Aggregate Planning

MGT 502
 Managerial Inputs

Operations Distribution and marketing

Current machine capacities Customer needs
Plans for future capacities Demand forecasts
Work-force capacities Competition behavior
Current staffing level

Materials Accounting and finance

Supplier capabilities Aggregate Cost data
Storage capacity plan Financial condition
Materials availability of firm

Engineering Human resources

New products Labor-market conditions
Product design changes Training capacity
Machine standards
 Aggregate Planning Alternatives
 Reactive
– Work force adjustments
– Keep anticipation inventory (leveled work force)
– Overtime/Undertime
– Vacation Scheduling
– Subcontracting
– Backlogs/backorders/stockouts
 Aggressive
– Complementary products
– Dynamic pricing
Planning Strategies

 Chase Strategy
– Vary work-force level
– Change output rate (overtime, subcontracting
etc.)
 Level Strategy
– Constant work-force level
– Constant production rate
 Mixed Strategies
To Do List for Aggregate Planning

 Determine demand for each period

 Determine capacities for each period
 Identify policies that are pertinent
 Determine units costs
 Develop alternative plans and costs
 Select the best plan that satisfies objectives
 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
 Disaggregating

 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 to test the
feasibility of a master schedule.
 Master schedule server as the basis for a
short-term production plan and production
scheduling