Professional Documents
Culture Documents
Chapter 14
Aggregate Sales and
Operations Planning
McGraw-Hill/Irwin
OBJECTIVES
McGraw-Hill/Irwin
Exhibit
Exhibit14.1
14.1
Process planning
Long
range
Intermediat Forecasting
& demand
e
management
range
Manufacturing
Services
Master scheduling
Material requirements planning
Short
range
McGraw-Hill/Irwin
Order scheduling
Long-range planning
Medium-range planning
Short-range planning
McGraw-Hill/Irwin
McGraw-Hill/Irwin
10000
10000
8000
8000
6000
7000
6000
5500
4500
4000
2000
0
Jan
Feb
Mar
9000
10000
Apr
May
Jun
8000
8000
What
Whatwe
wewant
wantto
todo
doisis
balance
balanceout
outthe
the
production
productionrate,
rate,
workforce
workforcelevels,
levels,and
and
inventory
inventoryto
tomake
make
these
figures
these figuresmatch
matchup
up
McGraw-Hill/Irwin
6000
6000
4500
4000
Jan
Feb
4000
4000
2000
0
Mar
Apr
May
Jun
Current
physical
capacity
Raw material
availability
McGraw-Hill/Irwin
External
to firm
Economic
conditions
Planning
for
production
Current
workforce
Market
demand
Inventory
levels
Activities
required
for
production
Internal
to firm
Level
Some
McGraw-Hill/Irwin
Jan
Feb
Mar
Apr
May
Jun
4500
5500
7000
10000
8000
6000
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
McGraw-Hill/Irwin
$5/unit
$1/unit per mo.
$1.25/unit per mo.
$200/worker
$250/worker
.15 hrs/unit
$8/hour
250 units
7.25
8
2006 The McGraw-Hill Companies, Inc., All
10
Jan
Feb
Mar
Apr
May
4500
5500
7000
10000
8000
6000
Productive hours/worker/day
Paid straight hrs/day
22x8hrsx$8=$140
Jan
8
Days/mo
22
Hrs/worker/mo
159.5
Units/worker
1063.33
$/worker
$1,408
McGraw-Hill/Irwin
Feb
19
137.75
918.33
1,216
7.25
8
Mar
21
152.25
1015
1,344
7.25x2
2
7.25x0.15=48.33
&
Apr
May
Jun
84.33x22=1063.33
21
22
20
152.25
159.5
145
1015 1063.33 966.67
1,344
1,408
1,280
11
Chase Strategy
(Hiring & Firing to meet demand)
Days/mo
Hrs/worker/mo
Units/worker
$/worker
Demand
Beg. inv.
Net req.
Req. workers
Hired
Fired
Workforce
Ending inventory
McGraw-Hill/Irwin
J an
22
159.5
1,063.33
$1,408
J an
4,500
250
4,250
3.997
3
4
0
Lets
Letsassume
assumeour
ourcurrent
currentworkforce
workforceisis77
workers.
workers.
12
Below
Beloware
arethe
thecomplete
completecalculations
calculationsfor
forthe
theremaining
remaining
months
monthsin
inthe
thesix
sixmonth
monthplanning
planninghorizon
horizon
Days/mo
Hrs/worker/mo
Units/worker
$/worker
Demand
Beg. inv.
Net req.
Req. workers
Hired
Fired
Workforce
Ending inventory
McGraw-Hill/Irwin
J an
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
J un
20
145
967
1,280
J an
4,500
250
4,250
3.997
Feb
5,500
Mar
7,000
Apr
10,000
May
8,000
J un
6,000
5,500
5.989
2
7,000
6.897
1
10,000
9.852
3
8,000
7.524
6,000
6.207
2
8
0
1
7
0
3
4
0
6
0
7
0
10
0
13
Demand
Beg. inv.
Net req.
Req. workers
Hired
Fired
Workforce
Ending inventory
Material
Labor
Hiring cost
Firing cost
3
4
0
Feb
5,500
Mar
7,000
Apr
10,000
May
8,000
Jun
6,000
5,500
5.989
2
7,000
6.897
1
10,000
9.852
3
8,000
7.524
6,000
6.207
2
8
0
1
7
0
6
0
7
0
10
0
J an
Feb
Mar
Apr
May
Jun
$21,250.00 $27,500.00 $35,000.00 $50,000.00 $40,000.00 $30,000.00
5,627.59 7,282.76 9,268.97 13,241.38 10,593.10 7,944.83
400.00
200.00
600.00
750.00
500.00
250.00
McGraw-Hill/Irwin
Costs
203,750.00
53,958.62
1,200.00
1,500.00
$260,408.62
14
McGraw-Hill/Irwin
Demand
Beg. inv.
Net req.
Workers
Production
Ending inventory
Surplus
Shortage
J an
4,500
250
4,250
6
6,380
2,130
2,130
15
Below
Below are
arethe
thecomplete
complete calculations
calculationsfor
for the
the remaining
remaining
months
monthsin
inthe
thesix
sixmonth
monthplanning
planninghorizon
horizon
Demand
Beg. inv.
Net req.
Workers
Production
Ending inventory
Surplus
Shortage
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
May
8,000
-2,680
10,680
6
6,380
-1,300
Jun
6,000
-1,300
7,300
6
5,800
-1,500
2,680
1,300
1,500
Note,
Note, ifif we
we recalculate
recalculate this
this sheet
sheet with
with 77 workers
workers
we
we would
would have
have aa surplus
surplus
McGraw-Hill/Irwin
Below
Below are
are the
the complete
complete calculations
calculations for
for the
the
remaining
remaining months
months in
in the
the six
six month
month planning
planning
horizon
horizon with
with the
the other
other costs
costs included
included
Jan
4,500
250
4,250
6
6,380
2,130
2,130
Jan
$8,448
31,900
2,130
Feb
5,500
2,130
3,370
6
5,510
2,140
2,140
Feb
$7,296
27,550
2,140
Mar
7,000
10
4,860
6
6,090
1,230
1,230
Mar
$8,064
30,450
1,230
Apr
10,000
-910
8,770
6
6,090
-2,680
May
8,000
-3,910
10,680
6
6,380
-1,300
Jun
6,000
-1,620
7,300
6
5,800
-1,500
2,680
1,300
1,500
Apr
$8,064
30,450
May
$8,448
31,900
Jun
$7,680
29,000
3,350
1,625
1,875
Note,
Note,total
total
costs
costs under
under
this
thisstrategy
strategy
are
areless
lessthan
than
Chase
Chaseat
at
$260.408.62
$260.408.62
$48,000.00
181,250.00
5,500.00
6,850.00
Labor
Material
Storage
Stockout
$241,600.00
McGraw-Hill/Irwin
16
17
Yield Management
problems like
Overbooking
Fare Classes
Premium Seats
Single Order Quantities
McGraw-Hill/Irwin
18
Strategic Capacity
Capacity Management Concepts
Management
Capacity Planning
Decision tree as a tool to evaluate capacity
alternatives
McGraw-Hill/Irwin
19
Decision Tree
McGraw-Hill/Irwin