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Aggregate Planning: Created by Dianne H. Rivera Email
Aggregate Planning: Created by Dianne H. Rivera Email
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executives Intermediate-range plans
(3 to 18 months)
Sales planning
Production planning and budgeting
Operations Setting employment, inventory,
managers subcontracting levels
Analyzing operating plans
Short-range plans
(up to 3 months)
Job assignments
Operations Ordering
managers, Job scheduling
supervisors, Dispatching
foremen Overtime
Part-time help
They include:
Information about the resources and the facilities available.
Demand forecast for the period for which the planning has
to be done.
Cost of various alternatives and resources. This includes
cost of holding inventory, ordering cost, cost of production
through various production alternatives like subcontracting,
backordering and overtime.
Organizational policies regarding the usage of above
alternatives.
Aggregate Planning Inputs and Outputs
Input Output
Resources Total cost of plan
-Workforce/production rates
-Facilities and equipment
Cost Projected levels of:
-Inventory carrying cost Inventory
-Backorders Output
-Hiring/firing Employment
-Overtime Subcontracting
-Inventory changes Backordering
-Subcontracting
Demand forecast
Policies on workforce changes
Subcontracting
Overtime
Inventory levels/changes
Backorders
Economic,
Corporate competitive, Aggregate
strategies and political demand
and policies conditions forecasts
Establishes operations
Business Plan
and capacity strategies
Establishes
Aggregate plan
operations capacity
Planning Sequence
Aggregate Planning
Aggregate Operations Plan
Aggregate Operations Plan
Is concerned with setting production rates by product group or other broad
categories for the intermediate term (2 to 18 months).
The main purpose of the aggregate operations plan is to specify the
optimal combination of production rate, work-force level and inventory on
hand.
Production rate – refers to the number of units completed per unit of time.
Workforce level – is the number of workers needed for production.
Inventory on hand – is unused inventory carried over from the previous
period.
Demand and Capacity Options
Advantages Disadvantages
Stable output rates Greater inventory
and workforce costs
Increased overtime
and idle time
Resource utilizations
vary over time
Level Production
Demand
Production
Units
Time
Advantages Disadvantages
Investment in inventory is The cost of adjusting
low output rates and/or
Labor utilization in high workforce levels
Chase Demand
Demand
Production
Units
Time
Customer service
Operational effectiveness
Workforce morale
A Cut-and-Try Approach
Linear Programming
Simulation Approach
A general procedure for aggregate planning
consists of the following steps:
Aggregate
Planning
Disaggregation
Master
Schedule
Master Schedule
It shows the planned output for individual products rather than
the entire product group, along timing of production.
It is the result of disaggregating the aggregate plan
It contains important information for marketing as well as for
production.
Master Production Schedule (MPS) indicates the quantity and
timing of planned production, taking into account desired
delivery quantity and timing as well s on-hand inventory
Master Scheduler
Evaluates impact of new orders
Provides delivery dates for orders
Deals with problems
Production delay
Revising master schedule
Insufficient capacity
Master Scheduling Process
Inputs Outputs
Master
Forecast Scheduling Master production schedule