Aggregate Planning.ppt

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Aggregate Planning Aggregate Planning

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Aggregate Planning

Transcript of Aggregate Planning.ppt

PowerPoint PresentationAggregate planning
Translates business plans into rough labor schedules and production plans
Issues to Consider for Aggregate Planning
Production rate: “aggregate units” per worker per unit time
Workforce level: available workforce in terms of hours
Actual Production: Production rate x Workforce level
Inventory: Units carried over from previous periods
Costs: production, changing workforce, inventory
What does aggregate planning do?
Given an aggregate demand forecast , determine production levels, inventory levels, and workforce levels, in order to minimize total relevant costs over the planning horizon
Given the number of variables, there is not a single optimal solution!
Aggregate Planning Strategies
Chase strategy: match production rate to production requirements by varying the workforce (no inventory buildup or shortage allowed)
Level strategy: keep a constant workforce who work at maximum capacity (inventory will vary from period to period); workforce level chosen such that the total requirement over the planning horizon can be exactly met
Stable workforce: keep a constant workforce who work at maximum capacity; outsource in order to match production and requirements (no inventory buildup or shortage allowed); workforce level chosen such that they can exactly satisfy the requirements in the period with the minimum requirement level
Example: CA&J Company…
$4.00/hour
Outsourcing
$20.00/unit
Ending Inventory = Beginning Inventory + Production Requirement – Forecast
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= Total hours required over planning horizon/(8*total days)
= 38,000/(8*125) = 38. This is the no. of workers for each month
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Number of workers
= 900*5/(21*8)
= 27 workers (this is the no. of workers for each month)
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Layoff Cost
… outsourcing costs increase or decrease?
… the holding costs are higher?
… the hiring costs are lower?
… the firing costs are higher?