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Production Planning Essay, Research Paper

Production Planning

Introduction

The intention of this project is to demonstrate the function of

production planning in a non – artificial environment. Through this simulation

we are able to forecast, with a degree of certainty the monthly requirements for

end products, subassemblies, parts and raw materials. We are supplied with

information that we are to base our decisions on. The manufacturer depicted in

this simulation was actually a General Electric facility that produced black and

white television sets Syracuse, New York. Unfortunately this plant is no longer

operational, it was closed down and the equipment was shipped off to China. One

can only wonder if the plant manager would have taken Professor Moily’s class in

production management the plant still might be running.

Modern production management or operation management (OM) systems first

came to prominence in the early half of the twentieth century. Frederick W.

Taylor is considered the father of operations management and is credited in the

development of the following principles.

a. Scientific laws govern how much a worker can produce in a day. b. It is the

function of management to discover and use these laws in operation of productive

systems. c. It is the function of the worker to carry out management’s wishes

without question.

Many of today’s method’s of operation management have elements of the

above stated principles. For example, part of Material Requirement Planning

system (MRP) is learning how workers to hire, fire, or lay idle. This is

because it we realize the a worker can only produce so many widgets a day, can

work so many hours a day, and so many days a year.

I will disagree with principle ?c? in that the worker should blindly

carry out the wishes of management. Successful operations are based upon a two-

way flow of thought and suggestions from management to labor. This two-way flow

of ideas is incorporated into another modern system of operations management,

the Just – In – Time system. Eastman Kodak gives monetary rewards to employees

who devises an improvement in a current process or suggests an entirely new

process of manufacturing. Often a small suggestion can yield a big reward when

applied to a mass-produced item.

Body

In this project we are presented with the following information: bounds

for pricing decisions, market share determination, the product explosion matrix,

sales history (units per month at average price), unit value, setup man-hours,

running man hours, initial workforce, value of inventory, on hand units. We

also know that we have eight end products, four subassemblies, eight parts, and

four raw materials. The eight end products are comprised entirely from the

subassemblies, parts, and raw materials. From this information I was able to

determine how many units of each final product, how many units of parts to

produce in a month, how many units of raw material to order every month and how

to price the final products.

The first step that I took in this project was to develop product

structures for each product (please refer to the Appendices for product

structures on all eight products, plus new product nine). This information was

presented in product explosion matrix. For example, I determined that product

one used one subassembly nine and one part thirteen. Part thirteen consisted of

raw material twenty-one. Sub-assembly nine consists of part thirteen (which

includes raw material twenty-one), raw material twenty one and raw material

twenty-four. From this product explosion matrix I have realized that an end

product does not just happen; they consist of many subassemblies, parts and raw

material.

We also determined the minimal direct costs to each of the eight

products. The minimal direct product is the cost of the raw material, plus the

price of the amount of labor for the assembly to end product. For product one

we have a total of three raw material ?twenty-one? which cost ten dollars a

piece and one raw material ?twenty-four? which cost twenty dollars each. We now

have a total of fifty dollars for the price of the parts. Next we calculate the

labor that goes into transforming these parts into a viable end product. We get

a total of six hours of running man hours/unit and an hourly labor rate of $8.50,

which gives us a total of fifty-one dollars. This gives a minimal total cost of

$101 to produce product one. This number is useful in determining how much a

unit actually cost to manufacture and what we must minimally sell the product

for to make a profit. We can than analyze if a product costs to much to make or

the sum of the parts is more than the price of the end product. Product eight

had the lowest direct minimum cost ($89.50) and four had the highest minimal

direct cost.

From a purely economic stand point, it would be beneficial to use as

much of raw material twenty-three ($5 unit) and as little of raw material

twenty-two ($30 unit). This does not consider that raw material twenty-two may

actually be more valuable than raw material twenty-three. Perhaps raw material

twenty two may be gold or silver and raw material twenty-three may be sand or

glass.

I also converted all information in the sales history per month (figure

four of the MANMAN packet).

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