CHAPTER FOUR

OPERATIONS PLANNING AND CONTROL

4.1 Aggregate Production Planning

Aggregate planning: Intermediate-range capacity planning, usually

covering 2 to 12 months. The goal of aggregate planning is to achieve a
production plan that will effectively utilize the organization’s resources to
satisfy expected demand.

Organizations make capacity decisions on three levels:

 Short-range plans (Detailed plans)

 Machine loading

 Job assignments

 Intermediate plans (General levels)

 Employment

 Output, and inventories

 Long-range plans

 Long term capacity

 Location / layout

 Aggregate planning begins with a forecast of aggregate demand for the

intermediate range.
 This is followed by a general plan to meet demand requirements by setting
output, employment, and finished-goods inventory or service capacities.
 Managers must consider a number of plans, each of which must be
examined in light of feasibility and cost.
 If a plan is reasonably good but has minor difficulties, it may be reworked.

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 Aggregate plans are updated periodically, often monthly, to take into
account updated forecast and other changes.

Aggregate Planning Inputs

 Resources

 Workforce/production rate

 Facilities and equipment

 Demand forecast

 Policies

 Subcontracting

 Overtime

 Inventory levels

 Back orders

 Costs

 Inventory carrying

 Back orders

 Hiring/firing

 Overtime

 Inventory changes

 subcontracting

Aggregate Planning Outputs

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 Total cost of a plan

 Projected levels of:

 Inventory

 Output

 Employment

 Subcontracting

 Backordering

A general procedure for Aggregate Planning

1. Determine demand for each period

2. Determine capacities (regular time, over time, and subcontracting) for each
period

3. Identify policies that are pertinent

4. Determine units costs for regular time, overtime, subcontracting, holding

inventories, back orders, layoffs, and other relevant costs

5. Develop alternative plans and compute the costs for each

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

Aggregate Planning in Services

 Aggregate planning for services takes into account projected customer
demands, equipment, capacities, and labor capabilities. The resulting plan
is a time-phased projection of service staff requirements.

 Aggregate planning for manufacturing and aggregate planning for services

share similarities in some respect, but there are some important
differences which are:

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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

Disaggregating the aggregate plan

 For the production plan to be translated into meaningful terms of
production, it is necessary to disaggregate the aggregate plan.

 This means breaking down the aggregate plan into specific product
requirements in order to determine labor requirements (skills, size of
workforce), materials, and inventory requirements.

 To put the aggregate production plan into operation, one must convert, or
decompose, those aggregate units into units of actual product or services
that are to be produced or offered.

 For example, televisions manufacturer may have an aggregate plan that

calls for 200 televisions in January, 300 in February, and 400 in March. This
company produce 21, 26, and 29 inch TVs, therefore the 200, 300, and 400
aggregate TVs that are to be produced during those three months must be
translated into specific numbers of TVs of each type prior to actually
purchasing the appropriate materials and parts, scheduling operations, and
planning inventory requirements.

Operations Scheduling

Introduction

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•Detailed plan for what is to be done

• Mainly focuses on job scheduling

• Prioritized list of the orders indicating what should be done first,

second, etc.

• Timetable for performing activities, utilizing resources or

allocating facilities

• Basis for manufacturing execution system

Objective

• Meet due dates

• Minimize lead time

• Minimize setup time or cost

• Minimize WIP inventory

• Maximize machine or labor utilization

This supplement focuses on operations scheduling, which involves assigning

jobs to workstations or employees to jobs for specified time periods.
Effective scheduling helps managers achieve the full potential of their
supply chains. “Operations Planning and Scheduling,” covers the basics of
scheduling—Gantt charts, workforce scheduling, two rules (FCFS and EDD)
for sequencing work at a single workstation, and two commonly used
performance measures (flow time and past due). Here we deepen your
understanding with additional performance measures and priority
sequencing rules, a discussion of scheduling multiple workstations, and a
discussion of scheduling a two-station flow shop.

Scheduling is the process of organizing, choosing and timing resource usage

to carry out all the activities necessary to produce the desired outputs at

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the desired times, while satisfying a large number of time and relationship
constraints among the activities and the resources (Morton and Pentico,
1993). A Schedule specifies the time each job starts and completes on each
machine, as well as any additional resources needed. A Sequence is a
simple ordering of the jobs.

Scheduling in Work Centers

• Job arrives at a work center & enters a queue

• Scheduling determines sequence and assigns machine

• Scheduling system uses either infinite or finite loading

• System uses forward or backward scheduling

Infinite & Finite Loading

• Infinite loading

– Job assigned to work center based only on what is needed

– Capacity or sequence not considered

– Resources checked only at an aggregate level

• Finite loading

– Capacity and sequence considered

Forward & Backward

• Forward scheduling

– Operations scheduled forward in time

– Determines earliest date that an order can be completed

• Backward scheduling

– Starts from date in the future i.e. due date

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– Schedules the required operation in reverse sequence

– Tells when an order must be started

Scheduling and Control

• Allocate orders, equipment and personnel to work centers i.e. short-run

capacity planning

• Determine sequence of order performance – that is establishing job

priorities

• Initiate performance of the scheduled work; commonly termed

dispatching of orders

• Shop-floor control or production activity control

Job Sequencing

• Use priority rules to determine job sequence

• Simple rules requiring that jobs be sequenced according to some data, i.e.
processing time, due date, etc

Priority Rules

• First come, first served (FCFS)

• Shortest operating time (SOT)

• Earliest due date first (EDD)

• Slack time remaining (STR)

• Slack time remaining per operation (STR/OP)

• Critical ratio (CR) – No. of remaining days to due date/No. of working days

• Last come, first served (LCFS)

• Random order or whim

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Evaluation of Priority Rules

• Meeting due dates of customers or downstream operations

• Minimizing the flow time i.e. time a job spends in the process

• Minimizing WIP inventory

• Minimizing idle time of machines and workers

Principles of scheduling

• There is direct equivalence between workflow and cash flow

• Effectiveness measured by speed of flow through the shop

• Once started, a job should not be interrupted

• Speed of flow is most efficiently achieved by focusing on bottleneck work

centers and jobs

• Reschedule every day

• Obtain feedback each day on jobs that are not completed at each work
center

• Match work-center input information to what the worker can actually do

• When seeking improvement in output, look for incompatibility between

engineering design and process execution

Scheduling Service and Manufacturing Processes

The scheduling techniques we discuss in this supplement cut across the

various process types found in services and manufacturing. Many service
firms are characterized by a front-office process with high customer

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contact, divergent work flows, customization and consequently, a complex
scheduling environment. Often customer demands are difficult to predict,
which puts a high premium on scheduling employees to handle the varied
needs of customers. At the other extreme in the service industry, a back-
office process has low customer involvement, uses more line work flows,
and provides standardized services. Inanimate objects are processed; these
processes take on the appearance of manufacturing processes.

Manufacturing processes also benefit from operations scheduling

techniques. Our discussion of the operations scheduling techniques in this
supplement has application for job, batch, and line processes in services as
well as in manufacturing. Schedules for continuous processes can be
developed with linear programming (see Supplement E, “Linear
Programming”). Although the scheduling techniques provide some
structure to the selection of good schedules, many alternatives typically
need to be evaluated. We begin by looking at the performance measures
managers use to select good schedules.

Operations schedules are short-term plans designed to implement the sales

and operations plan. Often, several jobs must be processed at one or more
workstations. Typically, a variety of tasks can be performed at each
workstation. If schedules are not carefully planned to avoid bottlenecks,
waiting lines may develop. Operations scheduling a type of scheduling in
which jobs are assigned to workstations or employees are assigned to jobs
for specified time periods. When a job order is received for a part, the raw
materials are collected and the batch is moved to its first operation. The
colored arrows show that jobs follow different routes through the
manufacturing process, depending on the product being made. At each
workstation, the next job to process is a decision because the arrival rate of
jobs at a workstation often differs from the processing rate of the jobs at a
workstation, thereby creating a waiting line. In addition, new jobs can enter
the process at any time, thereby creating a dynamic environment. Such
complexity puts pressure on managers to develop scheduling procedures

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that will handle the workload efficiently. In this section, we focus on
scheduling approaches used in two environments: (1) divergent flow
processes and (2) line flow processes. A manufacturer's operation with
divergent flows is often called a job shop, which specializes in low- to
medium-volume production and utilizes job or batch processes. The front
office would be the equivalent for a service provider. Jobs in divergent flow
processes are difficult to schedule because of the variability in job routings
and the continual introduction of new jobs to be processed.

Reference

# www.google.com

# Baker, K. R. Elements of Sequencing and Scheduling. Hanover, NH: Baker

Press, 2002.

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# Strathmore business school pdf.

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