1. The Essentials
- Production Planning -
HASH MANAGEMENT SERVICES LLP
CHENNAI
PH: 91766 13965

2. Overview
 ‘The Essentials’ series from Business Sense is an initiative to empower the students(freshers) and
professionals in performing more efficiently and effectively in the organization
 This document is a part of the “Certified Manufacturing Professional” course offered by Business Sense
 This course is aimed at bridging the gap between the institutions and the industry by providing the
fundamentals of manufacturing management which are not offered by any of our
institutions/curriculum
 This course would immensely benefit students and professionals who are joining manufacturing
organizations
 For more details, please visit www.businessense.in
 At Business Sense, we help clients through consulting engagements focusing on improving their
Operations through Lean Manufacturing Implementation covering 5S, SMED, Kaizen and other tools.
 We also serve clients on Preparation of Detailed Project Reports, Market Assessments, and Supply
Chain Re-engineering.
 You can subscribe to our bi-weekly newsletter here.
 Follow us:
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3. Contents
 Section 1 – Introduction to Planning Processes
 Section 2 – Terminology
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4. Introduction to Production Planning
 Production Planning function is responsible for preparing the Plan for
the production
 Normally the planning is done through Manufacturing Requirements
Planning (MRP) or Manufacturing Resource Planning (MRP2)
 Enterprise Resource Planning (ERP) is the automated & integrated
version of MRP2 – Nowadays a lot of ERP packages are in use widely,
across industries
 For our easy understanding, the focus would remain on the MRP
systems
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5. Materials Requirement Planning (MRP)
 Material requirements planning (MRP) is a production planning and
inventory control system used to manage manufacturing processes.
 Evolved in1960’s
 An MRP system is intended to simultaneously meet three objectives:
 Ensure materials are available for production and products are available for delivery to
customers
 Maintain the lowest possible material and product levels in store
 Plan manufacturing activities, delivery schedules and purchasing activities
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6. Manufacturing Resource Planning (MRP2)
 MRP2 had evolved from MRP in the 80’s
 It encompasses the same methodology but includes integrated
materials planning, finance and human relations.
 It has a simulation capability to answer "what-if" questions
 Usage of Software is ideal for MRP2, since it is complex to build it
manually
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7. Enterprise Resource Planning (ERP)
 Integrated functions aids in better planning and
execution
ERP
 Both MRP and MRPII are still widely used, now
independently and as modules of more
comprehensive ERP systems MRP 2
1980’s
 Automatically calculates the materials
purchasing, production planning and delivery
MRP
schedules
1960’s
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8. Contents
 Section 1 – Introduction to Planning Processes
 Section 2 – Terminology
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9. Terminology
 The following are the various factors that should be considered while
planning for the production using an MRP system
Supply Company Demand
Bill of
Materials
Machine / Labor
Productivity
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10. Demand Side - Customer Order
 A confirmed order from the Customer specifying the following:
 Order No
 Product Required
 Quantity
 Delivery schedule
 Price
 Sample approval / Design / Technical drawings – depending on the industry
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11. Demand Side - Forecasted Demand
 For items which are manufactured based on the sales forecast, the
following items are required for planning:
 Product Required
 Quantity
 Region-wise / other break-up ( depending on the company)
 Shipment date
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12. Company Side – Bill of Materials
 Bill of Materials (BoM) is the list of all items
required to manufacture a product
Bill of Materials (BoM) for X
 It includes all raw materials, consumables, 1. Copper rod – 5 m
2. Steel rod – 10 m
3. Plastic Case – type A – 2 nos
packing materials with clear consumption 4. Plastic Case – type B – 1 no
5. Welding rod – 2 no
details to manufacture 1 product 6. ‘OK’ Sticker – 1no
7. Barcode label – 1no
8. Packing box – 1 no
 This must be created for each and every 9. Carton box – 1/6 no ( 6 items in 1 box)
finished product the company is delivering to
the customers
 An example for a BoM is demonstrated here
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13. Company Side – Machine / Labor
Productivity
 What is the time taken for manufacturing – manufacturing lead time
 Lead time of all manufacturing processes
 Machine run time + idle time + transportation + documentation etc (refer 7
wastes – explained in the production module)
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14. Supply Side – Stock in Hand
 This is the stock for the items present in hand
 Finished goods
 Raw materials
 For e.g. For a customer order of 500 items of ‘X’ product, if we have 100
nos of ‘X’ in stores, we can plan only for the remaining 400 nos
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15. Supply Side – Lead time, Safety stock &
Minimum Order Quantity
 This has been clearly explained in the Purchase and Stores modules
 Lead time(LT) – is the time an item takes to reach the factory gate from the time of raising a Purchase
Order (PO)
 Safety Stock (SS) – is the stock quantity/no of days of stock that should be planned to compensate for
any uncertainty in the delivery
 Minimum Order Quantity (MOQ) – There is a minimum order size and batch size for most of the
items. for. E.g. the supplier of welding rods might accept the order only a minimum of 500 rods are
ordered and the multiples will be in 100
 Minimum order is 500 nos. After that multiples of 100 ( an order of 575 nos will not be accepted;
either 600 nos or 500 nos should be ordered)
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16. Supply Side – Pending Order Status
 This refers to the pending Purchase Orders that are yet to be fulfilled by
the suppliers/ vendors
 One has to take this also in to account while planning for the materials
Detailed Production Planning and Step-by-Step examples are explained in the “Certified
Manufacturing Professional” course. To access login to www.businessense.in
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17. End of Free Content
 Please visit our website www.businessense.in to access the full course – “Certified Manufacturing
Professional”
 Our website also contains list of ready-to-use templates and report formats containing Charts and
pivot tables.
 Templates and report formats are available for Purchase, Stores, Production, Quality, Maintenance and
HR functions
 These templates come in excel /word and can be downloaded and used right away
 At Business Sense, we help clients through consulting engagements focusing on improving
their Operations through Lean Manufacturing Implementation covering 5S, SMED, Kaizen and
other tools.
 We also serve clients on Preparation of Detailed Project Reports, Market Assessments, and
Supply Chain Re-engineering.
 You can subscribe to our bi-weekly newsletter here.
 Follow us:
Copyright of Hash Management Services LLP www.businessense.in