Unit 1: PPC fundamentals and forecasting
Production Planning and Control notes · PTU syllabus (MBA 955-26)
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Unit summary
Production planning and control decides what to make, how much and when, and keeps production on track. This unit covers the objectives and functions of PPC, types of production systems, aggregate production planning and the master production schedule, and forecasting types, techniques and forecast error.
After this unit you can
- Explain the objectives and functions of PPC
- Classify production systems
- Prepare aggregate plans and master production schedules
- Apply forecasting techniques and measure forecast error
PTU syllabus topics
- Objectives and functions of production planning and control
- types of production systems (job shop, batch, mass, continuous)
- aggregate production planning and Master Production Scheduling
- forecasting types
- techniques and forecast error
- 1
Demand forecast
- 2
Aggregate production plan
- 3
Master production schedule
- 4
MRP
Materials
- 5
Capacity requirements planning
- 6
Shop floor scheduling and control
Topic 1
Objectives and functions of PPC
PPC plans what to produce, when and how, and controls production to meet the plan.
- 1Routing
Path and sequence of operations
- 2Scheduling
When each job starts and finishes
- 3Loading
Assign work to machines
- 4Dispatching
Release orders to start work
- 5Follow-up (expediting)
Check progress and remove delays
- Planning levels: aggregate planning (medium term), master production schedule, material requirements planning (MRP), shop-floor control.
- Objectives: meet delivery dates, use capacity and labour efficiently, minimise inventory and costs, maintain quality, coordinate departments, respond to changes.
Topic 2
Types of production systems
Project
One unique product, large and complex
Bridge, ship, building
Job (job shop)
Very low volume, high variety, made to order
Tailoring, custom furniture
Batch
Moderate volume in lots
Bakery, medicines, garments
Mass (line/repetitive)
High volume, standard products
Cars, mobile phones
Process (continuous)
Very high volume, non-stop flow
Oil refinery, cement, chemicals
Exam tip
Process choice depends on volume and variety: as volume rises and variety falls, move from project and job towards mass and continuous production (the product-process matrix).
Topic 3
Aggregate production planning
- Aggregate planning: medium-term (3–18 months) plan of overall output, workforce and inventory for product families to meet forecast demand at minimum cost.
Chase strategy
Vary output (hiring, layoffs, overtime) to match demand
Low inventory; high hiring and firing costs
Level strategy
Constant output; inventory absorbs demand swings
Stable workforce; high inventory or backorders
Mixed strategy
Combine options
Usually lowest total cost
- Options: inventory, workforce size, overtime and idle time, subcontracting, part-time workers; demand options — pricing, promotions, backorders, complementary products.
- Methods: trial-and-error (spreadsheets), linear programming, transportation method.
Topic 4
Master production schedule
- MPS: a short-term plan stating which end items will be produced, in what quantities and when — derived from the aggregate plan, customer orders and forecasts.
- Time fences: frozen (no changes), slushy (limited changes), liquid (changes allowed).
- Available-to-promise (ATP): uncommitted inventory and planned production for new customer orders.
- Rough-cut capacity planning checks whether the MPS is feasible against key resources.
Topic 5
Forecasting types and techniques
By horizon
Short, medium, long term
Qualitative
Executive opinion, Delphi, sales force composite, market surveys
Time series
Moving average, weighted moving average, exponential smoothing, trend projection, seasonal indices
Causal
Regression and econometric models
MAD
Σ abs(actual − forecast) ÷ n
MSE
Σ (actual − forecast)² ÷ n
MAPE
Σ [abs(error) ÷ actual] × 100 ÷ n
Tracking signal
Cumulative error ÷ MAD
Example
Errors of +10, −5, +15 and −10 units give MAD = 40 ÷ 4 = 10; cumulative error = +10; tracking signal = 1 — no bias.
Key terms
- PPC
- Planning and controlling production to meet demand efficiently
- Aggregate planning
- Medium-term planning of output, workforce and inventory
- Chase strategy
- Varying output to match demand
- Master production schedule
- Plan of end items by period
- Tracking signal
- Measure of forecast bias
Quick revision
- PPC objectives and functions (routing, scheduling, loading, dispatching, follow-up).
- Job, batch, mass, continuous production.
- Chase, level, mixed strategies; options; methods.
- MPS, time fences, ATP, RCCP.
- Forecasting types; MAD, MSE, MAPE, tracking signal.
Important exam questions
Practice questions written to the PTU exam pattern for this unit's syllabus: short answers (Section A style) and long answers (Sections B and C style).
Short-answer questions
- Q1.State four objectives of PPC.
- Q2.Distinguish job and mass production.
- Q3.Distinguish chase and level strategies.
- Q4.What is a master production schedule?
- Q5.What are time fences?
- Q6.Define MAD.
Long-answer questions
- Q1.Explain the objectives and functions of production planning and control.
- Q2.Explain types of production systems with examples.
- Q3.Explain aggregate production planning and its strategies.
- Q4.Explain forecasting techniques and the measurement of forecast error.
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