Production Planning

Dr. Everette S. Gardner, Jr.

Aggregate planning
Definition
Choosing production rates, work force levels, and
inventory levels
Horizon
6-18 months into future
Prerequisites
Forecasting
Company policies on
Max./min. inventories
Hiring/firing
Overtime
Production Planning

Policy considerations in aggregate

planning
Flexibility
Are work force and inventories maintained at a
level sufficient to meet unexpected demand?
Work force stability
Improves quality, productivity, union relations
Production rate stability
Makes materials planning easier, reduces
uncertainty in physical distribution
Production Planning

APP.xls

Policy considerations in
aggregate planning (cont.)
Production capacity
Will overtime reduce quality? When will
physical capacity (space, machinery,
equipment) become inadequate?
Customer service
Have lead time and stock availability goals
been met?

Production Planning

Aggregate planning in services

Definition
Balancing service capacity with demand
Tactics
Change operating hours
Change staffing
Nbr. of workers
Full vs. part-time
Modify type of service
Influence demand
Advertising
Pricing
Build more service outlets
Production Planning

Aggregate planning in services

(cont.)
Evaluation
Waiting time
Throughput
Service time
Nbr. of lost customers

Production Planning

Production Inventory System

#
#

25 Day Delay to sense

needs, place
and transmit
orders

5 Day Delay
to sense
needs, place
and transmit
M.O.s

25 Day Delay
for Review
and
Transmission
of orders

Information Flow
Material Flow
Days for transit time
Days to process or to
handle and issue orders
13 Day Delay
for Review
and
Transmission
of orders

Demand
Raw
Ultimate
Material
Vendor

Factory

Factory
Warehouse
4

35
30

Distributor

1
Company System
Under
Managerial Control

Retail

Inventory
2
10

Inventory
1
5

50 Independent
Distributors

Production Planning

Customer
1

500 Independent
Retailers

Dynamo.xls

Response of inventories
10

10,000
Retail inventory (units)
-4%
Factory production output (units/week)

+45%

7500

Distributor inventory (units)

7.5

+10%

5000

-10%

+12%

Retail sales RRR

(units/week)

Weeks

+32%

-3%

-15%

Factory warehouse inventory

(units)
2.5

2500

Jan Feb Mar Apr May Jun

July Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun J

Production Planning