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Aggregate Planning: Operations Management
Aggregate Planning: Operations Management
Aggregate Planning: Operations Management
Operations Management
6th Edition
R. Dan Reid & Nada R. Sanders
Financial plan
Identifies the sources and uses of funds; projects cash flows, profits,
return on investment; and provides budgets in support of the strategic
business plan.
Engineering plan
Identifies new products or modifications to existing products that are
needed to support the marketing plan.
Master production schedule
The anticipated production schedule for the company expressed in
specific configurations, quantities, and dates.
Demand-based options
Reactive:
Finished goods inventory – absorb fluctuations and develop a stable
work environment
Backorders for fluctuations (unfilled orders); can be costly
Proactive:
Shifts the demand – patterns (incentives) to minimize fluctuations e.g.
early bird dinner prices at a restaurant
Capacity-based options
Changes output capacity to meet demand
Uses
Overtime – cost of labor per unit increases; short term only
Under time – more people than demand or build up of inventory; short
term only
Subcontracting – provide extra capacity; med to long term
Hiring & Firing – expensive; long term
Part-timers
Cost and operational implications
Data for
Sophisticated
Skates
First calculate
the level
production
rate (14400/8
=1800)
Plan A - Evaluation
19
Total cost reduced by $114K over Plan F, utilization improved to 100%, and cost
per service call now $33.72 (-$7.41)
Workforce fluctuates from 30-69 people- morale problems
Solution?? Compare smaller permanent workforce, more OT??
Aggregate Planning Within OM: How It All Fits
Together
27