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Aggregate Planning

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Rough-cut capacity planning: Approximate ... Time Fences in MPS. 12. 11. 10. 9. 8. 7. 6. 5. 4. 3. 2. 1. Period. frozen. firm. full. open. Aggregate Planning ... – PowerPoint PPT presentation

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Title: Aggregate Planning


1
Aggregate Planning
Chapter 12
2
Core MRP II
MANUFACTURING RESOURCE PLANNING
3
Aggregate Planning Strategies
  • Maintain a level workforce
  • Maintain a steady output rate
  • Match demand period by period
  • Use a combination of decision variables

4
Basic Strategies
  • Level capacity
  • Maintaining a steady rate of regular-time output
    while meeting variations in demand by a
    combination of options.
  • Chase demand
  • Matching capacity to demand the planned output
    for a period is the expected demand for that
    period.

5
Disaggregating
  • Master schedule The result of disaggregating an
    aggregate plan shows quantity and timing of
    specific end items for a scheduled horizon.
  • Rough-cut capacity planning Approximate
    balancing of capacity and demand to test the
    feasibility of a master schedule.

6
Master Scheduling Process
7
Time Fences in MPS
8
Aggregate Production Planning
  • Aggregate Versus Detailed Plans
  • Costs Of Production
  • Chase, Level, And Mixed Strategies

9
Aggregate Versus Detailed Plans
  • Plans differ in terms of detail and planning
    horizons
  • The aggregate production plan has a moderate
    horizon but little detail
  • E.g., Plan overall facility production
    month-by-month for the the next 18 months
  • The master production schedule has a short
    horizon but great detail
  • E.g., Plan production for each product
    week-by-week for the next 12 weeks

10
Aggregate Versus Detailed Plans
  • Why plan aggregate production levels?
  • Aggregate plans do not provide detail needed to
    run facility
  • But detail unnecessary for medium-range resource
    deployment decisions
  • Labor force size
  • Financing inventory
  • Aggregate forecasts are more accurate than
    detailed forecasts

11
Aggregate Versus Detailed Forecasts
  • Sales forecasts can be aggregated with respect to
    time

12
Aggregate Versus Detailed Forecasts
  • Sales forecasts can be aggregated with respect to
    time

13
Aggregate Versus Detailed Forecasts
  • Sales forecasts can be aggregated with respect to
    product

14
Aggregate Versus Detailed Forecasts
  • Sales forecasts can be aggregated with respect to
    product

15
Aggregate Versus Detailed Forecasts
  • Why? Aggregate forecasts are more accurate than
    individual detailed forecasts

16
Aggregate Versus Detailed Forecasts
  • Why? Aggregate forecasts are more accurate than
    individual detailed forecasts

17
Aggregate Versus Detailed Forecasts
  • Use aggregate forecasts for planning medium-range
    overall production levels.
  • High long-range forecast accuracy
  • Detail not needed for planning long-range
    resource use (labor, inventory, etc.)
  • Use detailed forecasts for initial detailed
    short-range Master Production Schedule (MPS)
  • Detailed forecasts reasonably accurate for this
    time frame
  • Need product-specific detail for MPS

18
The Aggregate Production Plan
  • Consider the following aggregate demand forecast
  • The plan is stated in the the common unit of
    capacity direct labor hours

19
The Aggregate Production Plan
  • Suppose we want to try to match demand

20
The Aggregate Production Plan
  • Suppose we want to try to match demand
  • How do we cost out the plan?

21
The Aggregate Production Plan
  • First need some more information

22
The Aggregate Production Plan
  • Projected Available Balance is simply the
    estimated ending inventory for each period

23
The Aggregate Production Plan
  • The workers needed is based on the planned
    production and average worker productivity
    here, it is 500 DLH/Worker/Quarter

24
Costs Of Maintaining And Changing Production
Levels
  • Costs of keeping production steady
  • Ch -- Holding cost ( / DLH / quarter)
  • Cb -- Backorder cost ( / DLH / quarter)
  • Costs of changing production
  • CH -- Hiring cost ( / Worker)
  • CF -- Firing cost ( / Worker)
  • Also need to worry about
  • CR -- Wage rate ( / DLH / period)

25
The Aggregate Production Plan
  • For our example, the wage rate is 10/DLH

26
The Aggregate Production Plan
  • The hiring and firing costs are 2000 and 500,
    respectively

27
The Aggregate Production Plan
  • Holding and backorder costs are 1 and 3
    /DLH/Quarter, respectively

28
The Aggregate Production Plan
  • Which gives us a projected cost of 400,000 for
    the year

29
Chase, Level, Mixed Strategies
  • This example is the first of the two "pure"
    strategies
  • Chase strategy make only as much as you can
    sell
  • The other pure strategy has a different cost
    structure
  • Level strategy maintain a steady production
    rate
  • In reality, a firm's strategy will be a
    combination or mixture of chase and level

30
The Aggregate Production Plan
  • A level strategy will absorb fluctuations in
    demand through fluctuations in inventory

31
The Aggregate Production Plan
  • A level strategy will absorb fluctuations in
    demand through fluctuations in inventory

32
The Aggregate Production Plan
  • A level strategy will absorb fluctuations in
    demand through fluctuations in inventory

33
The Aggregate Production Plan
  • A level strategy will absorb fluctuations in
    demand through fluctuations in inventory

34
The Aggregate Production Plan
  • A level strategy will absorb fluctuations in
    demand through fluctuations in inventory

35
The Aggregate Production Plan
  • A level strategy will absorb fluctuations in
    demand through fluctuations in inventory
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