Operations management by stevenson 9th student slides chapter 13

Chapter 13Aggregate Planning... Chapter 13: Learning Objectives • You should be able to: – Explain what aggregate planning is and how it is useful – Identify the variables decision maker

Chapter 13

Aggregate Planning

Chapter 13: Learning Objectives

• You should be able to:

– Explain what aggregate planning is and how it is useful

– Identify the variables decision makers have to work with in

aggregate planning and some of the possible strategies they can use

– Describe some of the graphical and quantitative techniques

planners use

– Prepare aggregate plans and compute their costs

Aggregate Planning

• Aggregate planning

– Intermediate-range capacity planning that typically

covers a time horizon of 2 to 18 months

– Useful for organizations that experience seasonal, or

other variations in demand

– Goal:

• Achieve a production plan that will effectively utilize the

organizations’ resources to satisfy demand

Why Use Aggregate Planning

• Why do organizations need to do aggregate planning?

– Planning

• It time to implement plans – Strategic

• Aggregation is important because it is not possible to predict with

accuracy the timing and volume of demand for individual items

– It is connected to the budgeting process

– It can help synchronize flow throughout the supply chain; it affects

costs, equipment utilization; employment levels; and customer satisfaction

Aggregate Planning Inputs

• Resources

– Workforce/production rates

– Facilities and equipment

• Demand forecast

• Policies

– Workforce changes

– Subcontracting

– Overtime

– Inventory levels/changes

– Back orders

• Costs

– Inventory carrying – Back orders

– Hiring/firing – Overtime – Inventory changes

– subcontracting

Aggregate Planning Outputs

• Total cost of a plan

• Projected levels of

– Inventory

– Output

– Employment

– Subcontracting

– Backordering

Aggregate Planning Strategies

• Typical aggregate planning strategies

1 Maintain a level workforce

2 Maintain a steady output rate

3 Match demand period by period

4 Use a combination of decision variables

Techniques for Aggregate Planning

• General procedure:

1.Determine demand for each period

2.Determine capacities for each period

3.Identify company or departmental policies that are pertinent

4.Determine unit costs

5.Develop alternative plans and costs

6.Select the plan that best satisfies objectives Otherwise return to step 5

Disaggregating the Aggregate Plan

• Master schedule:

– The result of disaggregating an aggregate plan

– Shows quantity and timing of specific end items for a

scheduled horizon

The Master Scheduling Process

Beginning inventory

Forecast

Customer orders

Projected inventory Master production schedule Uncommitted inventory

Master Production Schedule

MPS – Forecasts and Customer Orders

MPS – Projected On Hand

Determining MPS and Projected On Hand

Adding MPS and Projected On Hand to the MPS

Available to Promise