Production Planning and Inventory Control (PPIC)

Production Planning and Inventory Control or PPIC is one of the subjects in Industrial Engineering that learn about planning, doing, controlling, and continuous improvement in making products.

In production planning, we deal with:

1. Deciding which products that have to make, how many products to make, and when they should be finished.
2. Scheduling the time when the products must be delivered.
3. Planning Human Resources and equipment to accomplish the production plan.
4. Managing the details of what and how many products to produce and when to produce them as well as obtaining the raw materials, parts and resources to produce those products.

FORECASTING

Forecasting is a way to predict future. In IE, forecasting has a close relation to PPIC (Production Planning and Inventory Control). Forecasting is a first step that result a basic of the whole step in production planning.

Forecasting is commonly used to predict demand. We predict how many goods that would be ordered, how many materials that we need to process, how many inventories that we have to have in the storage, or how much salary that we get.

Forecasting usually incorporates both subjective and objective approaches to predicting future values. The subjective approaches integrate the opinion or judgments of people who are experienced or considered knowledgeable. The objective approaches often focus on using some statistically-based techniques to calculate the past values into the future. Both approaches need to be integrated for forecasting or estimating future.

There are six steps in the forecasting process:

1.   Determine the purpose of the forecast

-    It’s about what we want or what we are looking for from the forecasting. For the example: You do forecasting to estimate the cost of production.

2.   Establish a time horizon

-        We determine the time horizon as a parameter to estimate the cost in the future. We don’t need to increase the time horizon because it makes the accuracy of forecasting decreases. Just remember what Mrs. Rahmi said “Forecast accuracy decreases as time horizon increases”

3.   Select a forecasting technique

-         There are lots of forecasting techniques: Qualitative Models, Quantitative Models, and Casual Methods. Those three techniques still divided into several methods.

Model Differences

Qualitative – incorporates judgmental & subjective factors into forecast.

Time-Series – attempts to predict the future by using historical data.

Causal – incorporates factors that may influence the quantity being forecasted into the model.

4.   Gather and analyze data

-         We gather the data and analyze which one that gives the best effect in the future.

5.   Prepare the forecast

-      This step is where we start to calculate data. The input data is put into the technique that we choose before.

6.   Monitor the forecast

-       Monitoring the result or output of forecasting whether it is compatible with what we expected before or not. If it isn’t, we search the causes; maybe there are some errors during the process.

SOURCE:
- Power Point from Mrs. Rahmi about PPIC

- http://findarticles.com/p/articles/mi_hb3081/is_n1_v34/ai_n28611165/?tag=content;col1