Operations management by stevenson 9th student slides chapter 13

Chapter 13
Aggregate Planning

McGraw-Hill/Irwin

Copyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.


Chapter 13: Learning Objectives
• You should be able to:
– Explain what aggregate planning is and how it is useful
– Identify the variables decision makers have to work with in
aggregate planning and some of the possible strategies they can
use
– Describe some of the graphical and quantitative techniques
planners use
– Prepare aggregate plans and compute their costs

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Aggregate Planning
• Aggregate planning
– Intermediate-range capacity planning that typically covers a time
horizon of 2 to 18 months
– Useful for organizations that experience seasonal, or other
variations in demand
– Goal:

• Achieve a production plan that will effectively utilize the
organizations’ resources to satisfy demand

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Why Use Aggregate Planning
• Why do organizations need to do aggregate planning?
– Planning
• It time to implement plans
– Strategic
• Aggregation is important because it is not possible to predict with
accuracy the timing and volume of demand for individual items
– It is connected to the budgeting process
– It can help synchronize flow throughout the supply chain; it affects
costs, equipment utilization; employment levels; and customer
satisfaction

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Aggregate Planning Inputs
•Resources
– Workforce/production rates
– Facilities and equipment

•Demand forecast
•Policies
–
–
–
–

–

Workforce changes
Subcontracting
Overtime
Inventory levels/changes
Back orders

•Costs
–
–
–
–
–
–

Inventory carrying
Back orders
Hiring/firing
Overtime
Inventory changes
subcontracting

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Aggregate Planning Outputs
• Total cost of a plan
• Projected levels of
– Inventory

– Output
– Employment
– Subcontracting
– Backordering

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Aggregate Planning Strategies
• Typical aggregate planning strategies
1. Maintain a level workforce
2. Maintain a steady output rate
3. Match demand period by period
4. Use a combination of decision variables

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Techniques for Aggregate Planning
• General procedure:
1.Determine demand for each period
2.Determine capacities for each period
3.Identify company or departmental policies that are pertinent
4.Determine unit costs
5.Develop alternative plans and costs
6.Select the plan that best satisfies objectives. Otherwise return to
step 5.

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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

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The Master Scheduling Process
Inputs

Outputs

Beginning inventory
Forecast

Customer orders

Projected inventory
Master
Production
Schedule

Master production schedule
Uncommitted inventory

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MPS – Forecasts and Customer Orders

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MPS – Projected On Hand

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Determining MPS and Projected On Hand

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Adding MPS and Projected On Hand to the MPS

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Available to Promise

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