Aggregate Planning
MD 021 - Management and Operations
Aggregate Planning
Outline
Aggregate planning - definitions and strategies
Linear programming (LP)
Aggregate planning LP problem
Chase and level strategy problems
Definitions of Aggregate Planning
Aggregate planning is the “big picture” approach to planning for the intermediate term ([pic] 1 year). The goal of aggregate planning is to achieve a production plan that will effectively utilize the organization’s resources to satisfy expected demand.
Planners must make decisions on: • Output rates • Employment levels and changes • Inventory levels and changes • Backorders • Subcontracting/outsourcing
In a manufacturing firm, the aggregate plan links the strategic goals with plans for the individual products (i.e., the master production schedule).
In a service firm, the aggregate plan links the strategic goals with detailed work-force schedules.
Aggregation
Reason for aggregation - A planner can devise a course of action, consistent with strategic goals and objectives, without having to deal with a lot of detail.
Three dimensions of aggregation:
Product families - Based on similar demand requirements and common processing, labor, and materials requirements.
Labor - Considerations include work-force flexibility, physical and geographic locations.
Timing - The planning horizon is the length of time covered by the aggregate plan.
Planning Strategies
Chase strategy – Matching capacity to demand; the planned output for a period is set at the expected demand of the period.
Level strategy – Maintaining a steady rate of regular time output while meeting the variations in demand by a combination of inventories, overtime, part-time workers, subcontracting, and back-orders.
| |Pros
Aggregate Planning
Outline
Aggregate planning - definitions and strategies
Linear programming (LP)
Aggregate planning LP problem
Chase and level strategy problems
Definitions of Aggregate Planning
Aggregate planning is the “big picture” approach to planning for the intermediate term ([pic] 1 year). The goal of aggregate planning is to achieve a production plan that will effectively utilize the organization’s resources to satisfy expected demand.
Planners must make decisions on: • Output rates • Employment levels and changes • Inventory levels and changes • Backorders • Subcontracting/outsourcing
In a manufacturing firm, the aggregate plan links the strategic goals with plans for the individual products (i.e., the master production schedule).
In a service firm, the aggregate plan links the strategic goals with detailed work-force schedules.
Aggregation
Reason for aggregation - A planner can devise a course of action, consistent with strategic goals and objectives, without having to deal with a lot of detail.
Three dimensions of aggregation:
Product families - Based on similar demand requirements and common processing, labor, and materials requirements.
Labor - Considerations include work-force flexibility, physical and geographic locations.
Timing - The planning horizon is the length of time covered by the aggregate plan.
Planning Strategies
Chase strategy – Matching capacity to demand; the planned output for a period is set at the expected demand of the period.
Level strategy – Maintaining a steady rate of regular time output while meeting the variations in demand by a combination of inventories, overtime, part-time workers, subcontracting, and back-orders.
| |Pros