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ME : Mechanical Engineering
Module 8 : Production Planning and Control, Inventory Control,
Operations Research

INDEX

Production Planning and Control

Pg.
Contents Topics
No.
Introduction 1
Sales Forecasting 2
Aggregate Planning 9
Process Planning 13
Scheduling 15
Notes Routing 20
Progress Control 21
Dispatching 23
Material Requirement Planning (MRP) 26
List of Formulae 26
LMR (Last Minute Revision) 28
Assignment1 30
Assignments
Assignment2 33
Test Paper 1 36
Test Papers
Test Paper 2 39
Inventory Control
Pg.
Contents Topics
No.
Introduction 43
Inventory Control 44
Inventory Costs 47
Deterministic Models 48
Notes Production Model 52
Inventory Models with Probabilistic Demand 61
Safety Stock 64
List of Formulae 67
LMR (Last Minute Revision) 69
Assignment1 70
Assignment
Assignment2 73
Test Paper1 76
Test Paper
Test Paper2 79

Operations Research
Introduction 81
Linear Programming 83
Simplex Method 92
Transportation Models 105
Notes Assignment Models 138
Network Theory 145
Queuing Theory 153
List of Formulae 159
LMR (Last Minute Revision) 166
Assignment1 174
Assignments
Assignment2 177
Test Paper1 179
Test Papers
Test Paper2 182
Solutions

Production Planning and Control

Answer Key 185
Assignments
Model Solutions 186
Answer Key 192
Test Papers
Model Solutions 193

Inventory Control
Answer Key 197
Assignments
Model Solutions 198
Answer Key 205
Test Papers
Model Solutions 206
Operations Research
Answer Key 212
Assignments
Model Solutions 213
Answer Key 218
Test Papers
Model Solutions 219
 Topic 1 : Production Planning and Control

INTRODUCTION
Products are manufactured by the transformation of raw material (in to finished goods).
This is how production is achieved. Planning looks, anticipates possible difficulties and
decides in advance as to how the production, best, be carried out. The control phase
makes sure that the programmed production is constantly maintained.
A production planning and control system has many functions to perform, some, before
the arrival of raw materials and tools and other while the raw material undergoes
processing. The various functions are as follows.
Forecasting

Prior Order writing

Planning

Planning Product design

1. phase

Active Process planning and routing

Planning
Material control

Tool control

Loading

Scheduling

2. Action phase Dispatching

Progress reporting Data Processing

3. Control phase
Expediting

Corrective action

Replanning
a) Forecasting : Estimation of type, quantity and quality of future work.
b) Order writing : Giving authority to one or more persons to undertake a
particular job.
c) Product design : Collection of information regarding specifications, bill of
materials, drawings etc.
d) Process planning : Finding the most economical process of doing a work
and (then) and routing deciding how and where the
work will be done.

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Vidyalankar : GATE – ME

e) Material control : It involves determining the requirements and control of

materials.
f) Tool control : It involves determining the requirement and control of
tool used.
g) Loading : Assignment of work to man power, machine etc.
h) Scheduling : It is the time phase of loading and determines when and
in what sequence the work will be carried out. It fixes the
starting as well as the finishing time for the job.
i) Dispatching : It is transition from planning to action plans. In this phase
workers are ordered to start the actual work.
j) Progress reporting : (i) Data regarding the job progress is called for.
(ii) It is interpreted by comparison with the preset level
of performance.
k) Corrective action:
1. Expediting:
Expediting means taking action if the progress indicates a deviation of the
plan from the originally set targets.
2. Forecasting (sales):
(a) It means estimation of type, quality and quantity of future work eg. Sales
etc. It plays a crucial role in development of plans for the future. It makes
use of sale trend, with reasonable accuracy and the market trend several
years ahead. It becomes a goal against which the effectiveness of the
sales department will be measured. It should be accurate, simple and
easy to understand and economical.
(b) Purpose of sales forecasting
i) It determines the volume of production and the production rate.
ii) It forms basis for production budget, labour, material budget etc.
iii) It suggests the need for plant expansion.
iv) It emphasizes the need for product research development.
v) It suggests the need for changes in production method.
vi) It helps establishing pricing policies.
vii) It helps deciding the extent of advertising product distribution etc.

SALES FORECASTING
Basic Elements:
The four basic elements of economic data that should be used are:
1) Trends
2) Cycles
3) Seasonal variation
4) Irregular variation

SALES FORECASTING TECHNIQUES:

a) Historic estimate:
It is useful for determining model, size and colour distribution. It is useful if the activity
is affected by pattern of seasonality. It is useful and successful only when pattern of
events remain unchanged.

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 Notes on Production Planning and Control

b) Sales force estimate:

This technique is based upon the principle  that the person in contact with the
market knows best about the future market trend. Here the individual salesman
makes sales estimates of his territories and submits it with the district sales manager
who analyses it with other related factory executives and formulates the final estimate
of sales.

c) Trend line technique:

It is employed when there is an appreciable amount of historical data. This
technique involves plotting historical data i.e. tons of material on Yaxis and time on
Xaxis. A single best fitting line (using statistical technique) is drawn and projected to
show sales estimated for future. It is more accurate as it makes use of a large past
data and possesses scientific validity. However, it is time consuming, involves long
mathematical calculations and assumes an infinite population of relatively small
customer.

d) Delphi method:
A panel of experts is interrogated by a sequence of questionnaires in which the
response to one questionnaire is used to produce the next questionnaire. Any set of
information available to some experts and not others, is thus passed on to the others,
enabling all the experts to have access to all information and arrive at a reliable
consensus. Delphi method has fair to very good accuracy for short and long term
forecasts.

e) Forecasting by past average:

If our objective is the forecast or to predict the sales of an item for the next sales
period, then this method gives, Forecasted sales for next period = Average sales for
previous period

Example : Period no. Sales.

1 7
Forecasted sales for
2 5
3 9 759858
period no. 7 =
4 8 6
5 5 =7
6 8

f) Forecasting by Moving average:

This method represents a compromise between the two methods, in that the forecast
is neither influenced by very old data nor does it solely reflects the figure of the
previous data.

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Vidyalankar : GATE – ME

Consider the historical sales figures in table below, which are to be used to construct a
sales forecast for the next year.

Year Period Sales Four period moving

average forecasting
1987 1 50
2 60 Average
3 50
4 40
1988 1 50 50
2 55 50
3 40 48.75
4 30 46.25
1989 1 35 43.75
2 45 40
3 35 37.5
4 24 36.25
1990 1 35 35
2 45 35
3 35 35
4 30 36.25

Fig. Comparison of moving average forecast sales with actual sales

Using the fig. shows that the effect of the moving average is to smooth the sales
pattern and it is therefore of more value in establishing trends.
g) Weighted Moving Average Method for forecasting:
In this, the simple moving average gives equal effect to each component of the
moving average, allows any weights to be placed on each element, providing of
course, that the sum of all weights equal to one.

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 Notes on Production Planning and Control

 wi x i
Moving (Awt) =
 wi
xi is the actual data value for time period fi and wi is the weightage given for the time
period fi, then weighted average forecast = fi + 1 = (  wi xi ) /  wi

Example :
The demand during the months April, May and June are 50, 70 and 65 and the weights
assigned are 1, 2, 3 for these months, what is the forecast for the months of July?
Solution :
 50  1   70  2    65  3 
Moving average (Awt) =
1 2  3

= 53.33

forecast for July is 53.33

h) Forecasting by Exponential smoothing:

Disadvantages of the weighted moving average method for forecast are overcome by
the exponential smoothing techniques. The technique works by modifying the old
forecast in the light of new sales figure i.e. the new forecast =  (latest sales figure) +
(1  ) (old forecast) where  is known as the smoothing constant.

Equation can be expressed as

ft +1 = ft +  (xt  ft)
ft is the forecasted value for the ‘t’ th period, f t+1 is the forecasted value for the (t + 1)th
period,
xt is the actual demand without seasonal index value for the ‘t’ th period and  is the
smoothing constant.
Example :
The actual demand of 100 items, a predicated value of 90 and alpha value of 0.2.
Determine the forecast for the next period using exponential smoothing.

Solution :
ft+1 = ft + (xt ft )
actual demand (xt) = 100. predicted value ft = 90,  = 0.2
 forecast for the next period (ft+1) = 90 + 0.2 (100  90)
= 90 + 0.2 x 10
= 92
The size of  should be carefully chosen in the light of the stability or variability of actual
sales and is normally from 0.1 to 0.3. This process is called econometric forecasting.
Here, the analyst tries to notify those factors that best explain the level of sales for a
product. Econometric forecasting utilizes correlation and regression techniques.

i) Correlation Analysis:
Correlation Analysis is frequently used if a relationship can be found between sales
and other economic and noneconomic phenomena, such as the national income,
expenditure, population growth and the weather, such forecasting are generally

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Vidyalankar : GATE – ME

concerned with the sales volume for the entire industry. The forecaster arrives at this
company forecast by estimating the company’s share of total industry demand. It
makes use of cause and effect relationship between sales and some other
phenomena that are related to sales. Correlation and regression techniques are used
in casual model.
Sources of correlation data
(i) Economic data (ii) Industry data
 Survey of current business  Trade Journals
 Monthly labour review  Annual Survey of Manufacturer
 Business Magazines  Industrial trade association
Correction coefficient is a measure of the extent to which two variables are
associated. Perhaps the most useful coefficient is the Karl Pearson product moment
correlation coefficient, which is calculated as follows:
(x  x)(y  y)
coefficient (r) for two variables x and y =
(x  x)2 (y  y)2
where x is the mean value of all the individual x values and y is the mean values of
all the individual y values.

Fig. Correlation
Example :
A comparison of monthly sales of an expensive item, against the total number of visits
made by salesman during the previous months, yields the following data.
Is the correlation of two variables a good indicator of future sales?
sales (x) 1 3 5 7 11
visits made(y) 2 4 8 9 10
Solution :
x (x x ) (x x )2 y (y y ) (y y )2 (x x )(y y )
1 4.4 19.5 2 4.6 19.5 20.0
3 2.4 5.8 4 2.6 6.9 6.25
5 0.4 0.16 8 +1.4 1.95 0.56
7 +1.6 2.6 9 +2.4 5.8 3.85
11 +5.6 31.5 10 +3.4 11.5 19.6
x = 59.56  y = 33 45.65 50.26
27 33
y =
27 5
x=
5 = 6.6
= 5.4

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 Notes on Production Planning and Control

(x  x)  y  y  50.26  5
r=   0.093
(x  x)2   y  y 
2 59.56  45.65
n2

The correlation between the number of salesman visits and the number of sales is 0.09,
which is not sufficient to justify its possible use as a method of short term sales
forecasting.

J) Linear Regression Analysis:

 This method is a very useful forecasting technique if past data appear to fall
about a straight line. However an estimate of how good the line fits the data is
computed as part of the procedure.
 Forecast of demand is related to economic and competitive factors which control
or cause demand, through least square regression equation.
 The method is useful for short and medium range forecasting of existing product
and services.
 Forecasting based on regression methods establishes a forecasting function
called a regression equation.

Fig. Regression Analysis

 The regression line for y on x is the best line for calculating values y, i.e. the y
values in fig. (a).
 The regression line for x on y is the best line for calculating values of x and is
obtained by minimizing the sum of the squares of errors of estimation, i.e. the x
values in fig. (b).

The general equation for regression line of y on x is given by

Y=a+bx
where a and b are two constant. The values of these two constants are obtained by the
following formula
n  xy  ( x)( y)
b=
 
n  x2    x 
2

y  bx
a=
n
Similarly the general equation for the linear regression of x on y is

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Vidyalankar : GATE – ME

x=a+by
n  xy  ( x)( y)
b=
 
n  y2    y 
2

x  by
a= , n = no of observations
n
Example:
Given the data in table below, find the regression line for prediction of growth and
calculate the growth for a weight value of 50.
Let growth be variable y
Let weight be variable x
 y = a + bx

Solution:

Weight Growth
x2 xy
(x) (y)
12 5.5 144 66
18 5.9 324 106.2
24 6.5 576 156
30 7.4 900 222
36 8.2 1296 295.2
42 8.9 1764 373.8
48 8.6 2304 412.8
 x = 210  y = 51  x2 = 7308  xy = 1632, n = 7

n  xy    x   y  7 19632    210  51

From equations, b = =

n x 2
   x 2
7  7308    210 
2

714
=  0.10119
7056
y  bx  51  0.10119x  210 
a = =
n 7
= 10.32

now, y = a + b x where x = 50

y = 10.32 + (0.10119 x 50) = 15.379

The regression line provides only an estimate of the value y on x. The uncertainty or
accuracy of the estimate can be assessed by calculating the standard error of y on x,
(Syx)

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 Notes on Production Planning and Control

(y  y1 )2
Syx = where y = actual value
n2
y1 = estimated trend value calculated from regression equation
Similarly the standard error of the estimate of x on y is given by:
(x  x1 )2
Sxy =
n2
Syx or Sxy provides a measure of the closeness of the relationship between the two
variables.

AGGREGATE PLANNING
It refers to the preplanning of production, inventory and work force at broadest levels. It
is based on the expected demand, as an out come of forecasting whenever, the
seasonal demands or sales are characterized by fluctuations. The various strategies
which can be used for absorbing these fluctuations have already have discussed. Data
required for the aggregate planning consists of expected demand, production capacity of
the systems, inventory level at the various stages of manufacturing, cost involved due to
change in man power and inventory carrying costs.
Graphic technique:
The graphic technique is simple and shows clearly the fluctuations in production and
demand. However, it simply compares different alternative plans and by itself does not
generate optimum plan. Moreover, it is a static technique.
Production requirement or production demand for the individual months from January to
June and cumulative production demand from January to June in table.
Months Production Demand Cumulative production
(units) demand (unit)
January 240 240
February 340 580
March 380 960
April 240 1200
May 240 1400
June 100 1540

Fig. : Comparison of (actual) production demand, Plan1 and Plan2

GATE/ME/SLP/Module_8/Ch.1_Notes /Pg.9
Vidyalankar : GATE – ME

J+F+M

Fig. : Cumulative production demand, Plan1 and Plan2

Shows two plans (1 and 2) which may be employed to meet the actual production
requirements.

Plan 1:
It is shown by firm line in fig. It indicates smooth (level) production rate to meet the target
demand of 1540 units in 6 months. Fluctuation demand entails high inventory costs of
under and overstocks.

Table

Month Production Production Work Change Inventory Cumulative

(N) Demand as per plan force in work level inventory
(D) 1 required force level
(nos)
Jan 240 260 26 0 +20 +20
Feb 340 260 26 0 80 60
March 380 260 26 0 120 180
April 240 260 26 0 +20 160
May 240 260 26 0 +20 140
June 100 260 26 0 +160 +20

1. CD/CN
2. If each worker produces ten pieces

Plan 2:
It is shown by dotted line (fig.) above and it matches exactly the actual production
requirement of each month. Such a plan involves high labour turn over costs and other
work force adjustment costs, but the inventory costs move towards zero.

GATE/ME/SLP/Module_8/Ch.1_Notes /Pg.10
 Notes on Production Planning and Control

Fig. : Inventory cost and work force adjustment cost

Months Production Production Inventory Cumulative Work force Changes

Demand as per plan 2 level inventory (No) in work
level required force
level
Jan 240 240 0 0 24
Feb 340 340 0 0 34 +10
March 380 380 0 0 38 +4
April 240 240 0 0 24 142
May 240 240 0 0 24 0
June 100 100 0 0 10 14

1. It indicates that 10 more works are employed in the month of February.

2. 14 workers were asked to leave their jobs in the month of April.

The two plans discussed above represent two extreme solutions. The desired solution
will steer a path in between the two in such a way that the total cost becomes minimum.

Linear programming method:

Both, the simpler and distribution models can be employed for aggregate planning. In
aggregate planning, demands are specified in aggregate quantities like total number of
scooter in a year. Fig gives the concept of aggregate demand.

AD = Aggregate (total ) Demand

SD P1 = Seasonal Demand of product 1
SD P2 = Seasonal Demand of product  2

Fig. Concept of aggregate demand

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Vidyalankar : GATE – ME

As the first step of the (linear programming) technique aggregate levels are prepared and
then a model is built to develop the plan. The model takes into considerations various
requirements like under time, over time, inventory back order, sub contracting etc. Figure
below shows a distribution matrix for three periods of sale. Row for sub contracting
production can be added if required.

Fig. Distribution matrix

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 Notes on Production Planning and Control

In order to find optimum solution consider the distribution matrix of the figure.

Fig. Distribution matrix with capacity, demand and cost values

where capacities and demands have been shown along with the various cost values. The
costs have been calculated by assuming that
C = Rs 5, r = Rs 25, t = Rs 30 and b = Rs2
The solution of matrix by northwest corner method will show the number of units which
should be assigned to regular production and overtime production in three different
periods in order to minimize the total cost.

PROCESS PLANNING
Process planning means the preparation of work detail plan. It determines the most
economical method of performing an operation or activity.
(i) Information required to do process planning:
Quantity of work to be done along with product specification.
Quality of work to be completed.
Availability of equipments, tools and personnel.
Sequence in which operations will be performed on the raw material.
Standard time for each operation.
When the operations will be performed.
(ii) Process planning Procedure:
Different steps involved are:
(1) Selection of process.
(2) Selection of material.
(3) Selection of Jigs, Fixtures and other special attachments.
(4) Selection of cutting tools and Inspection gauges.

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Vidyalankar : GATE – ME

Economic Batch Quantity:

If the number of components to be produced is very large they cannot be manufactured
in the batch. Under such conditions economical batch size of the components is
considered.
Mathematically: EBQ can be determined as follows:
Q is economic batch quantity.
R is annual requirements.
S is preparation and set up cost each time a new batch is started = procurement cost
per order.

Fig. : Economic Batch Quantity (EBQ)

C is constant cost per piece (material, direct labour and overheads) and I is inventory
carrying charge rate per year (between 0.1 and 0.25).
Q
 Average inventory =
2
Q
Value of average inventory = C
2
Q
Cost of carrying inventory = CI … (1)
2
R
Number of set ups during a year =
Q
R RS
Cost of set ups = S= … (2)
Q Q
The total cost, T is obtained by adding cost equation (1) and (2)
QCI RS
T= +
2 Q
dT
For T to be minimum, we put 0
dQ
dT CI RS
=  2 0
dQ 2 Q
2RS
Q=
CI

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 Notes on Production Planning and Control

Example:
Find the economic batch quantity using the data given below
Set up cost = Rs.20 per set up
Annual requirement or yearly consumption of parts
= 1000
Inventory carrying cost = 10% of value / year
Cost per part = Rs.2

Solution:
Given S = Rs.20, R = 1000, C = Rs.2, I = 10% = 0.1
2  1000  20
Using above derived equation, E.B.Q. =  447 parts
2  0.1
 The numbers of batches to be made for manufacturing the parts are
1000
 2.24
447
1000
Nearest, 2 batches can be made and therefore the modified EQB =  500
2

SCHEDULING
Scheduling means  when and in what sequence the work will be done. It involves
deciding as to when the work will start and in certain duration of time how much work will
be finished. Scheduling deals with orders and machines i.e. it determines which order will
be taken up on which machine and in which department by which operator. It is the
document which authorizes the start of an operation on the shop floor. Scheduling
finalizes the planning phase of production planning and control system.
(i) Aims of the scheduling :
1. Effective material utilizations
2. Rapid response to demands
3. Completion of order before prescribe dead lines
4. Completion of work in minimum time
5. Total cost is minimized
(ii) Information required while designing schedule:
1. Routing Decisions
2. Preplanning Decisions
3. Resources capabilities
4. Resources Availability

Scheduling Procedure of n Jobs in Two machines (Johnson's method to minimize

makespan)
Step 1: Examine the columns for processing times on machines A and B and find the
smallest value [min (Ai, Bi)]
Step 2: If this value falls in the column A, schedule this Job first on machine A. If this
value falls in column B, schedule this job last on machine A. If there are equal
minimal values one in each column, schedule the one in the first column first on
machine A and the one in the second column last on machine A. If both equal
values are in the first column (A), select the one with lowest entry in column B

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Vidyalankar : GATE – ME

first. If the equal values are in the second column (B), select the one with the
lowest entry in column A first.
Step 3: Cross out the Job assigned and continue the process (repeat steps 1 and 2),
placing the Jobs as scheduled. The resulting sequence will minimize T  the total
time required.
Example:
A machine operator has to perform two operations, turning and threading, on number of
different Job. Determine the order in which the jobs can be scheduled to minimize the
total time required to turn out all the jobs.

Job Time of turning Time of the threading

(Minutes) (minutes)
1 3 8
2 12 10
3 5 9
4 2 6
5 9 3
6 11 1
Solution:
By examining the columns, we find the smallest value. It is threading time of 1minute of
Job 6 last as shown below:

Excluding 6, the smallest values is turning time of 2 minutes for Job 4 in first column.
Thus we schedule Job 4 first as shown below
4 6
Excluding 4 and 6, two equal minimal values: for job 1 in first column and Job 5 in second
column. According to rules,
4 1 5 6

Excluding column 4, 1, 5 and 6, the smallest value is turning time of 5 minutes for Job 3
in first column.
 the schedule Job 3, next to Job 1 and we get the optimal sequence as
4 1 3 2 5 6
We can calculate the elapsed time corresponding to the optimal sequence

Job Turning operation Threading operation

Time in Time out Time in Time out
4 0 2 2 8
1 2 5 8 16
3 5 10 16 25
2 10 22 25 35
5 22 31 35 38
6 31 42 42 43

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 Notes on Production Planning and Control

Thus the minimum elapsed time is 43 minutes. Idle time for turning operation (m/c) is 1
min(from 42nd min or 43 rd minute ) and for threading operation (m/c) is 2 + 4 = 6 minutes
2 from 02 & 4 from 3842 minutes).

Scheduling n Jobs through three machines:

Above method can be extended to cover the special cases where either one or both of
the following conditions hold good ( if neither of the conditions hold good, the method
fails)
(1) The minimum time on machine A is  maximum time on machine B
(2) The minimum time on machine C is  maximum time on machine B

To replace the problem by an equivalent problem involving n Jobs and two machines,
these two (fictitious ) machines are denoted by G and H and their corresponding time are
given by
Gi = Ai + Bi, Hi = Bi + Ci

The technique for establishing and maintaining priorities among various jobs of any
project is known as Critical ratio scheduling.

Example:
Determine the order in which the Jobs should be processed in order to minimize the total
time required to turn out all Jobs.

Times for threading

Job Time of turning (min) Time for knurling (min)
(min)
1 3 8 13
2 12 6 14
3 5 4 9
4 2 6 12
5 9 3 8
6 11 1 13

Solution:
Here, min Ai = 2, max Bi = 8, and min Ci = 8. Since min Ci = max Bi, we can solve this
example by the procedure described in above.
The problem can be replaced by the equivalent problem involving 6 jobs and two fictitious
machines G and H
Examining the columns Gi and Hi we find that smallest value is 8 min under operation Gi.
Thus we schedule Job 4 first on machine G.

Job Gi = Turning + Threading Hi Threading + Knurling

(minutes) (minutes)
1 11 21
2 18 20
3 9 13
4 8 18
5 12 11
6 12 14

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Vidyalankar : GATE – ME

Excluding job 4, the next smallest value 9 under column Gi for Job 3, hence we schedule
Job 3 as shown.
4 3

Excluding 4 and 3 jobs, there are two equal minimal value processing time 11 minutes
under column G for Job 1 and processing time of 11 minutes under column Hi for Job 5
these are then scheduled as
4 3 1 5

Excluding the above scheduled row, the smallest value 14 is under column H for 6.
Hence we schedule Job 6 next to job 1 and optimal sequence becomes

4 3 1 6 2 5

We may calculate the elapsed time corresponding to the optimal sequence

Job Turning operation Threading operation Knurling operation

Time in Time out Time in Time out Time in Time out
4 0 2 2 8 8 20
3 2 7 8 12 20 29
1 7 10 12 20 29 42
6 10 21 21 22 42 55
2 21 33 33 39 55 69
5 33 42 42 45 69 77

Thus the minimum elapsed time is 77 minutes. Idle time for turning operation is
77  42 = 35 minutes, for threading operation is 2 + 1 + 11 + 3 + (77  45) = 17 + 32 = 49
minutes and for knurling operation is 8 minutes.

Processing n Jobs through K Machines :

Thus scheduling problem in described as follows:
(i) there are n Jobs to be performed denoted by 1, 2, 3, . . . . . , i, . . . . . , n
(ii) there are K machines, denoted by A, B, C, . . . . . K,
(iii) each Job is to be processed in the prescribed order A B C . . . . K
(iv) no passing of Jobs in permitted (i.e. same order over each machine is main tainted)
(v) the actual or expected processing time A1, A2, . . . . An , B1, B2, . . . . . Bn j , C1, C2, . . . .
Cn j, . . . . K1, K2, . . . . . Kn are known and represented by table

GATE/ME/SLP/Module_8/Ch.1_Notes /Pg.18
 Notes on Production Planning and Control

Table
Machine times for n jobs and K machines
Job A B C … K
1 A1 B1 C1 … K1
2 A2 B2 C2 … K2
3 A3 B3 C3 … K3
: : : : .
i Ai Bi Ci … Ki
: : : : .
n An Bn Cn … Kn

To find the optimum sequence of Jobs which minimizes time, no general solution is
available at present for such a case. However above solution can be applied to cover
the special cases where either one or both of the following condition hold good (it
neither of the conditions holds good, the method fails).
(a) The minimum time on machine A is  maximum time on machine B, C, . . . . k 
1.
(b) The minimum time on machine k is  maximum time on machines B,C, . . . . k
1.
The method is to replace the K machine problem by an equivalent two machine
problem. These two (fictitious) machines are denoted by a and b and their
corresponding processing times are given by ai = Ai + Bi + . . . . . + (K  1)
bi = Bi + Ci + . . . . . + (K  1)i + Ki

The resulting optimal sequence with prescribed order a b is solved by the method of
above, the resulting optimal sequence will also be optimal for the original problem ,

Further, if Bi + Ci + . . . . . + (K  1)i = K
Where K is a fixed positive constant for all Jobs (i = 1, 2, 3, . . . . . , n) then the given
problem can be solved simply as n Job two machine problem.

Example:
Find the total minimum elapsed time if no passing of jobs is permitted

M/ C 
A B C D E
Job
1 7 5 2 3 9
2 6 6 4 5 10
3 5 4 5 6 8
4 8 3 3 2 6

GATE/ME/SLP/Module_8/Ch.1_Notes /Pg.19
Vidyalankar : GATE – ME

Solution :
Here min Ai = 5, min Ei = 6 and max (Bi, Ci, Di ) = 6, 5, 6 respectively. Since min Ei = max
(Bi, Di) we can also solve this problem by the procedure described in above. The
equivalent problem involving 4 Jobs and 2 fictious machines a and b becomes

Job Machine a Machine b

1 17 19
2 21 25
3 20 23
4 16 14

Examining the columns we find the optimal sequence is

1 3 2 4

Now elapsed time corresponding to the optimal sequence

M/ C
A B C D E
Job
1 07 712 1214 1417 1726

3 712 1216 1621 2127 2735

2 1218 1824 2428 2833 3545

4 1826 2629 2932 3335 4551

Thus the minimum elapsed times is 51 time units. Machines A, B, C, D and E remain idle
for 25, 33, 37, 35 and 18 units respectively.

ROUTING

Routing lays down the flow of work in the plant. It determines what works is to be done
and where and how it will be done i.e. authorization of work to be performed. Taking from
raw material to the finished product, routing decides the path and sequence of operations
to be performed on the Job from one machine to another. The purpose is to establish the
optimum sequence of operation.

Routing Procedure:
1. Manufacturing type  Mass /flow production, Job, Batch production.
2. Availability of Resource like plant, machineries and facilities.
3. Process involved.
4. Characteristics of machineries, plant and facilities.

Route sheet can be made to include many activities like authority to production, materials
requirement, tool orders and move order etc. first two columns of route sheet show the
manufacturing route for given component.

GATE/ME/SLP/Module_8/Ch.1_Notes /Pg.20
 Notes on Production Planning and Control

Fig. Operation and route sheet

PROGRESS CONTROL
Progress control means trying to achieve the standard set, i.e. a certain level of efficiency
or a certain volume of production in specified duration. The system of progress control
should be such that it furnishes timely, adequate and accurate information about the
progress made, delays and under  or over loading.
Steps involved in progress control
(a) Setting up a system to watch and record the progress of the operating facility.
(b) Transmission of report to
1. Control group for necessary control active and
2. Accounting group for recording material and labour expenditures.
(c) Making a report of the work progress or work accomplishment.
(d) Interpretation of the information contained in the progress report by the control group.
(e) Taking corrective action, if necessary.
System to Record the work Accomplishment:
Progress charts are normally employed for this purpose. They compare the work
progress against a prescribed target and point out the failure to achieve the same.
(1) The Bar chart: consists of number of bars. Each bar has its length proportional to the
activity duration. A bar chart is generally used to point out and analyze interrelated
data which otherwise is difficult to read.

Fig. A bar chart

GATE/ME/SLP/Module_8/Ch.1_Notes /Pg.21
Vidyalankar : GATE – ME

(2) A curve chart: It is a graph between two variable (like, number of days and number of
items produced) marked along x and y axis. As the day pass, the number of items being
produced are marked over the graph such points are joined they indicate the
production trend.

]
Fig. A curve chart
[
(3) The Gnatt chart: developed by Henry L. Gnatt. It is frequently used to keep track of
multiple machine schedules. Gnatt chart is actually a modified bar chart, where in load is
marked against a time scale with one horizontal bar or line. Gnatt chart is useful for
scheduling & control and provides information about production schedule.
Two basic types of Gnatt chart:
(i) Order control chart

Fig. Order control Gnatt chart

GATE/ME/SLP/Module_8/Ch.1_Notes /Pg.22
 Notes on Production Planning and Control

(ii) Machine load chart

Fig. Machine load Gnatt chart

(4) Mechanical charts: They include wall charts, visible index files and other scheduling
devices like product Tool board, Board master, schedule U Graph etc which are
commercially available. These equipments have added signaling devices likes pages,
strings, clips etc. to focus the attention on the situations needing corrective action.

DISPATCHING
Dispatch function executes planning function. It is concerned with getting the work
started. Dispatch ensures that the plans are properly implemented. Dispatch function
determines  by whom the job shall be done and it coordinates production. It is the key
point of a production communication system. It creates a direct link between production
and sales.
Dispatch procedure:
The various steps of dispatch procedure for each operation are listed below in sequence:
(a) Store issue order:
Authorized store (department) to deliver required raw material.
(b) Tool order:
Authorize tool store to release the necessary tools. The tools can be collected by the
tool room attached.
(c) Job order:
Instruct the worker to proceed with the operation.
(d) Time ticket:
It records the beginning and ending time of operation and forms the basis for workers
pay.
(e) Inspection order:
Notify the inspectors to carry out necessary inspections and report the quality of the
component.
(f) Move order:
Authorize the movement of materials and components from one facility (machine) to
another for further operation.

GATE/ME/SLP/Module_8/Ch.1_Notes /Pg.23
Vidyalankar : GATE – ME

Dispatching rule:
(1) SPT rule:
Shortest processing time (SPT) means that sequencing of jobs in the ascending
order of their processing time. Priority is given to the Job which has shortest
processing time in the machine under consideration.
Properties: (1) Mean flow time minimizes.
(2) In process inventory minimizes.
(3) Mean waiting time minimizes.
(4) It is more superior, most powerful comparatively effective dispatching
rule.
Example :
Five Jobs are processed in a single machine and the data are as follows:
Job (i) 1 2 3 4 5
Processing time (ti) 4 5 7 1 3
Due date (di) 7 20 16 5 6
(a) Determine the sequence of Jobs as per rule
(b) Determine the mean flow time?
(c) Determine (i) Mean lateness (ii) Mean tardiness (iii) in process inventory (iv) No. of
tardy Jobs?
Solution:
Single machine model. Assigning the first Job which has least processing time that is Job
4 and time is 1. Leaving the assigned Job, the next least processing time is Job 5 with
time 3. Similarly assigning the other Job.

(a)  SPT sequence of Jobs ; 45123

Processing time 
1 3 4 5 7

Job 4 5 1 2 3
0 1 4 8 13 20

Flow time
(b) SPT sequences: 4 5  1  2  3

Job (i) 4 5 1 2 3 Total

Processing (ti ) 1 3 4 5 7 20
Flow time (Fi) 1 4 8 13 20 46
Due date (di) 5 6 7 20 16 
Lateness (Li) 4 2 1 7 4 8
Tardiness (Ti) 0 0 1 0 4 5

Flow time : Fi = Fi 1 + ti
Job lateness Li = Fi  di ( due date)
Tardiness : Ti = Li when Li is + ve
= 0 when Li is negative or zero
mean flow time F = (  Fi ) /n = 46/5 = 9.20

GATE/ME/SLP/Module_8/Ch.1_Notes /Pg.24
 Notes on Production Planning and Control

(c) (i) Mean lateness, L = (  Li ) /n = 8/5 = 1.60

(ii) Mean tardiness, T = (  Ti ) /n = 5/5 = 1
(iii) No. of tardy Jobs = no. of jobs whose tardiness > = 0
(iv) In process inventory , I = (n F ) /Fi max
= (5  9.20 ) / 20
= 2.30
penalty cost / unit/ time, Pc = 100
 Total penalty cost = Total tardiness  Pc
= (  Ti) Pc = n T . Pc
= 5  1  100
= Rs. 500

(2) Earliest Due date (EDD) rule:

Priority is given to Jobs which have minimum value of due date. Job sequencing is in the
order of ascending order of due dates from lowest to highest due dates.

Properties of EDD:
(a) The maximum tardiness is minimized.
(b) The maximum lateness is minimized
(c) Processing time of the Job is independent
(d) The EDD sequence for single machine model yields only one tardy Job.

Example:
Taking the last problem and sequencing by EDD rule.

Job (i) 1 2 3 4 5
Processing time (ti) 4 5 7 1 3
Due date (di ) 7 20 16 5 6

Solution:
Ascending order of due dates = 5, 6, 7, 16, 20,
EDD sequence : 4  5  1  3  2

Job (i) 4 5 1 3 2 Total

ti 1 3 4 7 5 20
Fi 1 4 8 15 20 48
di 5 6 7 16 20 
Li 4 2 1 1 0 6
Ti 0 0 1 0 0 1

GATE/ME/SLP/Module_8/Ch.1_Notes /Pg.25
Vidyalankar : GATE – ME

(a) Maximum lateness, L max = 1

(b) Maximum Tardiness, T max = 1
(c) Mean flow time, F = (  Fi )/n = 48/5 = 9.60
(d) Mean lateness, L = (  Li ) / n = 6/5 = 1.20
(e) Mean tardiness T = (  Ti ) / n = 1/5 = 0.20
48
(f) In process inventory I = (nF / Fimax )  = 2.40
20
(g) Total penalty cost = n T . Pc = 5  1/5  100 = Rs. 100
(h) Total number of Tardy Jobs = 1

MATERIAL REQUIREMENT PLANNING (MRP)

It is a method for coordinating multistage production system that involves many

subassemblies, products, components and raw material, so that they are made available
at time schedule. The dependent  demand item depends upon the demand for the end
products. It translates the master production schedule, into time based net requirements
and prepares a planned coverage of these requirements for such component which are
when needed. MRP is also capable of re-planning and rescheduling of orders to adjust
for changes in demand estimates. It coordinates not only inventory but also the
purchasing, manufacturing, scheduling and planning functions.

Key features of MRP system:

(1) Planned order releases.
(2) Time Planning of requirements.
(3) Provision for rescheduling.
(4) Generation of lower level requirements.

The benefit of MRP is that it enables the firm to overcome uncertainties to eliminate
safety stocks and also reduce carrying the inventory.

The characteristic life cycle of a product consists of 4 periods. The rate of consumption
increases rapidly at the beginning of the maturity period.

LIST OF FORMULAE

 WX
 Weighted moving average (Awt) = i i
 Wi
Xi is the actual data value for time period and Wi is the weightage given for the time
period ti .
The weighted Average forecast = Fi + 1 = (  Wi X i) /  Wi

 New forecast =  (latest sales figure ) + (1  ) (old forecast)

 is known as the smoothing constant equation from, Ft+1 = Ft + (Xt  Fi)

GATE/ME/SLP/Module_8/Ch.1_Notes /Pg.26
 Notes on Production Planning and Control

   x  x  y  y   n
 Coefficient of correlation , r =
 x  x  y  y
2 2

where x is the mean value of all the individual x values and y is the mean values of
all the individual y values.

 General equation for regression line y on x is given by , y = a + b x

where a and b are two constants.
n  xy    x   y 
b=
n( x 2 )    x 
2

 y b x
a=
n
n = no. of observations.
For x = a + b y,
n  xy  ( x)( y)
b=

n  y2    y  2

x  by
a=
n

 
2
 y  yi
 Standard error Syx = estimates the standard error of y on x, where y =
n2
actual value
yi = estimates the end value calculated from equation of regression

 
2
 x  xi
Sxy = determines the standard error of x on y.
n2
 Coefficient of determination
Explained variation
=
Total variation

 y 2  a  y  b  xy
 Standard deviation, SD =
n2

 Coefficient of determination
a  y  b  xy  ny 2
r2=
 y 2  ny 2
(yi  y)2 explained variation
= 
(y  y)2 total variation
Where yi = estimated trend value calculated from regression equation.

 Coefficient of correlation, r = r2

GATE/ME/SLP/Module_8/Ch.1_Notes /Pg.27
Vidyalankar : GATE – ME

P 1  p 
 Accuracy = , p = precision
N
 Number of random observation
1  p  p
N = K2
 s.p 
2

 Economic Batch Quantity

2RS
Q=
CI
R is annual requirements
Q is economic batch quantity
S is preparation and set up cost
C is constant cost / piece
I inventory carry change
 SPI rule Formula:
Flow time, Fi = Fi1 + ti
Job lateness, Li = Fi  di
Tardiness, Ti = Li when Li is positive
= o when Li is negative or Zero
Mean lateness, L I = (  Li ) / n
Mean tardiness T = (  Ti ) /n
Inprocess inventory, I = (n F ) / Fimax
Penalty cost / unit /time, PC
Total penalty cost = Total tardiness  PC
= (  Ti ) PC = n. T . PC
where, Fi  flow time
Li  Job lateness.
Ti  Tardiness.
di  due date.

LMR (LAST MINUTE REVISION)

 Forecasting by past average:
Forecasted sales for next period = Average sales for previous period
 Weighted Moving Average Method for forecasting:
The simple moving average gives equal effect to each component of the moving
average, allows any weights to be placed on each element, providing of course, that
the sum of all weights equal to one.
 The forecasting by Exponential smoothing works by modifying the old forecast in the
light of new sales figure i.e. new forecast =  ( latest sales figure ) + (1  ) (old
forecast) where  is known as the smoothing constant.
 Correlation Analysis is frequently used if a relationship can be found between sales
and other economic and noneconomic phenomena, such as the national income,
definer expenditure, population growth and the weather, such forecasting are
generally concerned with the sales volume for the entire industry.

GATE/ME/SLP/Module_8/Ch.1_Notes /Pg.28
 Notes on Production Planning and Control

 Aggregate Planning refers to the pre planning of production, inventory and work force
at broadest levels.
 Linear Regression Analysis: This method is a very useful forecasting technique if
past data appear to fall about a straight line.
 Process planning means the preparation of work detail plan. It determines the most
economical method of performing an operation or activity.
 Scheduling means  when and in what sequence the work will be done. Scheduling
deals with orders and machines.

 Scheduling Procedure of n Jobs in Two machines

Examine the columns for processing times on machines A and B and find the
smallest value [min (Ai ,Bi)].

 Scheduling n Jobs through three machines:

Above method can be extended to cover the special cases where either one or both
of the following conditions hold good (if neither of the conditions hold good, the
method fails)
(1) The minimum time on machine A is  maximum time on machine B and
(2) The minimum time on machine c is  maximum time on machine B
 Processing n Jobs through K Machines :
(a) The minimum time on machine A is  maximum time on machine B, C, . . . . . K
 1.
(b) The minimum time on machine K is  maximum time on machines B, C, . . . . K
 1.
 Routing lays down the flow of work in the plant. It determines what work is to be done
and where and how it will be done.
 Progress control means trying to achieve the standard set, i.e. a certain level of
efficiency or a certain volume of production in specified duration.
 Dispatch function executes planning function. It is concerned with getting the work
started. Dispatch ensures that the plans are properly implemented.
 Shortest processing time (SPT) means that sequencing of Job in the ascending order
of their processing time.
 Priority is given to Job which has minimum least value of due date. Job Sequencing
is in the order of ascending order of due dates from lowest to highest due dates.

 Earliest Due date (EDD) rule: Priority is given to Jobs which have minimum value of
due date. Job sequencing is in the order of ascending order of due dates from lowest
to highest due dates.

 MRP is a method for coordinating multistage production system that involves many
subassemblies, products, components and raw material, so that they are made
available at time schedule.


GATE/ME/SLP/Module_8/Ch.1_Notes /Pg.29
Vidyalankar : GATE – ME

ASSIGNMENT  1
Duration : 45 Min. Max. Marks : 30
Q1 to Q6 carry one mark each

1. The major elements of planning are

(A) machines and materials
(B) men and machines
(C) men, machines and money
(D) men, machines, money and materials
2. Regression and correlation techniques are used in which model of forecasting
(A) Delphi method (B) Time series model
(C) Casual model (D) Qualitative forecasting

3. Which of the following is independent of sales forecast?

(A) Productivity (B) Inventory control
(C) Production planning (D) Production control

4. Inventory control in production, planning and control aims at

(A) achieving optimization
(B) ensuring against market fluctuation
(C) acceptable customer service at low capital investment in inventory
(D) discounts allowed in bulk purchase

5. An optimum project schedule implies

(A) optimum utilization of men, machines and materials
(B) lowest possible cost and shortest possible time for project
(C) timely execution of project
(D) to produce best results under given constraints
6. Aggregate planning refers to
(A) Planning of production to the broadest long term period levels.
(B) Planning of production at the short term period levels.
(C) Planning of production, work force and inventory at the broadest levels.
(D) Planning of productions, work force and inventory at the short term
period.

Q7 to Q18 carry two marks each

7. The characteristics life cycle of a product consists of four periods. The rate of
consumptions increases rapidly at the beginning of the
(A) incubation period (B) growth period
(C) maturity period (D) decline period

8. The forecast trend of sugar for the month of July is 400 tonnes. The seasonal
indices for the months June, July, August and September are 0.5, 1.5, 0.8 and
0.9 respectively. The forecast for the sugar demand is
(A) 1000 tonnes (B) 600 tonnes
(C) 1600 tonnes (D) 1500 tonnes

GATE/ME/SLP/Module_8/Ch.1_Assign /Pg.30
 Assignment on Production Planning and Control

9. Sales data of demand for the months May, June, July and August are 11, 10, 12
and 14 thousand rupees. The forecasted sales for the month of September by
three periods moving average is
(A) Rs. 14000 (B) Rs. 15000
(C) Rs. 16000 (D) Rs. 12000

10. Statistical quality control was developed by

(A) Frederick Taylor (B) Walter shewhart
(C) George Dantzig (D) W.E. Deming

11. In a weaving operation, the parameter to be controlled is the number of defects

per 10 square yards of material. Control chart appropriate for this task is
(A) P-chart (B) C-chart
(C) R-chart (D) X -chart

12. Suppose X is a normal random variable with mean 0 and variance 4. Then the
mean of the absolute value of X is
1 2 2
(A) (B)
2 
2 2 2
(C) (D)
 
13. The data on monthly sales are as 80, 70, 80, 90, 80, 100, 85, 60 and 75
respectively for past nine months. The forecast for the 9th month is taken as
average, what is the forecast for the 10th month by exponential smoothing?
(A) 80 (B) 85
(C) 79 (D) 70
14. In a time series forecasting model, the demand for five time periods was 10, 13,
15, 18 and 22. A linear regression fit resulted in an equation F = 6.9 + 2.9 t where
F is the forecast for period t. The sum of absolute deviations for the five data is
(A) 2.2 (B) .2
(C) -1.2 (D) 24.3
15. For a product, the forecast and the actual sales for December 2002 were 25 and
20 respectively. If the exponential smoothing constant () is taken as 0.2, the
forecast sales for January 2003 would be
(A) 21 (B) 23
(C) 24 (D) 27

16. A component can be produced by any of the four processes I, II, III and IV.
Process I has a fixed cost of Rs. 20 and variable cost of Rs.3 per piece. Process
II has a fixed cost of Rs.50 and variable cost of Re.1 per piece. Process III has a
fixed cost of Rs.40 and variable cost of Rs.2 per piece. Process IV has a fixed
cost of Rs.10 and variable cost of Rs.4 per piece. If the company wishes to
produce 100 pieces of the component, from economic point of view it should
choose
(A) Process I (B) Process II
(C) Process III (D) Process IV

GATE/ME/SLP/Module_8/Ch.1_Assign /Pg.31
Vidyalankar : GATE – ME

17. A washing machine firm has been using a 12 month moving average of monthly
demand. The March month forecast made was 950 units, but the actual
demand is found to be 1000 units. Hence they want to convert to exponential
smoothing model for the forecast for April. What would be their forecast for April?
(A) 957.50 (B) 958.68
(C) 957.00 (D) 960.00

18. A firm has developed a seasonal index for the various months in a year, for their
product. The seasonal index for August and September is as 1.08 and 1.20
respectively. The old forecast sales are for an average of 500 units per month. The
firm uses exponential smoothing for forecast with  = 0.1. If the actual sales for
August is 450 units, what is the forecast for September?
(A) 600.0 (B) 650.00
(C) 590.00 (D) 550.00



GATE/ME/SLP/Module_8/Ch.1_Assign /Pg.32
Vidyalankar : GATE – ME

TEST PAPER  1

Duration : 30 Min. Max. Marks : 25

Q1 to Q5 carry one mark each

1. Interchangeability can be achieved by

(A) Standardisation (B) Better process planning
(C) Simplification (D) Better product planning
2. Production cost per unit can be reduced by
(A) Producing more with increased input
(B) Producing more with the same input
(C) Eliminating idle time
(D) Minimising resource wastage
3. Which one of the following methods can be used for forecasting the sales
potential of new product?
(A) Time series analysis
(B) Jury of Executive opinion
(C) Sales force composite method
(D) Dispatch of work order through shop floor
4. Given that  = procurement cost per order, D = number of units demanded per
year, H = holding cost per unit per year, i = rate of interest, P = purchase price
per unit, then procurement quantity per order (Q) is given by :
2   D 2   D
(A) Q= (B) Q=
iH  P H  iP
2   D 2
(C) Q= (D) Q=
H  iP D H  iP 

5. Given T = underlying trend

C = cyclic variation within the trend
S = seasonal variation within the trend and
R = residual, remaining or random variation
As per the time series analysis of sales forecasting, the demand will be a function
of
(A) T and C (B) R and S
(C) T and S (D) T, C, S and R

Q6 to Q13 carry two marks each

6. Consider the following phases

1. Information phase 2. Evaluation
3. Creative phase 4. Investigation phase
The correct sequence of these phases in value engineering is
(A) 1, 3, 4, 2 (B) 1, 3, 2, 4
(C) 3, 1, 4, 2 (D) 3, 1, 2, 4

GATE/ME/SLP/Module_8/Ch.1_Test /Pg.36
 Test on Production Planning and Control

7. If one state occurred four times in hundred observations while using the work
sampling technique, then precision of the study using as 95% confidence level
will be
(A) 90% (B) 95%
(C) 92% (D) 98%

8. Match list  I (methods) with list  II (problems) and select the correct answer
using the codes given below the lists:

List  I List II

a. Moving average 1. Assembly
b. Line balancing 2. Purchase
c. Economic batch size 3. Forecasting
d. Johnson algorithm 4. Sequencing
Code a b c d
(A) 1 3 2 4
(B) 1 3 4 2
(C) 3 1 4 2
(D) 3 1 2 4
9. A company intends to use exponential smoothing technique for making a
forecast for one of its product. The previous year’s forecast has been 78 units
and the actual demand for the corresponding period turned out to be 73 units. If
the value of the smoothening constant  is 0.2, the forecast for the next period
will be
(A) 73 units (B) 75 units
(C) 77 units (D) 78 units
10. The management is interested to know the percentage of idle time of an
equipment. The trial study showed that percentage of idle time would be 20%.
The number of random observations necessary for 95 % level of confidence and
5 % accuracy is
(A) 64000 (B) 1600
(C) 6400 (D) 160

11. In a study to estimate the idle time of a machine out of 100 random observations,
the machine is found idle on 40 observations. The total random observations
required for 95% confidence level and  5 % accuracy are
(A) 384 (B) 600
(C) 12000 (D) 9600
12. Match List I and II and select the correct answer using the codes given below the
lists
a. Decision making under complete 1. Delphi approach
certainty
b. Decision making under risk 2. Maxi max criterion
c. Decision making under complete 3. Transportation model
uncertainty.
d. Decision making based on expert 4. Decision free
opinion.

GATE/ME/SLP/Module_8/Ch.1_Test /Pg.37
Vidyalankar : GATE – ME

Code a b c d
(A) 3 4 1 2
(B) 4 3 2 1
(C) 3 4 2 1
(D) 4 3 1 2

13. XYZ firm uses exponential smoothing with  = 0.1 to forecast, the demand of
their products. The forecast for January was 500 units whereas actual demand
turned out to be 450 units, if the trend forecast for February with smoothing
constant for trend is  = 0.2. What is trend adjusted forecast for March?
(A) 504.8 (B) 550.8
(C) 514.8 (D) 510.8

Q14(a) & (b) carry two marks each

Linked Answer Question

14(a). XYZ firm uses exponential smoothing with  = 0.1 to forecast, the demand of
their products. The forecast for January was 500 units whereas actual demand
turned out to be 450 units, what is the forecast for February?
(A) 495 (B) 560
(C) 450 (D) 550

14(b). For above problem, if the actual demand for February turned out to be 505 units,
what would be the forecast for March?
(A) 500 (B) 560
(C) 496 (D) 450



GATE/ME/SLP/Module_8/Ch.1_Test /Pg.38