Aggregate Planning

Aggregate Planning

• 1.
  Beni Asllani Universityof Tennessee at Chattanooga Aggregate Planning Operations Management - 5 th Edition Chapter 13 Roberta Russell & Bernard W. Taylor, III
• 2.
  Lecture Outline AggregatePlanning Process Strategies for Adjusting Capacity Strategies for Managing Demand Quantitative Techniques for Aggregate Production Planning Hierarchical Nature of Planning Aggregate Planning for Services
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  Aggregate Planning Determinethe resource capacity needed to meet demand over an intermediate time horizon Aggregate refers to product lines or families Aggregate planning matches supply and demand Objectives Establish a company wide game plan for allocating resources Develop an economic strategy for meeting demand
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  Aggregate Planning Figure13.2 Master production schedule and MRP systems Detailed work schedules Process planning and capacity decisions Aggregate plan for production Product decisions Demand forecasts, orders Marketplace and demand Research and technology Raw materials available External capacity (subcontractors) Workforce Inventory on hand
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  Meeting Demand StrategiesAdjusting capacity Resources necessary to meet demand are acquired and maintained over the time horizon of the plan Minor variations in demand are handled with overtime or under-time Managing demand Proactive demand management
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  Strategies for AdjustingCapacity Level production Producing at a constant rate and using inventory to absorb fluctuations in demand Chase demand Hiring and firing workers to match demand Peak demand Maintaining resources for high-demand levels Overtime and under-time Increasing or decreasing working hours Subcontracting Let outside companies complete the work Part-time workers Hiring part time workers to complete the work Backordering Providing the service or product at a later time period
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  Strategies for ManagingDemand Shifting demand into other time periods Incentives Sales promotions Advertising campaigns Offering products or services with counter-cyclical demand patterns Partnering with suppliers to reduce information distortion along the supply chain
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  Quantitative Techniques ForAPP Pure Strategies Mixed Strategies Linear Programming Transportation Method Other Quantitative Techniques
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  Transportation Method 1900 1000 100 500 2 1500 1200 150 500 3 1600 1300 200 500 4 3000 1300 200 500 Regular production cost per unit $20 Overtime production cost per unit $25 Subcontracting cost per unit $28 Inventory holding cost per unit per period $3 Beginning inventory 300 units EXPECTED REGULAR OVERTIME SUBCONTRACT QUARTER DEMAND CAPACITY CAPACITY CAPACITY
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  Transportation Tableau UnusedPERIOD OF PRODUCTION 1 2 3 4 Capacity Capacity Beginning 0 3 6 9 Inventory 300 — — — 300 Regular 600 300 100 — 1000 Overtime 100 100 Subcontract 500 Regular 1200 — — 1200 Overtime 150 150 Subcontract 250 250 500 Regular 1300 — 1300 Overtime 200 — 200 Subcontract 500 500 Regular 1300 1300 Overtime 200 200 Subcontract 500 500 Demand 900 1500 1600 3000 250 1 2 3 4 PERIOD OF USE 20 23 26 29 25 28 31 34 28 31 34 37 20 23 26 25 28 31 28 31 34 20 23 25 28 28 31 20 25 28
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  Other Quantitative TechniquesLinear decision rule (LDR) Search decision rule (SDR) Management coefficients model
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  Hierarchical Nature ofPlanning Items Product lines or families Individual products Components Manufacturing operations Resource Level Plants Individual machines Critical work centers Production Planning Capacity Planning Resource requirements plan Rough-cut capacity plan Capacity requirements plan Input/ output control Aggregate production plan Master production schedule Material requirements plan Shop floor schedule All work centers
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  Aggregate Planning forServices Most services can’t be inventoried Demand for services is difficult to predict Capacity is also difficult to predict Service capacity must be provided at the appropriate place and time Labor is usually the most constraining resource for services