Aggregate planning

Question 1

Where on the planning hierarchy is aggregate planning?

Answer 1

after

• finance
• marketing
• operations
• forecasting
• capacity planning

before

• MPS
• Lot sizing
• Purchasing
• Scheduling & Routing

Question 2

Describe aggregation

Answer 2

• big picture approach
• focuses of groups of goods and services
• calculetes operating hours / machine hours per period

Question 3

For how long does aggregation plan?

Answer 3

3-18 months

Question 4

How can time and material problems be reduced?

Answer 4

-include supply chain partners

Question 5

What is the goal of aggregate planning?

Answer 5

• match supply and demand

- minimize costs for planning horizon & cover forecasted demand

Question 6

How can supply and demand be matched?

Answer 6

Demand strategies
-adjust demand through price adjustment and advertising

Capacity strategies
-change capacities so demand can be met

Mixed strategies
-demand + capacity strategy

Question 7

another name for aggregate planning

Answer 7

Sales and operations planning

Question 8

What information is needed for aggregate planning?

Answer 8

Production rate
Workforce (nr of workers/divisions)
Overtime (planned)
Machine capacity level
subcontracting
backlog
inventory on hand

Question 9

What is backlog?

Answer 9

-demand carried over form last period

Question 10

What is inventory on hand?

Answer 10

planned inventory at the end of one period

Question 11

What are basic capacity strategies?

Answer 11

Level strategy (Emancipation)

Chase strategy (Synchronization)

using a combination of decision variables

Question 12

Define level strategy

Answer 12

• constant production rate/work force
• stable work force
• stable production rate
• high inventory costs

Question 13

What happens when demand and output change during level strategy?

Answer 13

Demand & output equal –> inventory constant
Output > Demand –> inventory builds up
Output < Demand –> stockout may occur/inventory is reduced

Question 14

Define chase strategy

Answer 14

• capacity adjusted to match demand over planning horizon
• inventory investment is kept low
• cost of adjusting output rates & workforce levels low

Question 15

What happens during the chase strategy of demand changes?

Answer 15

forecasted demand –> output = demand

less than forecasted demand –> output lowered to match demand

more than forecasted demand –> output above normal, capacity increased

Question 16

How does the trial and error technique work?

Answer 16

1. Plot demand
2. Determine capacity
3. chose level/chase/mixed strategy
4. optimize via linear programming

Question 17

What is the gerneral approach to aggregate planning?

Answer 17

1. Determine demand for each period
2. determine capacities for each period
3. identify company/department policies
4. determine unit costs for relevant costs
5. develop alternative plans & compute cost of each

If satisfactory plans emerge select the one that satisfies goals the best
Therwise return to step 5.

Question 18

What is master scheduling?

Answer 18

Break down of the aggregate plan into short-term production quantities as well as time-based requirements

Question 19

How does master scheduling work?

Answer 19

1. Disaggregation of aggregated products
2. breaking down aggregate plan into short term quantities & long term requirements
3. Tough capacity planning to check for feasibility with master schedule
4. time fences divide time into three phases
5. already includes lot sizing

Question 20

What are the phases of master scheduling?

Answer 20

1-3 periods — frozen (firm or fixed)

4-5 periods — slushy (somewhat firm)

6-9 periods — liquid (open)