Production Planning

What is Production Planning?

Production Planning refers to deciding beforehand, what is to be produced when to be produced, how to be produced, how much to be produced, where to be produced, and by whom to be produced. Basically, it is a technique of ascertaining every single step in a long series of individual operations to ensure that each step is taken in the right degree, right place, and at right time.

It is a pre-production activity that involves the ascertainment of manufacturing requirements. This facilitates the firm in making the production process more and more efficient.

Production planning means foreseeing and preparing for bottlenecks and identifying the steps which need to be taken for a continuous and smooth production flow. With the help of production planning, the requirement for material, machinery, and labor can be ascertained to establish a proper sequence of operation and also define time schedule.

It helps in increasing the operational efficiency of the firm and facilitates selling and reduces the cost of production. It results in the effective utilization of the company’s resources.


The various functions performed under production planning are:functions-of-production-planning

Product Planning: It covers product engineering, product design, and development, functional and technological considerations, etc.

Forecast planning: In forecast planning quantity forecast and demand pattern forecast are covered.

Process Planning: It includes technology selection, process selection, machine selection, operation sequencing, process parameter selection, and so forth.

Material Planning: It involves store planning, material specifications, and their volumes, economic order size, inventory planning, etc.

Equipment Planning: It takes into account types of equipment, number of equipment, maintenance planning, and capacity analysis.

Production Planning: Machine loading, job sequencing, and operation schedules are covered here.


The primary objectives of production planning are:

  • To determine the type of resources required such as men, machine, method, material, and so forth in proper quality and quantity.
  • To make essential arrangements so that the targets of production can be achieved easily. And proper adjustments are to be made to cope with any fluctuations in the demand for the product.
  • To fulfill the demand at optimum production cost.
  • To maintain coordination between different departments related t production.
  • To keep a continuous flow of production.

Factors Influencing Production Planning

The factors which influence the production planning of an enterprise greatly vary in terms of the nature and type of organization. However, some common ones are discussed here:

  1. Production Volume
  2. Nature of Product
  3. Quantity to be Produced
  4. Available technology to produce the product
  5. Possible improvements in technology
  6. Production process
  7. Nature of Production Process
  8. Available space of operation
  9. Type of possible layout

Elements of Production Planning

Production planning is associated with two main aspects which are routing of work tasks and layout i.e. spatial relationship amidst the resources. The elements of production planning are:elements-of-production-planning


Planning involves planning for the procurement of raw materials, components, and spare parts in adequate quantity and specification at the right time from the specified source. It also involves choosing the most effective method for processing and ascertain the best sequence of operations. Further, it encompasses planning for manpower with requisite skills and expertise.


It means a determination of the flow of work material handling in the plant and the sequence of steps involves in operations. It is associated with determining appropriate shop and plant layout, storage location for raw materials and components, and material handling system.


Setting up operation times to establish the performance standards of workers as well as machines. Further, it involves deciding the product quantity which should be produced and the total cost involved, as per the sales forecast.


In machine loading, specific jobs are assigned to machines, men, and work centers depending on their relative priorities and capacity utilization. This leads to maximum possible utilization of productive facilities and prevents bottlenecks. To ensure the best possible utilization of resources, overloading and underloading the facility, work center, and the machine is quite important.


It means fixing the amount of work to be performed, arranging the different manufacturing operations in the order of preference, and setting up a start and finish time and date for each operation. Scheduling ensures parts, and sub-assemblies and finished goods are by the desired date of delivery and furnish a timetable for the operational activities.

Production Planning Process

The production planning process involves five major steps which are:

  1. Estimation of product demand in a given time period.
  2. Weigh different production alternatives, considering the resources in hand and production capacity.
  3. Selecting the most appropriate and efficient alternative.
  4. Monitoring and evaluation of the plan, as it is implemented.
  5. Making adjustments in the plan, wherever required.


The benefits of production planning are listed below:

  • Facilitates time-bound delivery of the product desired by the marketing department.
  • Helps in maintaining a good relationship with vendors.
  • It reduces investment in inventory and prevents overstocking and understocking.
  • Decreases the overall production cost.
  • Ensures optimum utilization of men and machinery
  • Improves productivity and efficiency of the production function
  • Reduces production cycle time.
  • Minimizes wastage and misuse of material.

Wrap Up

Production Planning is a part of operations management with the help of which desired output can be produced at the desired rate and cost. It is all about establishing goals for production and estimating the resources needed to meet these goals on time. For this a detailed plan is prepared for future production so as to reach the goals efficiently, timely, and economically.

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