Production planning and control in batch production

Production planning and control in batch production

Batch production
A variety of products are made but volume is not too large, to demand a separate line for each product. Here, items are processed in lots or batches and a new batch is undertaken for production only when the production on all items of a batch is complete.

In fact, batch type production can be considered as an extension of job type system. The best example of batch type system is of chemical industry, where different medicines are manufactured in batches. Other example includes production of machines tools and printing press etc. this type of production generally adopted in medium size enterprises. It is a stage in between job production and mass production.

Production planning and control in batch production
Batch production is the manufacture of a number of identical articles either to meet a specific order or to satisfy the continuous demand. The decisions regarding jigs and fixtures are dependent on the quantities involved in the production batch.

Batch production can be three types namely:
 A batch produced only once.
 A batch produced repeatedly at irregular intervals, when the need arises.
 A batch produced periodically at known intervals, to satisfy continuous demand.

Planning problems in batch production: - Two problems that may arise in batch production are:
 Due to the size of the batch.
 Due to scheduling of production.

If larger batch size: - more inventory carrying cost and low set up cost.
If smaller batch size: - low inventory carrying cost and more set up cost.

The solution to these problems depends on whether the production is governed by:
1. External customer order: - if it is the case of external customer orders, the customer order size usually determines the batch sizes. The timing will also depend on the delivery dates specified by the customers.

2. whether the plant is producing for internal consumption (i.e. a sub assembly used in the final product): - if it is for internal consumption, both batch size and the production scheduling problems are matters for internal management decisions.

The problems of optimal batch size has to take into account the set up costs which are involved, before each production runs and the inventory carrying cost incurred, when the finished product is held in stock. The batch size determines the length of the production run and affects both the production schedule and batch size considerations of other products.

Points considered in PPC for batch production
1. Inventory carrying cost: - It consist of:
a. Cost of capital
b. Space cost
c. Material handling cost
d. Obsolescence, spoilage or deterioration cost.
e. Insurance cost
f. Cost of general administration
2. Set up cost (ordering cost): - It consist of
a) Cost of time spent in setting up the equipment and organizing the labour for manufacturing batch (cost of idle time i.e. when material is not available on time).
b) Any cost associated with rearrangement or arrangement (i.e. pay of workers)
c) Cost due to rejects, scrap, rework generated during a set up.
d) Variable cost of administration paper work.

3. Planning and implementing economic batch size is the key focus.

4. Economic or optimal batch size: - it is such quantity at which total cost of carrying inventory and set up is minimum.


Determination of economic batch quantity
Let, A= annual demand
Q= manufacturing batch quantity
P= production rate
R= consumption rate
T= production cycle time
T*= small time within the production cycle (t), in which manufacturing is completed.
Cc= inventory carrying cost/ unit/ per period
Cp = set up cost/ batch

EBQ =  2CpA
                Cc ( p-r)/p

Peak inventory level during any cycle = t* ( p-r)
Set up cost = Cp  A/Q
Inventory cost = Cc (p-r)  Q
2p

Characteristics of PPC function in batch production
• Before issuing manufacturing orders, need for new raw materials and tools, overloading and under loading of particular machines or work centers must be anticipated.
• As products are diversified and several orders are handled simultaneously in different wok centers, scheduling and follow up becomes a different task.
• Dispatching has to be done efficiently to avoid delays and bottlenecks in the production process.

Conclusion
In case of batch production, raw materials are converted into components or parts for stock but they are combined according to the customer orders. The products are manufactured usually in large batches. Every batch differs from others, but all units with in a batch are identical. A number of heterogeneous finished products are manufactured with in a limited range of options. Therefore, PPC in intermittent manufacturing is a mixture of those used in process industry and job order production.