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CHAPTER 3 : AGGREGATE PLANNING. MOHD HAFIZUL BIN TUKIMIN MOHD SYAFIQ BIN MANSOR MOHD RUBA’I AMIR BIN SALLEH CHE MUHD FIRDAUS BIN CHE MAT. OUTLINE. 3.1 Introduction 3.2 Aggregate Planning Option Demand Capacity 3.3 Aggregate Unit of Production 3.4 Technique of Aggregate Planning
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CHAPTER 3 : AGGREGATE PLANNING MOHD HAFIZUL BIN TUKIMIN MOHD SYAFIQ BIN MANSOR MOHD RUBA’I AMIR BIN SALLEH CHE MUHD FIRDAUS BIN CHE MAT
OUTLINE 3.1 Introduction 3.2 Aggregate Planning Option • Demand • Capacity 3.3 Aggregate Unit of Production 3.4 Technique of Aggregate Planning • Linear programming : Transportation Method • Spreadsheet Approach • Disaggregation
3.1 Introduction Aggregate planning • Operational activity that does an aggregate plan for the production process in advance of 2 to 18 months. • Give an idea to management as to what quantity of materials and other resources are to be procured and when. • To keep the total cost of operations of the organization to the minimum over that period.
3.1.1Goal of aggregate planning • Determine the quantity and timing of production for the immediate future. • To achieve a production plan which will effectively utilize the organization’s resources to satisfy expected demand
3.1.2 Why Aggregate planning 3.1.2.1 Objectives of Aggregate Planning: • Minimize total cost over the planning horizon. • Maximize customer service • Minimizeinventory investment • Minimizechanges in workforce levels • Minimizechanges in production rates • Maximize utilization of plant and equipment
3.2 Aggregate Planning Option • Capacity- total number of units per time period that can be produced • Demand - total number of units needed • If capacity and demand are not balance, must decide whether: • To increase or decrease capacity to meet demand or; • Decrease demand to meet capacity
3.4 Aggregate Units of Production The method is based on notion of aggregate units. They may be actual units of production • Weight (tons of steel) • Volume (gallons of gasoline) • Dollars (Value of sales) • Fictitious aggregate units
3.4.1 Example of fictitious aggregate units: A plant manager working for a large national appliance firm is considering implementing an aggregate planning system to determine the workforce and production levels in his plant. This particular plant produces 6 models of TVs. The characteristics of the TVs are:
The manager notices that the percentages of the total number of sales for these six models have been fairly constant:
To find the particular aggregation scheme (1) Selling price / Number of worker-hours required =$ per Input-Hour
then what is $78.34? “Average dollars of output / worker-hour input” in this particular production plant
(2) The manager decides to define an aggregate unit of production as a fictitious TV what is 4.86 hours? “ Average worker-hours required to producea fictitious TV”
What if we like to know “ how many fictitious TV can one worker – one day (8hrs) produce ? ” [ 1 / 4.86 ] x 8 = 1.646 • Applications of this Avg. worker-hours/ TV ： ～ If the manager can obtain sales forecast of overall models, then he can use this to plan workforce ～
3.4 Technique of Aggregate Planning: 3.4.1 Spreadsheet Approach 3.4.2 Linear Programming 3.4.3 Disaggregation
Example spreadsheet The Power Star Company makes a variety of cookies . Given the following costs and monthly sales forecasts, formulate a plan that minimizes cost. They have an inventory from March of 5000 lb of cookies. Find the total cost of the production. • Hiring cost = $300 per workerFiring cost = $850 per workerInventory carrying cost = $1.50 per pound per quarterProduction per employee = 1,000 pounds per quarter • Beginning work force = 95 workers Solution 3
Example of Spreadsheet Method • There are 15 workers and each can produce 20 skateboards per period. • Assume a level of output rate of 300 units. • Find the total cost for this plan?
Description • Carrying costs are $2/tire/month. If goods are made in one period and held over to the next, holding costs are incurred • Supply must equal demand, so a dummy column called “unused capacity” is added • Because back ordering is not viable in this example, cells that might be used to satisfy earlier demand are not available. • Quantities in each column designate the levels of inventory needed to meet demand requirements • In general, production should be allocated to the lowest cost cell available without exceeding unused capacity in the row or demand in the column
A Dover, Delaware, plant has developed the accompanying supply, demand cost , and inventory data. The firm has a constant workforce and meets all its demand. Allocate production capacity to satisfy demand at a minimum cost. What is the cost of this plan? Supply capacity available (units) Demand forecast Other data : Initial inventory 50 units Regular- time cost per unit $50 Over time cost per unit $65 Subcontract cost per unit $80 Carrying cost per unit per period $1 Back order cost per unit per period $4
3.4.3 Disaggregation • Aggregate plans were built to optimal staffing levels for “families” or groups of products • Disaggregation is a means to build specific “Master Production Schedules” • Typically by breaking down the aggregating weights to individual parts – or working on schedules of these families as optimal • Later leads to values similar to Economic Order Quantity(EOQ)which will explore in Chapter 4!
