PRODUCTION PLAN STRATEGIES

 

PRODUCTION PLAN STRATEGIES

✓ Chase strategy

Chase strategy means producing the necessary quantities at any given time Although inventory levels remain steady, output levels fluctuate to meet demand. The chase strategy has the benefit of keeping inventories to a minimum. Goods are manufactured only when there is a market for them, and they are not held in storage. As a result, the risks of transporting inventories are avoided.

✓ Production levelling

Production levelling is continually producing an amount equal to the average demand. For Instance, the company always maintain to produce 10 000 units every month.  Sometimes demand is less than the amount produced and an inventory builds up. At other times demand is greater and inventory is used up.

 

✓ Hybrid strategy

It is a combination between level and chase. For example, in the first month maintain, half follow the demand then maintain and repeat. At production levelling will maintain the production of 1000 units but the demand can be up and down. So maybe company will have extra balance. 

 

 FORMULA PRODUCTION PLANNING

 

BASIC PPS

-       Total Production : Total Forecast + Back Order + Ending Inventory - Opening Inventory

-       Total Forecast : + all demand

-       Ending Inventory : Opening Inventory + Production - Demand

-       Back Order : given in the question

-       Opening Inventory : given in the question

-       Production : Total production / Total Number of Production

 

WORKING DAYS PP

-       Total production = Total forecast + Backlog + Ending Inventory – Opening Inventory

-       Total forecast = + All Demand

-       Back Order = Given in question

-       Production = Daily Production X Number of Working Days

-       Daily Production = Total Period / Total Number of Working Days

-       Ending Inventory = Opening Inventory + Production – Demand

-       Opening Inventory = Given in question

 

BACKLOG PPPS

-       Total Production = Total Forecast + Opening Inventory - Ending Inventory

-       Total Forecast = + all demand

-       Opening Backlog = given in Question

-       Ending Backlog = Opening Backlog + all demand - Production

-       Production = Total Production / Total Number of Period