Aggregate Planning OPC

8/3/2019 Aggregate Planning OPC

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Aggregate Planning

Definition:

The process of developing, analyzing, and maintaining a

preliminary, approximate schedule of the overall

operations of an organization.

An attempt to balance capacity and demand in such a

way that costs are minimized.

Targeted sales forecasts

Production levels

Inventory levels

Customer backlogs


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Production Planning and Control

Demandforecastin

g

Sales andorderentry

Customer

Production

Inventory Vendors

Aggregateplanning

Inventorymanageme

nt

Shippingand

receiving

Materialsrequirement

planning

Shop-floorschedulingand control

The Production Control System


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Aggregate planning is considered to be intermediate termin nature. (3-18 months)

It begins with the determination of demand and thedetermination of current capacity.

Importance: Demand prediction is difficult

Huge amount of time is required to implement theplan,

Optimum utilization of facilities, work force andinventory is important because even slightunderutilization may lead to huge losses

Aggregate Planning


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Planning the lowest cost method ofproviding the adjustable capacity to

accommodate the production requirements

For manufacturing operations, this involves

Planning the work force size

Production rate(work hours/work), and

Inventory levels

Aggregate Planning


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If demands were only constant, managing productive

systems sure would be a lot easier.

Large inventories invite pressures from the top

management to reduce investments

With lower inventories, Marketing is not happy with

poor service to the customer

Laying-off workers during a sales slump invites

threats from the Unions and the local administration

Aggregate Planning


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Manufacturing is responsible for

Producing high quality products,

At low costs,

Timed to meet customer delivery schedules,

Trade- off between costs and employment

stabilization, and also Maintain balance of the above even for seasonal

demands

Aggregate Planning


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Aggregateplan

Operations

1.Current machine

capacities2.Plans for future

capacities

3.Workforce capacities

4.Current staffing level

Distribution &Marketing

1.Customer needs

2.Demand forecasts

3.Competition behavior

Accounting & Finance

1.Cost data

2.Financial condition offirm

Human Resources

1.Labor-market condition

2.Training capacity

Engineering

1.New products2.Product design changes

Materials

1.Supplier capabilities

2.Storage capacity

3.Materials availability

Aggregate Plan- Managerial Input


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Aggregateplan

Complementaryproducts

Competitivepricing

Units / cost ofBacklogs,

backorders, orstock outs

Units or costof subcontract

Production permonth (in

units or value)

Inventorylevels

Size ofworkforce and

adjustment

Aggregate Plan- Outputs


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Workforce Planning

How much and what kind of labor is needed to support

production goals? Issues:

Basic Staffing Calculations: standard labor hours adjusted forworker availability.

Working Environment: stability, morale,

learning.

Flexibility/Agility: ability of workforce tosupport plant's ability to respond to shortand long term shifts.

Quality: procedures are only as goodas the people who carry them out.


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Capacity/Facility Planning

How much and what kind of physical equipment is needed tosupport production goals?

Issues:

Basic Capacity Calculations: stand-alone capacities and

congestion effects (e.g., blocking)

Capacity Strategy:lead or follow demand

Make-or-Buy: vendoring, long-term identity

Flexibility:with regard to product, volume, mix

Speed:scalability, learning curves


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Demand Management

Objective: establish an interface between thecustomer and the plant floor, that supports both

competitive customer service and workable

production schedules.

Issues:

Customer Lead Times: shorter is more competitive.

Customer Service: on-time delivery.

Batching:grouping like product families can reduce lost capacity dueto setups.

Interface with Scheduling:customer due dates are are anenormously important control in the overall scheduling process.


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Material Requirement Planning

Objective: Determine all purchase andproduction components needed to satisfythe aggregate/disaggregate plan.

Issues:

Bill of Materials: Determines components,quantities and lead times.

Inventory Management: Must becoordinated with inventory.


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Sequencing and Scheduling

Objective: develop a plan to guide the release ofwork into the system and coordination withneeded resources (e.g., machines, staffing,materials).

Methods:

Sequencing:

Gives order of releases but not times.

Scheduling: Gives detailed release times.


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Shop Floor Control

Objective: control flow of work through plant andcoordinate with other activities (e.g., qualitycontrol, preventive maintenance, etc.)

Issues:

Customization: SFC is often the most highly customized activity in a

plant.

Information Collection: SFC represents the interface with theactual production processes and is therefore a good place to collectdata.

Simplicity: departures from simple mechanisms must be carefullyjustified.


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Aggregate Planning develops mid- termplanning Schedules:

Reducing over and under loading, which result in

reduced production costs.

Planning production capacity to meet demand. Even in

times of peaks and valleys in demand.

Getting the most out of the material and resources

available


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To develop plans that are Feasible: should meet the demand the firm intends to meet

consistent with its financial and physical capacity

Optimal : ensure that resources are used as wisely as

possible and cost kept as low as feasible

To increase the range of alternatives of capacity use

for consideration of the management of the firm

Aggregate Planning- Objectives


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Situations in which demand needs to bematched with capacity: Pricing Promotion Back ordering New demand creation

Optional Strategies for the situations Hire/ Lay off Overtime Part time or casual labors Inventory Subcontracting Cross- training Other methods


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Techniques for Agg. Planning

Linear Programming

Mixed- integer Programming

Linear Decision Rule

Trial and Error techniques


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New Trends in Aggregate Planning

Annualized Hours (Flexi year) .

it is an extension to flextime.

Aggregate Planning OPC

Documents

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