Where on the planning hierarchy is aggregate planning?
after
- finance
- marketing
- operations
- forecasting
- capacity planning
before
- MPS
- Lot sizing
- Purchasing
- Scheduling & Routing
Describe aggregation
- big picture approach
- focuses of groups of goods and services
- calculetes operating hours / machine hours per period
For how long does aggregation plan?
3-18 months
How can time and material problems be reduced?
-include supply chain partners
What is the goal of aggregate planning?
- match supply and demand
- minimize costs for planning horizon & cover forecasted demand
How can supply and demand be matched?
Demand strategies
-adjust demand through price adjustment and advertising
Capacity strategies
-change capacities so demand can be met
Mixed strategies
-demand + capacity strategy
another name for aggregate planning
Sales and operations planning
What information is needed for aggregate planning?
Production rate Workforce (nr of workers/divisions) Overtime (planned) Machine capacity level subcontracting backlog inventory on hand
What is backlog?
-demand carried over form last period
What is inventory on hand?
planned inventory at the end of one period
What are basic capacity strategies?
Level strategy (Emancipation)
Chase strategy (Synchronization)
using a combination of decision variables
Define level strategy
- constant production rate/work force
- stable work force
- stable production rate
- high inventory costs
What happens when demand and output change during level strategy?
Demand & output equal –> inventory constant
Output > Demand –> inventory builds up
Output < Demand –> stockout may occur/inventory is reduced
Define chase strategy
- capacity adjusted to match demand over planning horizon
- inventory investment is kept low
- cost of adjusting output rates & workforce levels low
What happens during the chase strategy of demand changes?
forecasted demand –> output = demand
less than forecasted demand –> output lowered to match demand
more than forecasted demand –> output above normal, capacity increased
How does the trial and error technique work?
- Plot demand
- Determine capacity
- chose level/chase/mixed strategy
- optimize via linear programming
What is the gerneral approach to aggregate planning?
- Determine demand for each period
- determine capacities for each period
- identify company/department policies
- determine unit costs for relevant costs
- develop alternative plans & compute cost of each
If satisfactory plans emerge select the one that satisfies goals the best
Therwise return to step 5.
What is master scheduling?
Break down of the aggregate plan into short-term production quantities as well as time-based requirements
How does master scheduling work?
- Disaggregation of aggregated products
- breaking down aggregate plan into short term quantities & long term requirements
- Tough capacity planning to check for feasibility with master schedule
- time fences divide time into three phases
- already includes lot sizing
What are the phases of master scheduling?
1-3 periods — frozen (firm or fixed)
4-5 periods — slushy (somewhat firm)
6-9 periods — liquid (open)
