Aggregate Planning. Learning Objectives. Stages of Planning. Dr. Richard Jerz

Transcription

1 Aggregate Planning Dr. Richard Jerz 1 Learning Objectives Aggregate planning How to do aggregate planning Graphic technique for aggregate planning Mathematical techniques for aggregate planning 2 Stages of Planning 4 1

2 Overview of Planning Levels Long-range plans (over one year) Research & Development New product plans Capital investment Facility location/expansion Top executives Operations managers Operations managers, supervisors, foremen Responsibility Intermediate-range plans (3 to 18 months) Sales planning Production planning and budgeting Setting employment, inventory, subcontracting levels Analyzing cooperating plans Short-range plans (up to 3 months) Job assignments Ordering Job scheduling Dispatching Overtime Part-time help Planning tasks and horizon 5 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 6 Aggregate Planning Combines appropriate resources into general terms Part of a larger production planning system Disaggregation breaks the plan down into greater detail Disaggregation results in a master production schedule 8 2

3 Aggregate Planning Determine the quantity and timing of production for the immediate future Objective is to minimize cost over the planning period by adjusting Production rates Labor levels Inventory levels Overtime work Subcontracting Other controllable variables 9 Aggregate Planning Requirements A logical overall unit for measuring sales and output A forecast of demand for intermediate planning period in these aggregate units A method for determining costs A model that combines forecasts and costs so that scheduling decisions can be made for the planning period 10 Aggregate Planning Inputs Resources Workforce Facilities Demand forecast Policy statements Subcontracting Overtime Inventory levels Back orders Costs Inventory carrying Back orders Hiring/firing Overtime Inventory changes subcontracting 11 3

4 Aggregate Planning 12 Aggregate Planning Strategies Use inventories to absorb changes in demand Accommodate changes by varying workforce size Use part timers, overtime, or idle time to absorb changes Use subcontractors and maintain a stable workforce Change prices or other factors to influence demand 16 Changing Inventory Levels Increase inventory in low demand periods to meet high demand in the future Increases costs associated with storage, insurance, handling, obsolescence, and capital investment Shortages can mean lost sales due to long lead times and poor customer service 17 4

5 Workforce Hiring & Layoffs Match production rate to demand Training and separation costs for hiring and laying off workers New workers may have lower productivity Laying off workers may lower morale and productivity 18 Vary Production Overtime/Idle Allows constant workforce May be difficult to meet large increases in demand Overtime can be costly and may drive down productivity Absorbing idle time may be difficult 19 Subcontracting Temporary measure during periods of peak demand May be costly Assuring quality and timely delivery may be difficult Exposes your customers to a possible competitor 20 5

6 Using Part time Workers Useful for filling unskilled or low skilled positions, especially in services 21 Demand Options Use advertising or promotion to increase demand in low periods Attempt to shift demand to slow periods Back ordering during high demand periods Requires customers to wait for an order without loss of goodwill or the order Most effective when there are few if any substitutes for the product or service Often results in lost sales Counter seasonal product mixing 22 Aggregate Planning Techniques Technique Solution Characteristics Graphical/ charting Linear programming Linear decision rule Simulation Trial and error 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. 23 6

7 Graphical/Charting Methods Popular techniques Easy to understand and use Trial and error approaches that do not guarantee an optimal solution Require only limited computations Sometimes called the tableau method 24 Tableau Method Aggregate Planning Clear Number of periods: 6 1 Period Total Forecast ,800 Output Regular ,800 Part Time 0 Overtime 0 Subcontract 0 Output - Forecast Inventory Beginning Ending Average Backlog Costs: ,600 Part Hire/Layoff Back Total , , ,000 1,800 1,600 1,400 1,200 1, Cum Forecast Cum Production Aggregate Planning - Costs 1,400 1,200 1, Cumulative Forecast ,100 1,600 1,800 Cumulative Production ,200 1,500 1,800 Ending Inventory Backlog Regular Part Time Overtime Inventory Hire/Layoff Inventory Back orders 25 Steps for Tableau Method 1. Determine the demand for each period 2. Determine the capacity for regular time, overtime, and subcontracting each period 3. Find labor costs, hiring and layoff costs, and inventory holding costs 4. Consider company policy on workers and stock levels 5. Develop alternative plans and examine their total costs 26 7

8 Aggregate Planning in Services Controlling the cost of labor is critical Close scheduling of labor hours to assure quick response to customer demand Some form of on call labor resource Flexibility of individual worker skills Individual worker flexibility in rate of output or hours 27 Disaggregation Breaks the aggregate plan into greater detail Transforms the master production schedule into an aggregate plan Calculates the optimal price points for yield management Converts product schedules and labor assignments to a facility wide plan Is an assumption required for the use of the transportation model in aggregate planning 28 Disaggregating 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. 29 8