=\"oembed-1\" title=\"Office Space--Jansen\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/aT-eZXDLQl0?feature=oembed&#38;rel=0\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<h3><strong>Cellular Layout<\/strong><\/h3>\n<p>A <strong>cellular layout<\/strong> is a lean method of producing similar products using cells, or groups of team members, workstations, or equipment, to facilitate operations by eliminating set-up and unnecessary\u00a0costs between operations. Cells might be designed for a specific process, part, or a complete product. The goal of cellular manufacturing is to move as quickly as possible and make a wide variety of similar products with\u00a0as little waste as possible. This type of layout\u00a0is well suited for single-piece and one-touch production methods. Because of increased speed and minimal handling of materials, cells can result in great cost and time savings and reduced inventory.<\/p>\n<h3><strong>Fixed Position<\/strong><\/h3>\n<p>It\u00a0is easy to move marshmallow candies around the factory while you\u00a0are making them, but what about airplanes or ships? For the production of large items, manufacturers use <strong>fixed-position layout<\/strong> in which the product stays in one place and the workers (and equipment) go to the product. To see an excellent example of fixed-position layout, watch the following video that shows\u00a0how Boeing builds an airplane.<\/p>\n<p><iframe loading=\"lazy\" id=\"oembed-2\" title=\"Making of a Boeing air plane\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/-ovNi1cB7a4?feature=oembed&#38;rel=0\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<p>After the facility location has been selected and the best layout has been determined,\u00a0the next stage in production planning is to determine our material requirements.<\/p>\n<h2><strong>Material-Requirements Planning (MRP)<\/strong><\/h2>\n<p><strong>Material-requirements planning\u00a0(MRP)<\/strong> is a\u00a0production planning,\u00a0scheduling, and\u00a0inventory\u00a0control system used to\u00a0manage\u00a0manufacturing\u00a0processes. Most MRP systems are\u00a0software-based, but it is possible to do\u00a0MRP by hand, as well.<\/p>\n<p>An MRP system is intended to meet the following objectives simultaneously:<\/p>\n<ul>\n<li>Ensure that materials are available for\u00a0production\u00a0and\u00a0products\u00a0are available for\u00a0delivery\u00a0to customers<\/li>\n<li>Maintain the lowest possible material and product levels in store<\/li>\n<li>Plan manufacturing activities, delivery schedules, and\u00a0purchasing\u00a0activities<\/li>\n<\/ul>\n<p>Some manufacturing firms have moved beyond MRP systems and are now using enterprise resource planning (ERP) systems. ERP systems provides an integrated and continuously updated view of core business processes using shared\u00a0databases\u00a0maintained by a\u00a0database management system. ERP systems track business resources\u2014cash,\u00a0raw materials,\u00a0production capacity\u2014and the status of business commitments\u2014orders,\u00a0purchase orders, and\u00a0payroll. The applications that make up the system share data from and between various departments (e.g., manufacturing, purchasing, sales,\u00a0accounting, etc.).\u00a0ERP facilitates information flow between all business functions and manages connections to outside\u00a0stakeholders.<\/p>\n<p>Even with the implementation of highly integrated planning software, operations managers still need to plan for and control inventory.<\/p>\n<h2><strong>Just-in-Time (JIT) Manufacturing<\/strong><\/h2>\n<p><strong>Just-in-time (JIT) manufacturing <\/strong>is strategy that companies employ to increase efficiency and decrease waste by receiving goods only when\u00a0they are needed in the production process, thereby reducing inventory costs. In theory, a JIT system would have parts and materials arriving on the warehouse dock at the exact moment they are needed in the production process. To make this happen, manufacturers and suppliers must work together closely to prevent just-in-time from becoming just-isn\u2019t-there. Operations managers must accurately forecast the need for materials, since even the slightest deviation can result in a slowdown of production.<\/p>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-10288\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Revision and adaptation. <strong>Authored by<\/strong>: Linda Williams and Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-sa\/4.0\/\">CC BY-SA: Attribution-ShareAlike<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li><strong>Provided by<\/strong>: Wikipedia. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/en.wikipedia.org\/wiki\/Material_requirements_planning\">https:\/\/en.wikipedia.org\/wiki\/Material_requirements_planning<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-sa\/4.0\/\">CC BY-SA: Attribution-ShareAlike<\/a><\/em><\/li><li>rover 200 framing line. <strong>Authored by<\/strong>: spencer cooper. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/www.flickr.com\/photos\/spenceyc\/7481166880\/\">https:\/\/www.flickr.com\/photos\/spenceyc\/7481166880\/<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-nd\/4.0\/\">CC BY-ND: Attribution-NoDerivatives<\/a><\/em><\/li><li>Office Space: Jansen. <strong>Provided by<\/strong>: BBC. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/youtu.be\/aT-eZXDLQl0\">https:\/\/youtu.be\/aT-eZXDLQl0<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-nc-nd\/4.0\/\">CC BY-NC-ND: Attribution-NonCommercial-NoDerivatives <\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">All rights reserved content<\/div><ul class=\"citation-list\"><li>Making of a Boeing air plane. <strong>Authored by<\/strong>: Dial647. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/youtu.be\/-ovNi1cB7a4\">https:\/\/youtu.be\/-ovNi1cB7a4<\/a>. <strong>License<\/strong>: <em>All Rights Reserved<\/em>. <strong>License Terms<\/strong>: Standard YouTube License<\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":26,"menu_order":9,"template":"","meta":{"_candela_citation":"[{\"type\":\"cc\",\"description\":\"\",\"author\":\"\",\"organization\":\"Wikipedia\",\"url\":\"https:\/\/en.wikipedia.org\/wiki\/Material_requirements_planning\",\"project\":\"\",\"license\":\"cc-by-sa\",\"license_terms\":\"\"},{\"type\":\"original\",\"description\":\"Revision and adaptation\",\"author\":\"Linda Williams and Lumen Learning\",\"organization\":\"\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by-sa\",\"license_terms\":\"\"},{\"type\":\"copyrighted_video\",\"description\":\"Making of a Boeing air plane\",\"author\":\"Dial647\",\"organization\":\"\",\"url\":\"https:\/\/youtu.be\/-ovNi1cB7a4\",\"project\":\"\",\"license\":\"arr\",\"license_terms\":\"Standard YouTube License\"},{\"type\":\"cc\",\"description\":\"rover 200 framing line\",\"author\":\"spencer cooper\",\"organization\":\"\",\"url\":\"https:\/\/www.flickr.com\/photos\/spenceyc\/7481166880\/\",\"project\":\"\",\"license\":\"cc-by-nd\",\"license_terms\":\"\"},{\"type\":\"cc\",\"description\":\"Office Space: Jansen\",\"author\":\"\",\"organization\":\"BBC\",\"url\":\"https:\/\/youtu.be\/aT-eZXDLQl0\",\"project\":\"\",\"license\":\"cc-by-nc-nd\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-10288","chapter","type-chapter","status-publish","hentry"],"part":91,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/pressbooks\/v2\/chapters\/10288","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/wp\/v2\/users\/26"}],"version-history":[{"count":12,"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/pressbooks\/v2\/chapters\/10288\/revisions"}],"predecessor-version":[{"id":10652,"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/pressbooks\/v2\/chapters\/10288\/revisions\/10652"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/pressbooks\/v2\/parts\/91"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/pressbooks\/v2\/chapters\/10288\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/wp\/v2\/media?parent=10288"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/pressbooks\/v2\/chapter-type?post=10288"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/wp\/v2\/contributor?post=10288"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wmintrobusiness\/wp-json\/wp\/v2\/license?post=10288"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}