Operation Control

In: Business and Management

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The planning Process [pic]

Aggregate Planning • Combines appropriate resources into general terms • Part of a larger production planning system • Disaggregation breaks the plan down into greater detail • Disaggregation results in a master production schedule

Aggregate planning Strategies 1. Use inventories to absorb changes in demand 2. Accommodate changes by varying workforce size 3. Use part-timers, overtime, or idle time to absorb changes 4. Use subcontractors and maintain a stable workforce 5. Change prices or other factors to influence demand

Capacity Options • Changing inventory levels o Increase inventory in low demand periods to meet high demand in the future o Increases costs associated with storage, insurance, handling, obsolescence, and capital investment 15% to 40% o Shortages can mean lost sales due to long lead times and poor customer service • Varying workforce size by hiring or layoffs o Match production rate to demand o Training and separation costs for hiring and laying off workers o New workers may have lower productivity o Laying off workers may lower morale and productivity • Varying production rate through overtime or idle time o Allows constant workforce o May be difficult to meet large increases in demand o Overtime can be costly and may drive down productivity o Absorbing idle time may be difficult • Subcontracting o Temporary measure during periods of peak demand o May be costly o Assuring quality and timely delivery may be difficult o Exposes your customers to a possible competitor • Using part-time workers o Useful for filling unskilled or low skilled positions, especially in services

Demand Options • Influencing demand • Back ordering…...

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