What Is a Production Plan?

A production plan is a plan to ensure that goods are produced according to schedule. This includes purchasing and manufacturing details.

An effective production plan helps management cut costs as much as possible without sacrificing customer service. For example, ordering too much or not enough raw material creates problems that can be avoided by adequate planning. Too many raw materials mean wasted capital. Too few raw materials mean unfulfilled orders and lost labor hours paid to workers who are on the clock but not working on needed production. The production plan also needs to address the amount of time needed to create the items in time for shipping.