Operations Management

Size: px

Start display at page:

Download "Operations Management"

Helena Gibbs
6 years ago
Views:

1 12-1 Aggregate Planning Operations Management William J. Stevenson 8 th edition 12-2 Aggregate Planning CHAPTER 12 Aggregate Planning McGraw-Hill/Irwin Operations Management, Eighth Edition, by William J. Stevenson Copyright 2005 by The McGraw-Hill Companies, Inc. All rights reserved Aggregate Planning Planning Horizon Aggregate planning: Intermediate-range capacity planning, usually covering 2 to 12 months. Long range Short range Intermediate range Now 2 months 1 Year

2 12-4 Aggregate Planning 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 12-5 Aggregate Planning Planning Sequence Figure 12.1 Corporate strategies and policies Economic, competitive, and political conditions Aggregate demand forecasts Business Plan Establishes operations and capacity strategies Aggregate plan Establishes operations capacity Master schedule Establishes schedules for specific products 12-6 Aggregate Planning 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

3 12-7 Aggregate Planning Aggregate Planning Outputs Total cost of a plan Projected levels of inventory Inventory Output Employment Subcontracting Backordering 12-8 Aggregate Planning Aggregate Planning Strategies Proactive Alter demand to match capacity Reactive Alter capacity to match demand Mixed Some of each 12-9 Aggregate Planning Demand Options Pricing Promotion Back orders New demand

4 12-10 Aggregate Planning Capacity Options Hire and layoff workers Overtime/slack time Part-time workers Inventories Subcontracting Aggregate Planning Aggregate Planning Strategies Maintain a level workforce Maintain a steady output rate Match demand period by period Use a combination of decision variables Aggregate Planning 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.

5 12-13 Aggregate Planning Chase Approach Advantages Investment in inventory is low Labor utilization in high Disadvantages The cost of adjusting output rates and/or workforce levels Aggregate Planning Level Approach Advantages Stable output rates and workforce Disadvantages Greater inventory costs Increased overtime and idle time Resource utilizations vary over time Aggregate Planning Techniques for Aggregate Planning 1. Determine demand for each period 2. Determine capacities for each period 3. Identify policies that are pertinent 4. Determine units costs 5. Develop alternative plans and costs 6. Select the best plan that satisfies objectives. Otherwise return to step 5.

6 12-16 Aggregate Planning Cumulative Graph Figure 12.3 Cumulative output/demand Cumulative demand Cumulative production Aggregate Planning Average Inventory Average = inventory Beginning Inventory + Ending Inventory Aggregate Planning 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.

7 12-19 Aggregate Planning Summary of Planning Techniques Table 12.7 Technique Solution Characteristics Graphical/charting Trial and error Linear programming Linear decision rule Simulation Optimizing Optimizing Trial and error Intuitively appealing, easy to understand; solution not necessarily optimal. Computerized; linear assumptions not always valid. Complex, requires considerable effort to obtain pertinent cost information and to construct model; cost assumptions not always valid. Computerized models can be examined under a variety of conditions Aggregate Planning 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 Aggregate Planning Aggregate Plan to Master Schedule Figure 12.4 Aggregate Planning Disaggregation Master Schedule

8 12-22 Aggregate Planning Disaggregating the Aggregate Plan Master schedule: The result of disaggregating an aggregate plan; shows quantity and timing of specific end items for a scheduled horizon. Rough-cut capacity planning: Approximate balancing of capacity and demand to test the feasibility of a master schedule Aggregate Planning Master Scheduling Master schedule Determines quantities needed to meet demand Interfaces with Marketing Capacity planning Production planning Distribution planning Aggregate Planning Master Scheduler Evaluates impact of new orders Provides delivery dates for orders Deals with problems Production delays Revising master schedule Insufficient capacity

9 12-25 Aggregate Planning Master Scheduling Process Figure 12.6 Inputs Beginning inventory Forecast Customer orders Master Scheduling Outputs Projected inventory Master production schedule Uncommitted inventory Aggregate Planning Projected On-hand Inventory Projected on-hand inventory = Inventory from previous week - Current week s requirements Aggregate Planning Projected On-hand Inventory Figure 12.8 Beginning Inventory JUNE JULY Forecast Customer Orders (committed) Projected on-hand inventory Forecast is larger than Customer orders in week 3 Customer orders are larger than forecast in week 1 Forecast is larger than Customer orders in week 2

12-28 Aggregate Planning Time Fences in MPS Figure 12.

10 12-28 Aggregate Planning Time Fences in MPS Figure Period frozen (firm or fixed) slushy somewhat firm liquid (open) Aggregate Planning Solved Problems: Problem 1

LINEAR PROGRAMMING APPROACHES TO AGGREGATE PLANNING. Linear programming is suitable to determine the best aggregate plan.

LINEAR PROGRAMMING APPROACHES TO AGGREGATE PLANNING Linear programming is suitable to determine the best aggregate plan. Recall that linear programming assumes all variables are continuously divisible.