Production Planning and Control
What to master
Follow the planning hierarchy: demand forecasting, aggregate planning (level, chase, mixed), master production schedule, material requirements planning (BOM explosion, gross-to-net, lot sizing, lead-time offsetting), capacity requirements planning, then shop-floor scheduling and control. Know forecasting accuracy measures (MAD, MSE, MAPE, tracking signal), moving averages, and exponential smoothing (F_next = alpha x A_actual + (1 - alpha) x F_current; a higher alpha tracks change faster). For inventory, know EOQ = sqrt(2DS/H), reorder point with safety stock, quantity-discount logic, and ABC classification. For scheduling, know SPT (minimizes average flow time), EDD (minimizes maximum lateness), Johnson's rule for two machines, and Gantt/priority rules.
Traps
- Applying EOQ where demand is lumpy or price breaks apply.
- Netting errors in MRP: net requirement = gross - on hand - scheduled receipts, then rounded to the lot size.
- Omitting safety stock: ROP = d-bar x L + z x sigma_L.
- Confusing forward with backward scheduling.
- Mixing holding cost units (dollars per unit-year vs percent of unit cost).
- Believing SPT optimizes due-date performance - it does not.
Worked example
Annual demand 12,000 units, order cost $50, holding cost $3 per unit-year: EOQ = sqrt(2 x 12,000 x 50 / 3) = sqrt(400,000) = 632 units.
Rule of thumb
For two-machine sequencing, find the smallest time in the table; if it is on machine 1, schedule that job earliest; if on machine 2, schedule it latest. Repeat.