Chapter 13 Aggregate Planning Operations Management 5 th

Chapter 13 Aggregate Planning Operations Management - 5 th Edition Roberta Russell & Bernard W. Taylor, III Copyright 2006 John Wiley & Sons, Inc. Beni Asllani University of Tennessee at Chattanooga

Lecture Outline w w Aggregate Planning Process Strategies for Adjusting Capacity Strategies for Managing Demand Quantitative Techniques for Aggregate Production Planning w Hierarchical Nature of Planning w Aggregate Planning for Services Copyright 2006 John Wiley & Sons, Inc. 2

Aggregate Planning w Determine the resource capacity needed to meet demand over an intermediate time horizon n n Aggregate refers to product lines or families Aggregate planning matches supply and demand w Objectives n n Establish a company wide game plan for allocating resources Develop an economic strategy for meeting demand Copyright 2006 John Wiley & Sons, Inc. 3

Aggregate Planning Process Copyright 2006 John Wiley & Sons, Inc. 4

Meeting Demand Strategies w Adjusting capacity n n Resources necessary to meet demand are acquired and maintained over the time horizon of the plan Minor variations in demand are handled with overtime or under-time w Managing demand n Proactive demand management Copyright 2006 John Wiley & Sons, Inc. 5

Strategies for Adjusting Capacity w Level production n Producing at a constant rate and using inventory to absorb fluctuations in demand w w Chase demand n Hiring and firing workers to match demand w Peak demand n w Overtime and under-time Maintaining resources for high-demand levels n Subcontracting n Let outside companies complete the work w Part-time workers n Hiring part time workers to complete the work w Backordering n Copyright 2006 John Wiley & Sons, Increasing or decreasing working hours Providing the service or product at a later time period 6

Level Production Demand Units Production Time Copyright 2006 John Wiley & Sons, Inc. 7

Chase Demand Units Production Time Copyright 2006 John Wiley & Sons, Inc. 8

Strategies for Managing Demand w Shifting demand into other time periods n n n Incentives Sales promotions Advertising campaigns w Offering products or services with countercyclical demand patterns w Partnering with suppliers to reduce information distortion along the supply chain Copyright 2006 John Wiley & Sons, Inc. 9

Quantitative Techniques For APP w w w Pure Strategies Mixed Strategies Linear Programming Transportation Method Other Quantitative Techniques Copyright 2006 John Wiley & Sons, Inc. 10