chap012 - aggregate planning

8/9/2019 Chap012 - Aggregate Planning

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12-1 Aggregate Planning

William J. Stevenson

Operations Management

8th edition


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Planning Horizon

Aggregate planning: Intermediate-rangecapacity planning, usually covering 2 to 12

months.

Short

range

Intermediate

range

Long range

Now 2 months 1 Year


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Short-range plans (Detailed plans) Machine loading

Job assignments

Intermediate plans (General levels) Employment

Output

Long-range plans Long term capacity

Location / layout

Overview of Planning Levels


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Planning Sequence

Business PlanEstablishes operations

and capacity strategies

Establishes operations

and capacity strategies

Aggregate plan

Establishes

operations capacity

Establishes

operations capacity

Master schedule Establishes schedules

for specific products

Establishes schedules

for specific products

Corporate

strategies

and policies

Economic,

competitive,

and political

conditions

Aggregate

demand

forecasts

Figure 12.1


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Resources Workforce

Facilities

Demand forecast

Policies Subcontracting

Overtime

Inventory levels

Back orders

Costs Inventory carrying

Back orders

Hiring/firing

Overtime

Inventory changes

subcontracting

Aggregate Planning Inputs


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Total cost of a plan

Projected levels of inventory

Inventory Output

Employment

Subcontracting

Backordering

Aggregate Planning Outputs


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Aggregate PlanningStrategies

Proactive Alter demand to match capacity

Reactive

Alter capacity to match demand Mixed

Some of each


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Pricing

Promotion

Back orders

New demand

Demand Options


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Hire and layoff workers Overtime/slack time

Part-time workers

Inventories Subcontracting

Capacity Options

lA t Pl i


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12-11 Aggregate PlanningAggregate PlanningStrategies

Maintain a level workforce

Maintain a steady output rate

Match demand period by period

Use a combination of decision

variables

12 12 A Pl


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Basic Strategies

Level capacity strategy:

Maintaining a steady rate of regular-time outputwhile meeting variations in demand by a

combination of options.

Chase demand strategy:

Matching capacity to demand; the planned

output for a period is set at the expecteddemand for that period.

12 13 A Pl i


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Chase Approach

Advantages Investment in inventory is low

Labor utilization in high

Disadvantages

The cost of adjusting output rates and/or

workforce levels

12 14 A t Pl i


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Level Approach

Advantages Stable output rates and workforce

Disadvantages

Greater inventory costs

Increased overtime and idle time

Resource utilizations vary over time

12 15 A t Pl iT h i f A t


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1. Determine demand for each period2. Determine capacities for each period

3. Identify policies that are pertinent

4. Determine units costs

5. Develop alternative plans and costs

6. Select the best plan that satisfies objectives.

Otherwise return to step 5.

Techniques for AggregatePlanning

12 16 A t Pl i


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Cumulative Graph

1 2 3 4 5 6 7 8 9 10

Cumulative

production

Cumulative

demandC

umula

tiveoutput/d

emand

Figure 12.3

12 17 Aggregate Planning


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Average Inventory

Average

inventory

Beginning Inventory + Ending Inventory

2=



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Mathematical Techniques

Linear programming: Methods for obtainingoptimal solutions to problems involvingallocation of scarce resources in terms of cost

minimization.Linear decision rule: Optimizing technique that

seeks to minimize combined costs, using aset of cost-approximating functions to obtain a

single quadratic equation.

12 19 Aggregate PlanningSummar of Planning


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12-19 Aggregate PlanningSummary of PlanningTechniques

Technique Solution Characteristics

Graphical/chartingTrial and

error

Intuitively appealing, easy to

understand; solution not

necessarily optimal.

Linearprogramming

Optim izing Com puterized; linear assum ptions not always valid.

Linear

dec ision rule

Op tim izing C om plex, req uires co nsid era ble

effort to obtain pertinent cost

information and to construct

model; cost assumptions notalwa ys valid.

Sim ulation Trial and

error

Com puterized m odels can be

exam ined under a variety of

conditions.

Table 12.7

12 20 Aggregate PlanningAggregate Planning in


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Services occur when they are rendered

Demand for service can be difficult to

predict Capacity availability can be difficult to

predict

Labor flexibility can be an advantage in

services

Aggregate Planning inServices



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Aggregate Plan to MasterSchedule

Aggregate

Planning

Disaggregation

Master

Schedule

Figure 12.4

12-22 Aggregate PlanningDisaggregating the


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Master schedule: The result ofdisaggregating an aggregate plan; shows

quantity and timing of specific end items for

a scheduled horizon.

Rough-cut capacity planning: Approximate

balancing of capacity and demand to test

the feasibility of a master schedule.

Disaggregating theAggregate Plan



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Master Scheduling

Master schedule Determines quantities needed to meet demand

Interfaces with Marketing

Capacity planning

Production planning

Distribution planning



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Master Scheduler

Evaluates impact of new orders Provides delivery dates for orders

Deals with problems

Production delays Revising master schedule

Insufficient capacity



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Master Scheduling Process

MasterScheduling

Beginning inventory

Forecast

Customer orders

Inputs Outputs

Projected inventory

Master production schedule

Uncommitted inventory

Figure 12.6



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Projected On-hand Inventory

Projected on-hand

inventory

Inventory from

previous week

Current weeks

requirements-=



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Projected On-hand InventoryProjected On-hand Inventory

64 1 2 3 4 5 6 7 8

Forecast 30 30 30 30 40 40 40 40

Customer Orders

(committed) 33 20 10 4 2

Projected on-hand

inventory 31 1 -29

JUNE JULY

BeginningInventory

Customer orders are

larger than forecast in

week 1

Forecast is larger than

Customer orders in week 2

Forecast is larger than

Customer orders in week 3

Figure 12.8



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Time Fences in MPSTime Fences in MPS

Period

frozen

(firm or

fixed)

slushy

somewhat

firm

liquid

(open)

Figure 12.12

1 2 3 4 5 6 7 8 9



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gg g g

Solved Problems: Problem 1Solved Problems: Problem 1

chap012 - aggregate planning

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