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Production Plan in Small Business

Updated on February 6, 2010


Production Plan


Production or manufacturing as it is more commonly called is concerned with the making of things, the creation of form utility. Etymologically, the word "manufacturing" means "making by hand." However, very few articles are now made solely by hand. Even the simplest type of manufacturing necessitates some tools. There are hand tools and machine tools. In addition to tools, various types of equipment are often necessary, depending on the nature of the manufacturing process.

The modern production facility is generally large and complex. Vast amounts of raw materials are used to produce a great variety of industrial and consumer goods. To keep the wheels of industry turning, new manufacturing plants must be built and equipped, raw materials ordered and stored, production plans designed and implemented, and output quality checked. These and the many other tasks needed to run the production facility of today are the responsibility of production management.

Purchasing of Raw Materials

In addition to controlling inventory, the firm must decide what raw materials and capital equipment, such as heavy-duty machinery, need to be purchased. If the company is small and decentralized, these decisions will often be made by the production manager. If the company is large and centralized, the decisions will probably be made by a purchasing manager.

How Purchasing Is Done

The purchasing department is the firm's representative with external vendors. Its job is to purchase the necessary goods and services as efficiently as possible. In addition, the department is responsible for maintaining records on the performance of suppliers and for paying the agreed upon price.

Once goods are received they are often stocked in a storeroom and drawn out as needed. If more than one unit or department will be using them, it is common to find the purchasing department also supervising the disbursement of the materials. In this case, each production unit will present a requisition of the goods it needs, specifying the desired quantities.

Production Scheduling

Most products follow some production sequence. For example, the goods are first manufactured, then treated with a special coating, and then assembled. In order to follow the sequence, the company must have planned out a production schedule.

Scheduling involves determining when work should begin on a particular order and when it should finish. The company would also like to be able to determine the amount of progress that has been made to date. These things are often accomplished through the use of scheduling techniques.

Scheduling Techniques

Most firms rely on one or more scheduling techniques to help them solve their production coordination problems. These techniques can be grouped into two basic categories.

1.      Charts and graphs

2.      Operations research methods


Charts and graphs are used for scheduling. Perhaps the best known is the Gantt chart, which gives the numbers of the orders currently being worked on and the quantities of each item that are being manufactured.

Operations research methods is a term used to describe mathematical decision-making techniques. Most of these are far too technical for discussion.

However, the Program Evaluation and Review Technique (PERT) is easier to understand and widely used in scheduling complex jobs that are one-time operations for the firm. The reasons companies like to use PERT on complex projects is that it helps them to:

1.      Identify all the things that have to be done.

2.      Determine how long each will take.

3.     Work out the sequence in which everything must be accomplished.


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