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Operations Management MD021

Agenda. Relationship Between Planning LevelsAggregate Planning CharacteristicsTactics for Aggregate Planning. Relationship Between Planning Levels. Planning Sequence in Many Organizations. Overview of Planning Levels. Short-range plans (Detailed plans)Machine loadingJob assignmentsIntermediate plans (General levels)EmploymentOutputLong-range plansLong term capacityLocation / layout.

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Operations Management MD021

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    1. Operations Management (MD021) Aggregate Planning

    2. Agenda Relationship Between Planning Levels Aggregate Planning Characteristics Tactics for Aggregate Planning

    3. Relationship Between Planning Levels

    4. Planning Sequence in Many Organizations

    5. Overview of Planning Levels Short-range plans (Detailed plans) Machine loading Job assignments Intermediate plans (General levels) Employment Output Long-range plans Long term capacity Location / layout

    6. Aggregate Planning Characteristics

    7. Planning Horizon in Aggregate Planning Aggregate planning: Intermediate-range capacity planning, usually covering 2 to 12 months.

    8. Aggregate Planning Inputs Resources Workforce Facilities Demand forecast Policies Subcontracting Overtime Inventory levels Back orders Costs Inventory carrying Back orders Hiring/firing Overtime Inventory changes subcontracting

    9. Aggregate Planning Outputs Total cost of a plan Projected levels of inventory Inventory Output Employment Subcontracting Backordering

    10. Aggregate Planning Strategies Matching Capacity and Demand Proactive Alter demand to match capacity Reactive Alter capacity to match demand Mixed Some of each

    11. Options for Manipulating Demand Pricing Promotion Back orders New demand

    12. Options for Changing Capacity Hire and layoff workers Overtime/slack time Part-time workers Inventories Subcontracting

    13. Some General Aggregate Planning Strategies Maintain a level workforce Maintain a steady output rate Match demand period by period Use a combination of decision variables

    14. Basic Strategies “Level Capacity” strategy Maintaining a steady rate of regular-time output while meeting variations in demand by a combination of options. “Chase Demand” strategy Matching capacity to demand; the planned output for a period is set at the expected demand for that period.

    15. Level Capacity Approach Advantages Stable output rates and workforce Disadvantages Greater inventory costs Increased overtime and idle time Resource utilizations vary over time

    16. Chase Demand Approach Advantages Investment in inventory is low Labor utilization in high Disadvantages The cost of adjusting output rates and/or workforce levels

    18. Challenges of 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

    19. Tactics for Aggregate Planning

    20. Techniques 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. Otherwise return to step 5.

    21. Summary of Planning Techniques

    22. Cumulative Graph for Trial-and-Error Planning

    23. Mathematical Techniques Linear programming Methods for obtaining optimal solutions to problems involving allocation of scarce resources in terms of cost minimization. Linear decision rule Optimizing technique that seeks to minimize combined costs, using a set of cost-approximating functions to obtain a single quadratic equation.

    24. Aggregate Plan Must be Transformed into a Master Schedule

    25. Master Scheduling Master schedule Determines quantities needed to meet demand Interfaces with Marketing Capacity planning Production planning Distribution planning

    26. Must translate aggregate plan into master schedule

    27. Master Scheduler Evaluates impact of new orders Provides delivery dates for orders Deals with problems Production delays Revising master schedule Insufficient capacity

    28. Master Scheduling Process

    29. Disaggregating the Aggregate Plan Master production schedule (MPS) The result of disaggregating an aggregate plan; shows quantity and timing of specific end items for a scheduled horizon. Used as a basis for short-range planning Rough-cut capacity planning (RCCP) Validates the MPS Approximate balancing of capacity and demand to test the feasibility of a master schedule.

    30. Master Scheduling A Weekly Demand Forecast

    31. Beginning Inventory and Committed Customer Orders

    32. Projecting On Hand Inventory

    33. Calculating Projected On-Hand Inventory

    34. Identifying When to Produce

    35. Master Production Schedule

    36. Calculating Available-to-Promise Inventory

    37. MPS Time Fences can facilitate order promising and entry of orders into system

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