What decisions must firms make when planning production?

"Gearing Up: Production Planning An important part of operations management is production planning . Production planning allows the firm to consider the competitive environment and its own strategic goals to find the best production methods. Good production planning has to balance goals that may conflict, such as providing high-quality service while keeping operating costs low, or keeping profits high while maintaining adequate inventories of finished products. Sometimes accomplishing all these goals is difficult. Exhibit 10.4 From its storied creation in post-war Italy to its big-screen immortalization in movies such as Roman Holiday and Quadrophenia , the Vespa scooter has a reputation for romance, rebellion, and style. Manufactured by Italy’s Piaggio Group, the Vespa’s svelte, stainless-steel chassis and aeronautic-inspired designs are seen everywhere in Europe and more and more in the United States. The Piaggio Group presently operates factories in Italy, Vietnam, India, and China. What important production-planning decisions does Piaggio need to make as it considers expanding into more overseas markets? (Credit: Steve Watkins/ Flickr/ Attribution-2.0 Generic (CC BY2.0)) Production planning involves three phases. Long-term planning has a time frame of three to five years. It focuses on which goods to produce, how many to produce, and where they should be produced. Medium-term planning decisions cover about two years. They concern the layout of factory or service facilities, where and how to obtain the resources needed for production, and labor issues. Short-term planning, within a one-year time frame, converts these broader goals into specific production plans and materials management strategies. Four important decisions must be made in production planning. They involve the type of production process that will be used, site selection, facility layout, and resource planning. 374 Chapter 10 Achieving World-Class Operations Management This OpenStax book is available for free at http://cnx.org/content/col25734/1.7"