Production Planning

1
Production Planning

• Dr. Everette S. Gardner, Jr.

2
Aggregate planning

• Definition
• Choosing production rates, work force levels,
  and inventory levels
• Horizon
• 6-18 months into future
• Prerequisites
• Forecasting
• Company policies on
• Max./min. inventories
• Hiring/firing
• Overtime

3
Policy considerations in aggregate planning

• Flexibility
• Are work force and inventories maintained at a
  level sufficient to meet unexpected demand?
• Work force stability
• Improves quality, productivity, union relations
• Production rate stability
• Makes materials planning easier, reduces
  uncertainty in physical distribution

APP.xls
4
Policy considerations in aggregate planning
(cont.)

• Production capacity
• Will overtime reduce quality? When will
  physical capacity (space, machinery, equipment)
  become inadequate?
• Customer service
• Have lead time and stock availability goals been
  met?

5
Aggregate planning in services

• Definition
• Balancing service capacity with demand
• Tactics
• Change operating hours
• Change staffing
• Nbr. of workers
• Full vs. part-time
• Modify type of service
• Influence demand
• Advertising
• Pricing
• Build more service outlets

6
Aggregate planning in services (cont.)

• Evaluation
• Waiting time
• Throughput
• Service time
• Nbr. of lost customers

7

• Production Inventory System
• Information Flow
• Material Flow
• Days for transit time
• Days to process or to
• handle and
  issue orders
• 25 Day De- 5 Day
  Delay 25 Day Delay 13 Day
  Delay
• lay to sense to
  sense for Review for Review
• needs, place needs, place
  and and
• and transmit and transmit
  Transmission Transmission
• orders M.O.s of
  orders of orders
• Demand
• Raw Factory
  Factory Distributor
  Retail Ultimate
• Material Warehouse Inventory
  Inventory Customer
• Vendor

35
4
2
1
30
1
10
5
1
Company System Under Managerial Control
Dynamo.xls
8
Response of inventories

10
10,000

Retail inventory (units)
-4
Factory production output (units/week)
45
7.5
7500
Distributor inventory (units)
10
32
12
Retail sales RRR
Weeks
5
5000
(units/week)
-10
-15
-3
Factory warehouse inventory
(units)
2.5
2500
0
0
Sept
Feb
Mar
Apr
May
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Mar
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