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