Professional Documents
Culture Documents
Aggregate Planning
Aggregate Planning
Process planning
Sales and operations (aggregate) planning Sales plan Aggregate operations plan
Services
Material requirements planning Weekly workforce and customer scheduling Daily workforce and customer scheduling
Short range
Order scheduling
Greater than one year planning horizon Usually performed in annual increments
Medium-range planning
Short-range planning
One day to less than six months Usually with weekly or daily increments
production rate (units completed per unit of time) workforce level (number of workers) inventory on hand (inventory carried from previous period)
Product group or broad category (Aggregation) This planning is done over an intermediaterange planning period of 3 to18 months
Suppose the figure to the right represents forecast demand in units Now suppose this lower figure represents the aggregate capacity of the company to meet demand What we want to do is balance out the production rate, workforce levels, and inventory to make these figures match up
10000 8000 8000 6000 4000 2000 0 Jan Feb Mar 9000 8000 6000 6000 4000 2000 0 Jan Feb Mar Apr May Jun 4500 4000 4000 Apr May Jun 5500 4500 7000 6000
10000 8000
Current workforce
Inventory levels
Internal to firm
Chase
Level
Materials Holding costs Marginal cost of stockout Hiring and training cost Layoff costs Labor hours required Straight time labor cost Beginning inventory Productive hours/worker/day Paid straight hrs/day
Rs5/unit Rs1/unit per mo. Rs1.25/unit per mo. Rs200/worker Rs250/worker .15 hrs/unit Rs8/hour 250 units 7.25 8
7.25 8
Mar 21 Apr 21 May 22 Jun 20
10
Demand/mo Jun
Jan
Feb
Apr 10000
May 8000
7.25x2 2
11
Jan Demand Beg. inv. Net req. Req. workers Hired Fired Workforce Ending inventory
3 4 0
12
Demand Beg. inv. Net req. Req. workers Hired Fired Workforce Ending inventory
Then, calculate number of workers needed to produce the net requirements, or 4250/1063.33=3.997 or 4 workers Finally, determine the number of workers to hire/fire. In this case we only need 4 workers, we have 7, so 3 can be fired.
13
Below are the complete calculations for the remaining months in the six month planning horizon
Days/mo Hrs/worker/mo Units/worker Rs/worker Jan 22 159.5 1,063 1,408 Feb 19 137.75 918 1,216 Mar 21 152.25 1,015 1,344 Apr 21 152.25 1,015 1,344 May 22 159.5 1,063 1,408 Jun 20 145 967 1,280
Demand Beg. inv. Net req. Req. workers Hired Fired Workforce Ending inventory
14
Below are the complete calculations for the remaining months in the six month planning horizon with the other costs included
Demand Beg. inv. Net req. Req. workers Hired Fired Workforce Ending inventory Jan 4,500 250 4,250 3.997 3 4 0 Feb 5,500 5,500 5.989 2 6 0 Mar 7,000 7,000 6.897 1 7 0 Apr 10,000 10,000 9.852 3 10 0 May 8,000 8,000 7.524 2 8 0 Jun 6,000 6,000 6.207 1 7 0
Feb
Mar
Apr
May
Jun
Costs
15
Below are the complete calculations for the remaining months in the six month planning horizon with the other costs included
Demand Beg. inv. Net req. Req. workers Hired Fired Workforce Ending inventory Jan 4,500 250 4,250 3.997 3 4 0 Feb 5,500 5,500 5.989 2 6 0 Mar 7,000 7,000 6.897 1 7 0 Apr 10,000 10,000 9.852 3 10 0 May 8,000 8,000 7.524 2 8 0 Jun 6,000 6,000 6.207 1 7 0
16
Jan Demand Beg. inv. Net req. Workers Production Ending inventory Surplus Shortage
17
Demand Beg. inv. Net req. W orkers P roduction Ending invento ry Surplus Shortage
18
Below are the complete calculations for the remaining months in the six month planning horizon
Jan 4,500 250 4,250 6 6,380 2,130 2,130 Feb 5,500 2,130 3,370 6 5,510 2,140 2,140 Mar 7,000 2,140 4,860 6 6,090 1,230 1,230 Apr 10,000 1,230 8,770 6 6,090 -2,680 2,680 May 8,000 -2,680 10,680 6 6,380 -1,300 1,300 Jun 6,000 -1,300 7,300 6 5,800 -1,500 1,500
Demand Beg. inv. Net req. Workers Production Ending inventory Surplus Shortage
19
Below are the complete calculations for the remaining months in the six month planning horizon with the other costs included
Jan 4,500 250 4,250 6 6,380 2,130 2,130 Feb 5,500 2,130 3,370 6 5,510 2,140 2,140 Mar 7,000 10 4,860 6 6,090 1,230 1,230 Apr 10,000 -910 8,770 6 6,090 -2,680 2,680 Jan 8,448.00 31,900.00 2,130.00 Feb Mar Apr 7,296.00 8,064.00 8,064.00 27,550.00 30,450.00 30,450.00 2,140.00 1,230.00 3,350.00 May 8,000 -3,910 10,680 6 6,380 -1,300 1,300 May 8,448.00 31,900.00 1,625.00 Jun 6,000 Note, total -1,620 costs under 7,300 this strategy 6 5,800 are less than -1,500