aggregate planning by raj
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8/6/2019 Aggregate Planning by Raj
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Aggregate PlanningAggregate Planning
By - Raj
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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
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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
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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
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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
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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
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y Total cost of a plan
y Projected levels of inventory
Inventory
Output
Employment
Subcontracting
Backordering
Aggregate Planning OutputsAggregate Planning Outputs
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y Pricing
y Promotion
y Back orders
y New demand
Demand OptionsDemand Options
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y Hire and layoff workers
y Overtime/slack time
y Part-time workers
y Inventories
y Subcontracting
Capacity OptionsCapacity Options
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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
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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.
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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
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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
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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
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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.
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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.
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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
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Aggregate Plan to Master ScheduleAggregate Plan to Master Schedule
Aggregate
Planning
Disaggregation
Master
Schedule
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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
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Master SchedulingMaster Scheduling
y Master schedule Determines quantities needed to meet
demand
Interfaces withx Marketing
x Capacity planning
x Production planning
x Distribution planning
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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
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Master Scheduling ProcessMaster Scheduling Process
Master
Scheduling
Beginning inventory
Forecast
Customer orders
Inputs Outputs
Projected inventory
Master production schedule
Uncommitted inventory
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Projected OnProjected On--hand Inventoryhand Inventory
Projected on-handinventory
Inventory from previous week
Current week¶srequirements
-=
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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
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Time FencesTime Fences
Time Fences ² points in time
that separate phases of a
master schedule planninghorizon.
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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
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