aggregate planning by raj

8/6/2019 Aggregate Planning by Raj

http://slidepdf.com/reader/full/aggregate-planning-by-raj 1/28

Aggregate PlanningAggregate Planning

By - Raj



13-2

Planning HorizonPlanning Horizon

Aggregate planning : Intermediate-range

capacity planning, usually covering 2 to 12

months.

Shortrange

Intermediate

range

Long range

Now 2 months 1 Year



13-3

y Short-range plans (Detailed plans)

Machine loading

Job assignments

y Intermediate plans (General levels) Employment

Output

y

Long-range plans Long term capacity

Location / layout

Overview of Planning LevelsOverview of Planning Levels



13-4

Planning SequencePlanning Sequence

Business PlanEstablishes operations

and capacity strategies

Aggregate plan

Establishes

operations capacity

Master schedule Establishes schedules

for specific products

Corporate

strategies

and policies

Economic,

competitive,

and political

conditions

Aggregate

demand

forecasts



13-5

Aggregate PlanningAggregate Planning

y Begin with forecast of aggregate demand

y Forecast intermediate range

y General plan to meet demand by setting

Output levels Employment

Finished goods inventory level

y Production plan is the output of aggregateplanning

y Update plan periodically ² rolling planning horizon always covers the next 12 ² 18

months



13-6

y Resources

Workforce

Facilities

y Demand forecasty Policies

Subcontracting

Overtime Inventory levels

Back orders

y Costs Inventory carrying

Back orders

Hiring/firing Overtime

Inventory changes

Subcontracting

Aggregate Planning InputsAggregate Planning Inputs



13-7

y Total cost of a plan

y Projected levels of inventory

Inventory

Output

Employment

Subcontracting

Backordering

Aggregate Planning OutputsAggregate Planning Outputs



13-9

y Pricing

y Promotion

y Back orders

y New demand

Demand OptionsDemand Options



13-10

y Hire and layoff workers

y Overtime/slack time

y Part-time workers

y Inventories

y Subcontracting

Capacity OptionsCapacity Options



13-11

Aggregate Planning StrategiesAggregate Planning Strategies

y Maintain a level workforce

y Maintain a steady output rate

y Match demand period by period

y Use a combination of decision

variables



13-12

Basic StrategiesBasic Strategies

y Level capacity strategy:

Maintaining a steady rate of regular-timeoutput while meeting variations in demandby a combination of options.

y Chase demand strategy:

Matching capacity to demand; the plannedoutput for a period is set at the expecteddemand for that period.



13-13

Chase ApproachChase Approach

y Advantages

Investment in inventory is low

Labor utilization in high

y Disadvantages

The cost of adjusting output rates and/or

workforce levels



13-14

Level ApproachLevel Approach

y Advantages

Stable output rates and workforce

y Disadvantages

Greater inventory costs

Increased overtime and idle time

Resource utilizations vary over time



13-15

1. Determine demand for each period

2. Determine capacities for each period

3. Identify policies that are pertinent4. Determine units costs

5. Develop alternative plans and costs

6. Select the best plan that satisfies objectives.

Otherwise return to step 5.

Techniques for Aggregate PlanningTechniques for Aggregate Planning



13-16

Mathematical TechniquesMathematical Techniques

Linear programming :Methods for obtainingoptimal solutions to problems involvingallocation of scarce resources in terms

of cost minimization.

Simulation models:Computerized modelsthat can be tested under different

scenarios to problems.



Summary of Planning TechniquesSummary of Planning Techniques

Technique Solution Characteristics

Graphical/charting Heuristic (trial

and error)

Intuitively appealing, easy to

understand; solution not

necessarily optimal.Linear

programming

Optimizing Computerized; linear assumptions

not always valid.

Simulation Heuristic (trial

and error)

Computerized models can be

examined under a variety of

conditions.



13-18

y Services occur when they are rendered

y Demand for service can be difficult to

predict

y Capacity availability can be difficult to

predict

y Labor flexibility can be an advantage in

services

Aggregate Planning in ServicesAggregate Planning in Services



13-19

Aggregate Plan to Master ScheduleAggregate Plan to Master Schedule

Aggregate

Planning

Disaggregation

Master

Schedule



13-20

y Master schedule: The result of disaggregating

an aggregate plan; shows quantity and timing

of specific end items for a scheduled

horizon.

y Rough-cut capacity planning : Approximate

balancing of capacity and demand to test the

feasibility of a master schedule.

Disaggregating the Aggregate PlanDisaggregating the Aggregate Plan



13-21

Master SchedulingMaster Scheduling

y Master schedule Determines quantities needed to meet

demand

Interfaces withx Marketing

x Capacity planning

x Production planning

x Distribution planning



13-22

Master SchedulerMaster Scheduler

y Evaluates impact of new orders

y Provides delivery dates for orders

y Deals with problems

Production delays

Revising master schedule

Insufficient capacity



13-23

Master Scheduling ProcessMaster Scheduling Process

Master

Scheduling

Beginning inventory

Forecast

Customer orders

Inputs Outputs

Projected inventory

Master production schedule

Uncommitted inventory



13-24

Projected OnProjected On--hand Inventoryhand Inventory

Projected on-handinventory

Inventory from previous week

Current week¶srequirements

-=



13-25

Projected OnProjected On--hand Inventoryhand Inventory

64 1 2 3 4 5 6 7 8

Forecast 30 30 30 30 40 40 40 40

Customer Orders

(committed) 33 20 10 4 2

Projected on-hand

inventory 31 1 -29

JUNE JULY

Beginning

Inventory

Customer orders are

larger than forecast in

week 1

Forecast is larger than

Customer orders in week 2

Forecast is larger than

Customer orders in week 3



13-26

Time FencesTime Fences

Time Fences ² points in time

that separate phases of a

master schedule planninghorizon.



Time Fences in MPSTime Fences in MPS

Period

´frozenµ

(firm or

fixed)

´slushyµ

somewhat

firm

´liquidµ

(open)

1 2 3 4 5 6 7 8 9



13-28

ILLUSTRATIONILLUSTRATION

aggregate planning by raj

Documents