Transparency Masters to accompany Operations Management, 5E (Heizer & Render)

1. Operations ManagementAggregate SchedulingChapter 13 © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 13-1

2. Aggregate Planning Requires • Logical overall unit for measuring sales and outputs • Forecast for intermediate planning period in these aggregate units • Method for determining costs • Model that combines forecasts and costs so that scheduling decisions can be made © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 13-6

3. Planning • Setting goals & objectives • Example: Meet demand within the limits of available resources at the least cost • Determining steps to achieve goals • Example: Hire more workers • Setting start & completion dates • Example: Begin hiring in Jan.; finish, Mar. • Assigning responsibility © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 13-7

4. Responsible: Operations managers Short-range plans Job assignments Ordering Job scheduling Dispatching Intermediate-range plans Sales planning Production planning and budgeting Setting employment, inventory, subcontracting levels Analyzing operating plans Responsible: Top executives Responsible: Operations managers, supervisors, foremen Long-range plans R&D New product plans Capital expenses Facility location, expansion 1 year 5 years Today 3 Months Planning Horizon Planning Horizons © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 13-8

5. High Long-Range Facility location Top Executives Intermediate-Range Aggregate plans Operations Managers Short-Range Dispatching Supervisors Low Today 3 months 1 year 18 months 5 years Types of Plans Management Level © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 13-9

6. Marketplace and Demand Research and Technology Product Decisions Work Force Process Planning & Decisions Raw Materials Available Inventory On Hand Demand Forecasts, orders Aggregate Plan for Production External Capacity Master Production Schedule Detailed Work Schedules Plant Capacity Priority Planning & Scheduling Relationships of the Aggregate Plan © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 13-10

7. What’s Needed for Aggregate Planning • A mathematically based aggregate planning model requires considerable: • time • problem definition • model development • model verification • model application • expertise • people who understand the problem • people who understand both the modeling process, and the specific model • money • money to pay for all of the above • often requires funding for several people for several months! © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 13-11

8. Aggregate Scheduling • Provides the quantity and timing of production for intermediate future • Usually 3 to 18 months into future • Combines (‘aggregates’) production • Often expressed in common units • Example: Hours, dollars, equivalents (e.g., FTE students) • Involves capacity and demand variables © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 13-12

9. Aggregate Scheduling Goals • Meet demand • Use capacity efficiently • Meet inventory policy • Minimize cost • Labor • Inventory • Plant & equipment • Subcontract © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 13-13

10. Aggregate Planning StrategiesPure Strategies • Capacity Options — change capacity: • changing inventory levels • varying work force size by hiring or layoffs • varying production capacity through overtime or idle time • subcontracting • using part-time workers © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 13-14

11. Aggregate Planning StrategiesPure Strategies • Demand Options — change demand: • influencing demand • backordering during high demand periods • counterseasonal product mixing © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 13-15

12. Aggregate Planning Options - Advantages and Disadvantages © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 13-16

13. Advantages/Disadvantages - continued © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 13-17

14. Advantages/Disadvantages - continued © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 13-18

15. Advantage/Disadvantage - continued © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 13-19

16. Aggregate Scheduling Strategies • Mixed strategy • Combines 2 or more aggregate scheduling options • Level scheduling strategy • Produce same amount every day • Keep work force level constant • Vary non-work force capacity or demand options • Often results in lowest production costs © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 13-20

17. Aggregate Scheduling Methods • Graphical & charting techniques • Popular & easy-to-understand • Trial & error approach • Mathematical approaches • Transportation method • Linear decision rule • Management coefficients model • Simulation © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 13-21

18. Controlling the Cost of Labor in Service Firms • Close control of labor hours to ensure quick response to customer demand • Some form of-on-call labor resource that can be added or deleted to meet unexpected demand • Flexibility of individual worker skills to permit reallocation of available labor • Individual worker flexibility in rate of output or hours of work to meet demand © 1998 by Prentice Hall, Inc. A Simon & Schuster Company Upper Saddle River, N.J. 07458 Transparency Masters to accompany Operations Management, 5E (Heizer & Render) 13-24