Lean Management

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Production relates to where raw materials also known as inputs are converted into outputs. The main role of production is to produce services and products that customers demand in the most economical and efficient way (Kumar 1999).

Production planning and control is necessary in making decisions concerning utilization, acquisition, and allocation of resources in production processes with the objective of satisfying customer needs effectively and efficiently. It is used in determining workforce level, assigning of overtime work, sequencing the order in which tasks follow and deciding on production quantities (Graves 1999).

Planning challenges start with specification of client’s demand that must be met by the production plan. It is not easy to predict the exact future demand and thus sometimes future demand is not known (Graves 1999). This results to a firm relying on forecasting to predict the future demand. It is thus important for a company to formulate a plan that comes from the demand uncertainty. Alternatively it is important for a firm to revise the predicted figures frequently in order to update the forecast. This is done using the optimization models. It is very important for a firm to identify the relevant costs in a production planning. It is important to determine the variable costs of production, holding cost/carrying costs and set up costs (Graves 1999).

In production planning, there are three production systems: intermittent production, unit production and continuous production. In continuous production, products are produced in a standard process and in a sequence anticipating demand. It involves large capital investment in buying equipment and machinery to produce high quality products but with less work in i...

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