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Sales&Operation Planning
Sales&Operation Planning
e
Operations and
Supply Chain
Management
CHASE | SHANKAR | JACOBS
191
SALES AND
OPERATIONS
PLANNING
Chapter Nineteen
McGraw-Hill/Irwin
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reserved.
Learning Objectives
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reserved.
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reserved.
195
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Long-range planning
Planning focusing on a horizon greater than 1
year, usually performed annually
Intermediate-range planning
Planning focusing on a period from 3 to 18
months, time increments are weekly, monthly, or
quarterly
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reserved.
Types of Planning
Short-range planning
Planning covering a period from 1 day to 6
months with daily or weekly time increments
197
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reserved.
Aggregate Operations
Plans
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reserved.
Production Planning
Environment
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reserved.
1910
Production planning
strategies are the
plans for meeting
demand. Trade offs
involved include
workers employed,
work hours, inventory
and shortages.
A pure strategy uses
just one of these
approaches, a mixed
strategy uses two or
more.
Stabl
e
work
force
varia
ble
work
hour
s
Cha
se
stra
teg
y
Lev
el
stra
teg
y
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reserved.
Production Planning
Strategies
Sub
con
trac
ting
1911
Costs associated
with changes in
Basic production
the production
costs
rate
Cost Types
Inventory holding
costs
Backorder costs
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Relevant Costs
1912
Cut-and-try approach
Involves costing out various production planning alternatives
and selecting the one that is best
Elaborate spreadsheets developed to facilitate the decision
process
Linear programming
Use of mathematical analysis to determine an optimal plan
Simulation
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reserved.
Aggregate Planning
Techniques
1913
Because
inventory
holding cost is
in $/unit,
material cost is
not relevant
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reserved.
1914
January ending
inventory becomes
February
beginning
inventory.
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reserved.
Aggregate Planning
JC Company
Excel: Aggregat
e Planning
1915
Produce to meet
expected average
demand by maintaining a
constant workforce
Produce to meet
expected demand for all
but the first two months
using a constant
workforce and use
overtime to meet
additional output
requirements
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reserved.
Evaluate Alternative
Plans
1916
Production
exactly matches
requirements.
Workers are
added or
reduced as
needed.
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reserved.
1917
Number of workers is
set to meet average
demand over the
time horizon. This
then determines
production rate and
inventory/backorders
.
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reserved.
1918
to meet
minimum
demand (April).
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reserved.
Demand over
minimum is met with
subcontracting.
1919
Demand in
the first
two
months is
high, so
overtime is
used to
compensat
e. Then,
inventory
can be
built for
high
demand in
June.
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reserved.
1920
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reserved.
Plan Comparison
1921
Graphical
Summary
1922
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Level Scheduling
1923
Advantages
The entire system can be
planned to minimize
inventory and work-inprocess.
Product modifications are upto-date because of the low
amount of work-in-process.
There is a smooth flow
throughout the production
system.
Purchased items from vendors
can be delivered when
needed, often directly to the
production line.
Requirements
Production should be
repetitive (assembly-line
format).
The system must contain
excess capacity.
Output of the system must
be fixed for a period of time.
There must be a smooth
relationship among
purchasing, marketing, and
production.
The cost of carrying
inventory must be high.
Equipment costs must be low.
The workforce must be multiskilled.
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reserved.
Level Scheduling
1924
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Yield Management
1925
Demand can
be segmented
by customer
Product can be
sold in
advance
Inventory is
perishable
Demand is
highly variable
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Yield Management
Success Factors
1926
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reserved.
Yield Management
Hotels
Yield management
is most common
when price is
variable and
duration is
predictable.
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reserved.
Yield Management
Levers
1928
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reserved.
Yield Management
Systems