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Aggregate Planning

Aggregate Planning. Professor Ahmadi. Planning Tasks and Responsibilities. Aggregate Planning. Provides the quantity and timing of production for intermediate future Usually 3 to 18 months into future Combines (‘aggregates’) production Often expressed in common units

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Aggregate Planning

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  1. Aggregate Planning Professor Ahmadi

  2. Planning Tasks and Responsibilities

  3. Aggregate Planning • Provides the quantity and timing of production for intermediate future • Usually 3 to 18 months into future • Combines (‘aggregates’) production • Often expressed in common units • Example: Hours, dollars, equivalents (e.g., FTE students) • Involves capacity and demand variables

  4. Aggregate Planning Goals • Meet demand • Use capacity efficiently • Meet inventory policy • Minimize cost • Labor • Inventory • Plant & equipment • Subcontract

  5. Aggregate Planning StrategiesPure Strategies • Capacity Options — change capacity: • changing inventory levels • varying work force size by hiring or layoffs • varying production capacity through overtime or idle time • subcontracting • using part-time workers

  6. Aggregate Planning StrategiesPure Strategies • Demand Options — change demand: • influencing demand • backordering during high demand periods • counterseasonal product mixing

  7. The Extremes Chase Strategy Level Strategy Production equals demand Production rate is constant

  8. Aggregate Planning Strategies • Mixed strategy • Combines 2 or more aggregate scheduling options • Level scheduling strategy • Produce same amount every day • Keep work force level constant • Vary non-work force capacity or demand options • Often results in lowest production costs

  9. Aggregate Planning Methods • Graphical & charting techniques • Popular & easy-to-understand • Trial & error approach • Mathematical approaches • Transportation method • Linear decision rule • Management coefficients model • Simulation

  10. The Graphical Approach to Aggregate Planning • Forecast the demand for each period • Determine the capacity for regular time, overtime, and subcontracting, for each period • Determine the labor costs, hiring and firing costs, and inventory holding costs • Consider company policies which may apply to the workers or to stock levels • Develop alternative plans, and examine their total costs

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