Chapter 9: Aggregate Planning

Question 1

Aggregate planning decisions are 1. _____ which define the 2. _____ within which an organization will operate

Answer 1

1. Tactical decisions
2. Parameters

Question 2

Aggregate planning can be seen as matching _____ with _____

Answer 2

Demand with supply

Question 3

Define aggregate planning

Answer 3

It is capacity planning for the coming medium-term. For example 3 to 18 months

Question 4

What are the requirements for a good aggregate plan

Answer 4

• a logical unit of measure either of sales or output for a product
• a valid forecast for the planning period
• evaluate method of measuring the cost of the production of the product
• a planning model that combines the forecast made and the costs associated with production that will produce a valid aggregate plan

Question 5

What are the characteristics of an aggregate plan

Answer 5

• the plant seeds of facilities as fixed, they cannot be expanded or reduced
• a number of objectives are set by management
• an assumption is made that the demand is fluctuating seasonal or uncertain
• it is possible to change both the supply and demand variables
• the time Horizon for the plan is not longer than 18 months in the plan is updated regularly

Question 6

What are the capacity options in managing an aggregate plan (pg 236)

Answer 6

• making use of overtime
• making use of contract or part-time workers
• changing inventory levels as necessary
• subcontracting or outsourcing work to other organizations
• managing the workforce by planning for employee recruitment and/or redundancy decisions

Question 7

What are the demand options in managing an aggregate plan (pg 237)

Answer 7

• creating new demand
• mixing products or services to counteract each other seasonally
• attempting to influence the demand for a product
• utilizing backlogs or back ordering during peak demand periods
• using different pricing strategies to stimulate demand during periods of low demand

Question 8

What are the strategies used in balancing demand and capacity

Answer 8

• maintaining a level workforce
• producing at a steady output rate
• matching demand for each period
• combining all or some of these

The first three strategies known as pure strategies and the fourth strategy is known as a mixed strategy.
The first two strategies are also referred to as some form of level strategy, while the third strategy is a chase strategy

Question 9

Explain level strategy

Answer 9

A level strategy requires a level rate of output throughout the planning period. Inventory is used to balance the differences between demand and output

Question 10

Explain a chase strategy

Answer 10

Rather than maintaining a constant level of production and a fully staffed workforce, a business implementing a chase strategy adjusts production levels and work for service in response to customer demand.

this is achieved by:
- employing or laying of workers
- utilizing over time
- employing part-time labor or subcontracting work to other organizations

Question 11

Explain combining pure strategies

Answer 11

In this type of strategy the need for keeping inventory is almost non-existent

Question 12

What are the prevalent costs in aggregate planning (pg 241)

Answer 12

• employment and retrenchment costs
• back ordering and stock out costs
• subcontracting costs
• overtime and idle time costs
• inventory carrying cost
• part-time labor cost

Question 13

What are the advantages and disadvantages of various strategies in aggregate planning (pg 242)