Operation management 9e stevenson mcgrwhill chap013

13 Aggregate Planning McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc All Learning Objectives     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 13-2 Planning Horizon Aggregate planning: Intermediate-range capacity planning, usually covering to 12 months Long range Short range Now Intermediate range months Year 13-3 Overview of Planning Levels  Short-range plans (Detailed plans)  Machine loading  Job assignments  Intermediate plans (General levels)  Employment  Output  Long-range plans  Long term capacity  Location / layout 13-4 Planning Sequence Figure 13.1 Corporate strategies and policies Economic, competitive, and political conditions Aggregate demand forecasts Business Plan Establishes operations and capacity strategies Aggregate plan Establishes operations capacity Master schedule Establishes schedules for specific products 13-5 Aggregate Planning  Begin with forecast of aggregate demand  Forecast intermediate range  General plan to meet demand by setting  Output levels  Employment  Finished goods inventory level  Production plan is the output of aggregate planning  Update plan periodically – rolling planning horizon always covers the next 12 – 18 months 13-6 Aggregate Planning Inputs  Resources  Workforce  Facilities  Demand forecast  Policies     Subcontracting Overtime Inventory levels Back orders  Costs       Inventory carrying Back orders Hiring/firing Overtime Inventory changes Subcontracting 13-7 Aggregate Planning Outputs  Total cost of a plan  Projected levels of inventory  Inventory  Output  Employment  Subcontracting  Backordering 13-8 Aggregate Planning Strategies  Proactive  Alter demand to match capacity  Reactive  Alter capacity to match demand  Mixed  Some of each 13-9 Demand Options  Pricing  Promotion  Back orders  New demand 13-10 Cumulative Graph Cumulative output/demand Figure 13.3 Cumulative production Cumulative demand 10 13-17 Average Inventory Average Beginning Inventory + Ending Inventory = inventory 13-18 Mathematical Techniques Linear programming: Methods for obtaining optimal solutions to problems involving allocation of scarce resources in terms of cost minimization Simulation models: Computerized models that can be tested under different scenarios to problems 13-19 Summary of Planning Techniques Table 13.7 13-20 Aggregate Planning in Services  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 13-21 Aggregate Plan to Master Schedule Figure 13.4 Aggregate Planning Disaggregation Master Schedule 13-22 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  Rough-cut capacity planning: Approximate balancing of capacity and demand to test the feasibility of a master schedule 13-23 Master Scheduling  Master schedule  Determines quantities needed to meet demand  Interfaces with  Marketing  Capacity planning  Production planning  Distribution planning 13-24 Master Scheduler  Evaluates impact of new orders  Provides delivery dates for orders  Deals with problems  Production delays  Revising master schedule  Insufficient capacity 13-25 Master Scheduling Process Figure 13.6 Inputs Outputs Beginning inventory Forecast Customer orders Projected inventory Master Scheduling Master production schedule Uncommitted inventory 13-26 Projected On-hand Inventory Projected on-hand = inventory Inventory from previous week - Current week’s requirements 13-27 Projected On-hand Inventory Figure 13.8 Beginning Inventory 64 Forecast Customer Orders (committed) Projected on-hand inventory Customer orders are larger than forecast in week 1 30 JUNE 30 30 30 40 33 20 10 31 -29 JULY 40 40 40 Forecast is larger than Customer orders in week Forecast is larger than Customer orders in week 13-28 Time Fences Time Fences – points in time that separate phases of a master schedule planning horizon 13-29 Time Fences in MPS Figure 13.12 Period “frozen” (firm or fixed) “slushy” somewhat firm “liquid” (open) 13-30 Solved Problems: Problem 13-31 ... conditions Aggregate demand forecasts Business Plan Establishes operations and capacity strategies Aggregate plan Establishes operations capacity Master schedule Establishes schedules for specific