Chapter – 4
Overview of operational planning activities
Every organization must plan its’ activities at several level and operate these as a system. The time dimension is
shown as long, intermediate and short range.
Long-range planning:
Long-range planning (LRP) involves setting strategic goals and outlining actions to achieve them over an extended
period, typically several years to decades, focusing on an organization's future direction and aligning long-term
goals with action plans.
Long-range planning is the process of defining an organization's future direction and developing action plans to
achieve its long-term goals. The time horizon for long-range plans can vary depending on the industry and the
specific goals, but it typically spans several years, often 3-5 years or even longer.
The primary purpose of long-range planning is to guide an organization's actions towards its strategic aspirations
and ensure that its actions are aligned with its long-term vision.
Benefits:
Clear Direction: Provides a roadmap for the organization's future, ensuring that everyone is working
towards the same goals.
Improved Decision-Making: Helps leaders make informed decisions based on a long-term perspective.
Enhanced Performance: By aligning actions with long-term goals, organizations can improve their overall
performance and achieve better results.
Increased Resilience: Long-range planning can help organizations anticipate and prepare for potential
challenges and disruptions.
Intermediate-range planning:
Intermediate range planning, also known as tactical or middle-range planning, focuses on operational goals within
a 1-3 year timeframe, bridging the gap between long-term strategic plans and short-term operational plans.
Intermediate range planning typically covers a period of 1 to 3 years, providing a mid-term perspective.
It concentrates on operational goals and actions needed to support the strategic plan, ensuring alignment
between long-term vision and day-to-day activities.
It is crucial for ensuring that operational decisions align with the overall strategic direction of the organization.
Short-range planning:
Short-range planning covers time periods of one year or less. These plans focus on day-to-day activities and
provide a concrete base for evaluating progress toward the achievement of intermediate and long-range plans.
The length of the time horizon varies from industry to industry.
Short-term plans enable businesses to quickly adapt to technological advancements, economic shifts, and
emerging opportunities or challenges.
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Aggregate production planning
Aggregate production planning is concerned with setting production rates by product group or other broad
categories for the intermediate term (6 to 18 months).
Aggregate production planning (APP) is a forecasting technique that businesses use to determine production,
inventory, and employment levels over a mid-term (6-18 months) horizon, aiming to minimize costs while meeting
fluctuating demand.
The main purpose of the aggregate plan is to specify that combination of production rate, workforce level, and the
resulting inventory on hand or backlogs that both minimizes costs and satisfies the forecasted demand.
Production rate refers to the quantity of product competed per unit of time.
Workforce level is the number of workers needed for production. When the number of units produced in any
given period exceeds demand, the result is an inventory on hand of the product.
When demand exceeds production, the result is a backlog (stock out), which represents the shortfall. Both
inventories and backlogs are carried forward to the next time period, however, there can be situations when stock
outs are not carried forward because the customer decided to purchase the product elsewhere rather than wait.
Production planning strategies
Production strategies, or production planning strategies, are the different methods a company uses to plan the
future production of goods and materials at a manufacturing plant. Implementing various production planning
strategies creates a foundation that can help determine how much of each product to create.
There are essentially three production strategies. These strategies involve tradeoffs among workforce size, work
hours, inventory and other backlogs..
1. Chase strategy:
match the production rate to meet the order rate by hiring and laying off employees as the order rate
varies. There are obvious motivational issues with this strategy. When order backlogs are low, employees
may feel compelled to slow down out of fear of being laid off as soon as existing orders are completed.
2. Stable workforce:
variable work hours: vary the output by varying the number of hours worked through flexible work
schedule or overtime. By varying the number of work hours, production quantities can be matched,
within limits, to existing orders. This strategy provides workforce continuity and avoids many of the
emotional and tangible costs of hiring and firing personnel that are associated with that chase.
3. Level strategy:
maintain a stable workforce working at a constant output rate. Shortages and surplus are absorbed by
fluctuating inventory level, order backlogs, and lost sales. Employees benefit from stable work hours, but
inventory costs are increased. Another concern is the possibility of inventoried products becoming
obsolete.
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Scheduling and sequencing jobs
Scheduling is establishing the timing of the use of equipment, facilities and human activities in an organization. It
is a time table for performing activities, utilizing resourses or allocate facilities. Scheduling occur in any
organization regardless of the nature of its activities.
E.g. -.manufacturing schedule production, educational institution schedule classroom, instruction students and
service provider scheduled appointments.
Effective scheduling can yield
Cost savings
Increases in productivity
Jobs completed on time
Company competitive advantage in terms of customer service.
In hospital effective scheduling can save life & improve patient care.
Goals of scheduling
Efficient utilization of staff, equipment and facilities
Minimization of customer waiting time, inventories and processing time
Sequencing
Sequencing is determining the order in which jobs at a work center will be processed.
It is concerned with determining job processing order.
Sequencing determines both the order in which jobs are processed at various work centers and the
order in which jobs are processed at individual workstations within the work centers.
Importance of sequencing jobs
1. Optimizing Efficiency and Reducing Costs:
Minimizing Idle Time: Proper job sequencing can reduce the amount of time machines or resources
spend idle, waiting for the next job to be processed.
Reducing Total Elapsed Time: By strategically ordering jobs, you can minimize the overall time it takes
to complete all tasks, leading to faster turnaround times.
Optimizing Resource Allocation: Job sequencing helps ensure that resources are used effectively,
preventing bottlenecks and maximizing output.
Lowering Operational Costs: By optimizing processes and reducing waste, job sequencing can lead to
lower overall operational costs.
2. Enhancing Productivity and Meeting Deadlines:
Improving Throughput: Efficient job sequencing can increase the number of jobs completed within a
given timeframe, boosting overall productivity.
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Meeting Customer Expectations: By ensuring timely completion of jobs, you can better meet customer
expectations and maintain a positive reputation.
Streamlining Operations: Job sequencing helps create a smoother, more predictable workflow, reducing
disruptions and improving overall operational efficiency.
Assumptions of priority rules:
The set of jobs is known;
no new jobs arrive after processing begins
No jobs canceled.
Setup time is independent of processing sequence
There will be no interruption in processing such as machine breakdowns, accidents, or worker illness.
Job flow time: this is the length of time that a job is at a particular workstation or work center.
It includes; Actual processing time, Any time waiting to be processed, Transportation times between operations,
Any waiting time related to equipment breakdowns, Unavailable parts, and Quality problems and son on.
Job flow time is the length of time that begins when a job arrives at the shop, workstation, or work center,
and ends when it leaves the shop, workstation, or work center,
The average flow time for a group of jobs is equal to the total flow time for the jobs divided by the number
of jobs.
Job lateness (job tardiness): this is the length of time the job completion date is expected to exceed the
date that the job was due or promised to a customer.
Average lateness is the ratio of total late days to the total number of jobs.
It is the difference between the actual completion time and the due date.
Average number of jobs: jobs that are in a shop are considered to be work-in-process inventory. The average
work-in-process for a group of jobs can be computed using the following formula:
Average number of jobs = total flow time/make span.
Utilization is the percentage of the ratio of the total job work time to the sum of total flow time.
Priority rules for allocating Jobs to machines
The process of determining which job is started first on a particular machines or work center is known as
sequencing or priority sequencing. Priority rules are the criteria by which the sequence of jobs is determined.
These can be very simple, requiring only that jobs be sequenced according to one piece of data, such as
processing time, due date, or order of arrivals. Ten of the more common priority rules for sequencing jobs are.
1. FCFS: first come, first served. Orders are run in the order that they arrive in the department.
2. SPT- shortest processing time. Run the jobs with the shortest completion time first, next shortest second,
and so on. This is identical to SOT- shortest operating time.
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3. Due date- earliest due date first. Run the job with the earliest due date first.
4. STR-slack time remaining; this is calculated as the difference between the time remaining before the due
date minus the processing time remaining. Orders with the shortest STR are run first.
5. Longest Processing time: prioritizes and executes jobs with the longest processing time first i.e. prioritizes
jobs in descending order of their processing times and jobs with the longest processing time is assigned to a
machine first
6. Last come first served (LCFS): this is rule occurs frequently by default. As orders arrive they are placed on
the top of the slack and the operator usually picks up the order on top to run first.
7. Longest due date: prioritizes jobs with the longest due date first, leading to delays and missed deadlines for
jobs with earlier due dates
8. Random order-whim: the supervisor or the operator usually select whichever job they feel like running.
Scheduling in jobs on one machine
Consider the following examples: Ioannis Kyriakides is the supervisor of legal copy express, which provides copy
services for L.A. law firms in the down town Los Angeles area. Five customers submitted their order at the
beginning of the week. Specific scheduling data on these orders are as follows.
Job(in order of arrival) Processing time(days) Due date(days)
A 3 5
B 4 6
C 2 7
D 6 9
E 1 2
1. FCFS rule
job Processing time(in day) Due date(in days) Flow time(in days)
Start job time finish
A 3 5 0 + 3 = 3
B 4 6 3 + 4 = 7
C 2 7 7 + 2 = 9
D 6 9 9 + 6 = 15
E 1 2 15 + 1 = 16
Total flow time = 3+ 7+ 9 + 15 + 16 = 50 days
Mean flow time = 50/5 = 10 days
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Comparing the due date of each job with its flow time, we observe that only Job A will be on time. Job B, C, D
and E will be late by 1, 2, 6 and 14 days, respectively. On the average a job will be late by (0 + 1 + 2 + 6 +
14)/5 = 4.6 days.
2. SPT rules
job Processing time Due date Flow time
E 1 2 0+1=1
C 2 7 1+2=3
A 3 5 3+3=6
B 4 6 6 + 4 = 10
D 6 9 10 + 6 = 16
Total flow time = 1+3+6+10+16= 36 days
Mean flow time + 36/5 = 7.2 days
SPT results in lower average flow time. In addition Job E and C will be ready before the due date and Job A is late
by only one day. On the average a job will be late by (0+0+1+4+7)/5 = 2.4 days
3. Due date rules
Job Processing time Due date Flow time
E 1 2 0+1=1
A 3 5 1 +3=4
B 4 6 4+4=8
C 2 7 8+2=10
D 6 9 10+6=16
Total completion time= 1+4+8+10+16= 39 days
Men flow time= 7.8 days
In this case jobs B, C and D will be late. On average a job will be late by (0+0+2+3+7)/5=2.4 days.
4. LCFS rules
Job Processing time Due date Flow time
E 1 2 0+1=1
D 6 9 1+6=7
C 2 7 7+2=9
B 4 6 9+4=13
A 3 5 13+3=16
Total flow time = 46 days
Mean flow time= 9.2 days average day late=4 day
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5. Random schedule
Job Processing time Due date Flow time
D 6 9 0+6=6
C 2 7 6+2=8
A 3 5 8+3=11
E 1 2 11+1=12
B 4 6 12+4=16
Total flow time = 53 days
Mean flow time = 10.6 days Average day late 5.4 days
6. STR schedule
Job Processing time Due date Flow time
E 1 2 0+1=1
A 3 5 1+3=4
B 4 6 4+4=8
D 6 9 8+6=14
C 2 7 14+2=16
Total flow time = 43 days
Mean flow time = 8.6 days Average day late = 3.2 days.
Critical Ratio (CR)
An index number found by dividing the time remaining until the due date by the work time remaining on the
job.
Jobs with low critical ratios are scheduled ahead of jobs with higher critical ratios.
Performs well on average job lateness criteria
1. Helps determine the status of specific jobs
2. Establishes relative priorities among jobs on a common basis
3. Relates both stock and make to order jobs on a common basis
4. Adjusts priorities automatically for changes in both demand and job progress
5. Dynamically tracks job progress
Critical ratio = time remaining = due date – todays date
Work days remaining work (lead) time remaining
Critical Ratio (CR) Example:
Today is day 25 in Zyco medical laboratories production schedule. Three jobs are on order as indicated below.
Zyco wants to compute critical ratio, using the formula for CR.
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Job Due date Work days remaining
A 30 4
B 28 5
C 27 2
Compute critical ratio and determine the priority order?
Scheduling n jobs on two machines
Johnson rule consist of the following steps
1. List the operation time for each job on both machines
2. Select the job with the shortest operation time
3. If the shortest time is for the first machines, do that job first, if the shortest time is for the second machines
do the job last.
4. Repeat step 2 and 3 for each remaining job until the schedule is complete.
Example: we can illustrate the application of Johnson rule by scheduling four jobs through two machines.
Step1. List operation time
job Operation time machine 1 Operation time machine 2
A 3 2
B 6 8
C 5 6
D 7 4
Step 2 and 3: select shortest operation time and assign.
Job A is shortest on machine 2 and is assigned first and performed last.(job A is now no longer available to
be scheduled).
4. Repeat step 2 and 3 until completion of schedule
Select the shortest operation time among the remaining jobs. Job D is second shortest on machine 2, thus it is
performed second to last (remember job A is last). Now job A and D are not available any more for scheduling.
Job C is the shortest on machine 1 among the remaining jobs. Job C is performed first. Now, only job B is left with
the shortest operation time on machine 1. Thus according to step 3, it is performed first among the remaining 0r
second overall (job C was already scheduled first).
In summary, the solution sequence is:
C B D A
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