Production Control IIND2201 – section 1

Aggregate Planning – Chase and level Strategies Summary

Aggregate planning

 Approximate decision about how much to produce and what resources are needed to satisfy the demand for the
planning horizon.
A. Define number of workforce in order to satisfy the demand.
B. It has to be done in aggregate units.

 Methods

 Notation

Chase and Level Strategy

1
Chase Strategy Level Strategy

 It consists of having the exact needed
number of workers in each period t, so
that the satisfaction of the demand is
guaranteed.
 It implies keeping low inventory levels:
 It consists in having a constant number of workers (W*)
that can satisfy the demand of the planning horizon.
 It implies holding inventory in periods with low demand.

Simplified formulation
 when 𝑃𝑡 = 𝐷𝑡
𝑃𝑡
𝑊𝑡 =
𝐾 ∗ 𝑛𝑡

W* will be the minimum number of workers:

|𝑡|
∑𝑖=1 𝐷𝑖
𝑊𝑡 = |𝑡| for t=1 to T
𝐾 ∑𝑖=1 𝑛𝑖
∗
𝑊 = 𝑀𝑎𝑥(𝑊𝑡 )

𝑃𝑡 = 𝑊 ∗ 𝐾𝑛𝑡

General formulation
o 𝑅𝑁𝑡 : Net Requirements in period t
o 𝑆𝑆𝑡 : Safety stock in period t
o 𝑅𝑃𝑡 : programmed receipts in period t

𝑅𝑁𝑡 = 𝐷𝑡 + 𝑆𝑆𝑡 − 𝑅𝑃𝑡 − 𝐼𝑡−1 𝑅𝑁𝑡 = 𝐷𝑡 + 𝑆𝑆𝑡 − 𝑅𝑃𝑡 − 𝐼𝑡−1

𝐼𝑡 = 𝐼𝑡−1 + 𝑃𝑡 − 𝐷𝑡 + 𝑅𝑃𝑡 𝐼𝑡 = 𝐼𝑡−1 + 𝑃𝑡 − 𝐷𝑡 + 𝑅𝑃𝑡
𝑅𝑁𝑡 In this case since we do not know the production, we have:
𝑊𝑡 = => 𝑃𝑡 = 𝑊𝑡 ∗ 𝐾 ∗ 𝑛𝑡
𝐾 ∗ 𝑛𝑡 𝐼𝑡−1 = 𝑆𝑆𝑡−1
∑|𝑡|
𝑖=1 𝑅𝑁𝑖
𝑊𝑡 = |𝑡|
𝐾 ∑𝑖=1 𝑛𝑖
𝐶ℎ𝑜𝑜𝑠𝑒 𝑊 ∗ = 𝑀𝑎𝑥(𝑊𝑡 )
𝑃𝑡 = 𝑊 ∗ 𝐾𝑛𝑡