Production Planning Concepts for Small and Medium Enterprises (Smes): A Case Study in a Bakery Company

Abstract

Production planning and control (PPC) is a branch of knowledge that commonly discusses the available concepts and methods for operation management. The knowledge and understanding of PPC concepts, together with proper implementation can assist an organization in fulfilling customer demands with minimum cost. Large organizations are exposed to PPC concepts due to the qualification of workers and the availability of training. However, for small and medium enterprises (SMEs), awareness and knowledge of PPC concepts are lacking. This study is carried out in an SME, a bakery company located in Selangor, Malaysia, to determine how PPC concepts can be applied in SMEs. The case study found several problems faced by the company, ABC Bakery, that relate to supplier selection and workforce planning. In order to overcome the problems, two PPC techniques are introduced. Firstly, the quantity discount model is proposed to solve supplier selection issues. Secondly, the aggregate planning concept is utilized to overcome the workforce issue. From the calculation and analysis conducted, it is found that ABC Bakery can make a wise decision in the supplier selection process when the quantity discount model is implemented, in which selection is based on the minimum total cost incurred. Next, by applying aggregate planning; specifically varying workforce size and influencing demand strategies, the number of workforces required can be estimated and then further improved to increase demand in the future. In conclusion, this study shows that PPC concepts are suitable to be implemented in SMEs specifically to solve operations problems, and then help SMEs in increasing productivity and sales in the long term.