Professional Documents
Culture Documents
Learning Objectives
Describe planning Distinguish the types of plans Define aggregate scheduling Relate aggregate scheduling to the overall planning process Explain aggregate scheduling options Develop aggregate schedules
Example
Youve started a new company. Youve developed 2 production plans: Month Forecast Plan 1 Plan 2 Jan 900 900 800 Feb 700 700 800 Mar 800 800 800 You estimate 1 worker can make 100 units per month. Which plan do you use? How many workers do you hire? How do you meet demand?
Planning
Example: Meet demand within the limits of available resources at the least cost Example: Hire more workers
Assigning responsibility
Types of Plans
Management Level
High Top Executives Long-Range Facility location Intermediate-Range Aggregate plans
Supervisors
1 year 18 months 5 years
3 months
Aggregate Scheduling
Example: Hours, dollars, equivalents (e.g., FTE students) Time to make average product
No, modify CRP, MRP, or MPS Capacity Requirements Planning Shop Floor Schedules
Realistic?
Yes
Meet demand Use capacity efficiently Meet inventory policy Minimize cost
Capacity
Demand
Costs
Smoothing costs:
Hiring: advertise, interview, train Firing: severance, bad morale, future hiring
Holding costs - charged on inv At end Shortage costs Labor costs / overtime, materials Subcontracting / outsourcing
Produce same amount every day Keep work force level constant Vary non-work force capacity or demand Often results in lowest production costs
Hire / Fire workers to make production capacity meet necessary production
Chase strategy
Mixed strategy
Overtime
Price
Mixed Strategy
Inventory Subcontract
Popular & easy-to-understand Trial & error approach Linear Programming Simulation More involved, but usually better answers
Mathematical approaches
JC Company p. 292
Materials Cost: $100/unit Labor: 5 hours per unit, $4/hr RT, $6/hr OT
Subcontract $20/unit ($120 - $100 matl savings) Holding cost $1.5/unit/mo Stockout cost $5/unit/mo Hiring cost $200 Firing cost $250 Starting inventory 400 units, safety stock 25%
Jan Feb 1,500 Mar 1,100 Apr 900 May 1,100 June 1,600
Exhibit 11.3
Goal of 25% of sales as safety stock For planning, assume safety stock never used
Jan 400 1,800 450 1,850 450 Feb 450 1,500 375 1,425 375 Mar 375 1,100 275 1,000 275 Apr 275 900 225 850 225 May 225 1,100 275 1,150 275 June 275 1,600 400 1,725 400
Beginning Inventory Demand Forecast Safety Stock (0.25*demand foreast) Production Requirement (Forecast+SS-Begin Inv) Ending Inventory
Start with workers needed for month 1 May have too many at end
Apr (32) 850 21 6,720 1,344 900 412 225 187 281
May 412 1,150 22 7,040 1,408 1,100 720 275 445 668
Total D = 8,000 units 5*8,000 = 40,000 hours 125 days total = 1,000 hrs 40,000/1,000 = 40 workers No penalty missing safety stock
Subcontract: Plan 3
Production Req. Work Days Work Hrs Actual production Subcontracted Subcontr. Cost $ Labor Cost $ Workers = Subcontr. Cost = Labor Cost = Total Cost = Jan 1,850 22 4,400 880 970 19,400 17,600 25 $ 60,000 $ 100,000 $ 160,000
April has lowest demand 21 days * 8 hrs = 168 850*5/168 = 25.3 workers Subcontract rest
Feb
Mar
Apr
May
$ $ $
Find # workers to do all except biggest mos in RT Trial and error Not enough safety stock
Variables
It = Inventory for t Wt = workers for t Ht = hired in t Ft = fired in t Pt= production for t All must be >= 0 Ot = Overtime Ut = idle time St = subcontracted
Constraints
Workforce conservation Wt = Wt-1 + Ht - Ft Units Conervation It = It-1 + Pt + St - Dt Production and workforce level Pt= K*nt*Wt + Ot - Ut Each of these must be satisfied for all t
LP Formulation
Min cH H t cF Ft cI I t cR Pt
t 1 n
H t , Ft , I t , Ot , U t , St , Wt , Pt 0
LP Considerations
LP can be modified to include minimum inv. level each period Negative inventory can be allowed Care needed when rounding
Conclusion
Described role of aggregate planning Described types of plans Explained aggregate scheduling options Developed aggregate schedules