Production Planning, Costing and Industrial Engineering
Production Planning, Costing and Industrial Engineering examines capacity, scheduling, work measurement and cost control. The exam tests capacity balances, standard times, line balancing, cost build-up and break-even reasoning.
Core concepts
- Capacity planning balances order load, machine hours, labour and lead time.
- Work measurement uses time study and predetermined motion systems; standard minute value includes allowances.
- Line balancing assigns operations to stations to reduce idle time and meet takt time.
- Cost build-up includes material, conversion, overhead, waste, selling cost and margin.
- Break-even analysis separates fixed and variable costs and finds the volume where contribution covers fixed cost.
Worked example
An operator works 480 min/shift with 15% allowance; SMV is 2.0 min. Available productive time = 480 × 0.85 = 408 min. Capacity = 408/2.0 = 204 pieces/shift. If demand is 250 pieces, required operators = 250/204 = 1.23, so two operators are needed. Adding a 5% reject allowance raises required output to about 263 pieces, which still needs two operators but with less spare capacity.
Traps
- Using cycle time as SMV without allowances.
- Absorbing overhead on labour alone when machine time drives cost.
- Ignoring waste and yield in material cost.
- Treating break-even volume as a profit target.