What you'll need.
Decide how long you want the hair to be.
Fold the yarn back at the center of the head.
Keep folding the yarn back and forth until you have a nice pile.
Cut all the loops at one end.
It should look like this.
Lay the hair on the puppet.
Sew on the hair, making a stitch over each piece of yarn.
Then go back over, making each stitch start and end in the middle of each piece of yarn.
Now your puppet has hair! :D