Aggregate Production Planning

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National Institute of Technology Calicut

Department of Mechanical Engineering

PRODUCTION PLANNING (AGGREGATE PLANNING)
§ § § § Concerned with the overall operations of an organisation over a specified time horizon Determines the efficient way of responding (allocating resources) to market conditions Effectively allocate system capacity (plant, equipment, and manpower) over designated period A good production plan should Ø be consistent with organisational policy Ø meet demand requirements Ø be within capacity constraints Ø minimizes costs A medium range tactical problem of establishing aggregate production rates, work force sizes, inventory levels and possibly shipping rates States the mission manufacturing must accomplish if the firm’s overall objectives are to be met Managerial objective is to develop an integrated game plan whose manufacturing portion is the production plan The production plan, therefore, links strategic goals to production and is coordinated with sales objectives, resource availabilities, and financial budgets Game plan considers an integrated view of marketing, finance and production

§ § § § §

Planning Level Long Range

Policy, Product, Process, & Plant Decisions

Orientation Strategic

Aggregate Intermediate Range Planning Linking Activity

Short Range
• LONG RANGE - products - processes

Operations Decisions

Operational

Fig. 1 Relationship between aggregate planning and other planning stages

Production Planning

18

National Institute of Technology Calicut

Department of Mechanical Engineering





- plant location - plant layout INTERMEDIATE RANGE (Aggregates) - output rates - employment levels - inventory - subcontracting SHORT RANGE - job assignments - machine loading - job sequencing - lot sizes

Marketing Planning

“The Game Plan”

Financial Planning
MPC boundary

Resource planning

Production Planning

Demand Management

Master Production Scheduling
Fig. 2. Key Linkages of Production Planning § § § Provides the basis for making the more detailed set of MPC decisions Conceptually, production planning should precede and direct MPC decision-making In some firms, however, it is only after the other MPC systems are in place that the resultant production planning decisions are clearly defined Ø Top-down approach Vs Bottom-up approach

Production Planning

19

National Institute of Technology Calicut

Department of Mechanical Engineering

Long Range

Strategic Planning Aggregate Planning Master Production Scheduling Material Requirements Planning (MRP) Detailed Scheduling (Shop Floor Control) Short Range Fig. 3 Top-Down Planning § § § The planning performed in other MPC system modules is necessarily detailed, and the language is quite different from that required for production planning The production plan might be stated in rupees or aggregate units of output per month while the MPS could be in end product units per week MPS might be stated in units that use special bills of materials to manage complicated options

Aggregate Plan

G1

G2

G3

Gn

product groups

Master Production P1 Schedule Material Requirements Planning

P2 C1

P3

P4 C2

P5

products

components

C3

C4

C5

C6

Fig. 4 Planning Stages § The production plan needs to be expressed in meaningful units, but it also needs to be expressed in manageable number of units

Production Planning

20

National Institute of Technology Calicut

Department of Mechanical Engineering

§ § § § §

Experience indicates that 5 to 15 family groups seems to be about right for a top management group to handle Production plan is not a forecast of demand It is the planned production, stated on an aggregate basis, for which manufacturing management is to be held responsible Organisations attempt to satisfy variations in demand by manipulating the variables (size and combination) in its control Pure and mixed strategies can be used to...
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