Aggregate Planning
Transcript of Aggregate Planning
12-2 Aggregate Planning
CHAPTER12
Aggregate Planning
McGraw-Hill/IrwinOperations Management, Eighth Edition, by William J. StevensonCopyright © 2005 by The McGraw-Hill Companies, Inc. All rights
reserved.
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Planning HorizonPlanning Horizon
Aggregate planning: Intermediate-range capacity planning, usually covering 2 to 12 months.
Shortrange
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 LevelsOverview of Planning Levels
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Planning SequencePlanning Sequence
Business PlanEstablishes operationsand capacity strategiesEstablishes operationsand capacity strategies
Aggregate plan Establishesoperations capacity
Establishesoperations capacity
Master schedule Establishes schedulesfor specific products
Establishes schedulesfor specific products
Corporatestrategies
and policies
Economic,competitive,and political conditions
Aggregatedemand
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 InputsAggregate Planning Inputs
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Total cost of a plan Projected levels of inventory
Inventory Output Employment Subcontracting Backordering
Aggregate Planning OutputsAggregate Planning Outputs
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Aggregate Planning StrategiesAggregate Planning Strategies
Proactive Alter demand to match capacity
Reactive Alter capacity to match demand
Mixed Some of each
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Hire and layoff workers Overtime/slack time Part-time workers Inventories Subcontracting
Capacity OptionsCapacity Options
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Aggregate Planning StrategiesAggregate Planning Strategies
Maintain a level workforce
Maintain a steady output rate
Match demand period by period
Use a combination of decision variables
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Basic StrategiesBasic Strategies
Level capacity strategy:
Maintaining a steady rate of regular-time output while 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 expected demand for that period.
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Chase ApproachChase Approach
Advantages
Investment in inventory is low
Labor utilization in high
Disadvantages
The cost of adjusting output rates and/or workforce levels
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Level ApproachLevel Approach
Advantages
Stable output rates and workforce
Disadvantages
Greater inventory costs
Increased overtime and idle time
Resource utilizations vary over time
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1. Determine demand for each period
2. 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 Aggregate PlanningTechniques for Aggregate Planning
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Cumulative GraphCumulative Graph
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Cumulativeproduction
CumulativedemandC
um
ula
tive
ou
tpu
t/d
eman
d
Figure 12.3
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Average InventoryAverage Inventory
Averageinventory
Beginning Inventory + Ending Inventory2
=
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Mathematical TechniquesMathematical Techniques
Linear programming: Methods for obtaining optimal solutions to problems involving allocation of scarce resources in terms of cost minimization.
Linear decision rule: Optimizing technique that seeks to minimize combined costs, using a set of cost-approximating functions to obtain a single quadratic equation.
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Summary of Planning TechniquesSummary of Planning Techniques
Technique Solution Characteristics
Graphical/charting Trial and error
Intuitively appealing, easy to understand; solution not necessarily optimal.
Linear programming
Optimizing Computerized; linear assumptions not always valid.
Linear decision rule
Optimizing Complex, requires considerable effort to obtain pertinent cost information and to construct model; cost assumptions not always valid.
Simulation Trial and error
Computerized models can be examined under a variety of conditions.
Table 12.7
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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 in ServicesAggregate Planning in Services
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Aggregate Plan to Master ScheduleAggregate Plan to Master Schedule
AggregatePlanning
Disaggregation
MasterSchedule
Figure 12.4
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Master schedule: The result of disaggregating 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 the Aggregate Plan Disaggregating the Aggregate Plan
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Master SchedulingMaster Scheduling
Master schedule Determines quantities needed to meet demand Interfaces with
Marketing Capacity planning Production planning Distribution planning
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Master SchedulerMaster 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 ProcessMaster 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 InventoryProjected On-hand Inventory
Projected on-handinventory
Inventory fromprevious week
Current week’srequirements
-=
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Projected On-hand InventoryProjected On-hand Inventory
64 1 2 3 4 5 6 7 8Forecast 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
Beginning Inventory
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 orfixed)
“slushy”somewhat
firm
“liquid”(open)
Figure 12.12
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