Aggregate Planning Flashcards
What is sales and operations planning?
Balancing resources and forecasted demand by aligning competing demand from supply chain to consumers using strategic planning.
What is the objective aggregate planning?
Meet forecasted demand while minimizing cost over the planning period.
What question does aggregate planning consider?
Should changes in demand be absorbed through:
Inventories
Varying size of the workforce
Part-timers or overtimers
Subcontractors/outsourcing
What is the chase aggregate planning strategy?
Match output rates to demand forecast for each period
Very workforce/production rate
Favored by many
What is the level aggregate planning strategy?
Uniform daily production
Use inventory or idle time as buffer
Better quality and productivity due to stable production
How are inventories used in the level strategy?
What are the disadvantages?
Increased inventory in low demand period to meet high demand in the future
- May result in shortages (lost sales)
- Increased holding costs
How can varying the size of the workforce be used?
What are the disadvantages?
Match production rate to demand
- Costs associated with hiring/layoffs
- New workers may have different productivity levels
- Layoffs may lower morale
How can overtime be used?
What are the disadvantages?
Maintenance of the same workforce
- May still be difficult to meet high increases of demand
- Can be costly
How can subcontracting/outsourcing be used?
What are the disadvantages?
Temporary measures during periods of peek demand.
- May be costly
- Logistical issues
- Exposes customers to possible competitior
