Production Planning

The fourth chapter talks about two things:

• Planning a manufacturing facility.
• Inventory management.

Planning a manufacturing facility

The 2 main things to consider are:

• Location.
• Facility layout.

The ideal location depends on the type of facility you are planning, whether it is a heavy manufacturing facility, light industry facility or a warehouse / retail facility.
Depending on the type, weights are changed accordingly for different factors such as land costs and proximity to customers etc etc.
Each location is given a score for each criteria that is multiplied by the weight assigned, location with the highest score is usually the best choice.

Facility layout also depends on what you are making, the diversity of your products (eg. custom made or mass production) and their size.

The type of layout required is usually as easy choice, as the ideal for most products is already known.

Facility layouts are:

• Process Layout.
• Production Layout.
• Fixed Position Layout.
• Group Technology Layout.

Inventory Management

There are a lot of choices to be made in inventory management, from the amount to buy to the length of time to store them to withholding an extra spare amount for times of sudden increases in demand.

Which is why we use 2 techniques for calculating inventory aspects: EOQ (Economic Order Quantity) and Break even Analysis, EOQ calculating the best amount to buy whereas Break even analysis is to calculate whether you are making any profit or not and how many of sadi product should be sold to at least have covered your losses.

Overall this chapter is filled with many important concepts and second in size and importance only to the second.