Aggregate Planning Flashcards
Rolling planning horizon
the aggregate plan covers 12-18 months. 3-, 6-, 9- rolling.
Reactive strategies
involve capacity options: they attempt to alter capacity so that it matches demand.
Aggressive strategies
attempts to alter demand so that it matches capacity. AKA Proactive Strategies.
Mixed strategies
involves an element of both aggressive and reactive strategies.
Costs for Supply
Hiring and laying off workers- changing the level of the workforce impacts capacity. Higher skilled workers are harder to substitute than lower skilled. Costs of recruitment, screening, and training. Also for severance pay, cost of realigning work force, bad feelings towards the firm, loss of morale of workers when someone is laid off.
Overtime and slack time- overtime good for seasonal peaks. Avoids the cost of additional people and help. Slack time can be used for training, problem solving, and process improvement.
Part time workers- cost less than regular workers. Mainly for seasonal. Department stores, restaurants, supermarkets. Hourly wages and fringe benefits.
Inventories- holding and carrying goods as inventory until needed. Costs of storage, insurance, obsolescence, deterioration, spoilage, breakage, etc.
Subcontracting- conducting work for another organization.
Costs for Demand
Pricing- pricing differentials for shifts in demands. Peak periods and off peak periods. Opportunity costs.
Promotion-advertising. Costly because it stresses capacity if it bring in demand at the wrong time.
Back orders- orders are placed one period for promise of delivery in a later period. Cost of lost sales, annoyed and disappointed customers, additional paperwork.
New Demand- creating new demand in slack times or compliments to seasonal products.
Level Capacity Strategy
steady rate of regular-time output while meeting variations in demand using a COMBINATION of options. May include backlogging, subcontracting, and inventories.
Chase Demand Strategy
matching capacity to demand; the planned output for a period is set at the expected demand for that period.
Types of Aggregate Planning
Production Plan
Staffing Plan
things to aggregate
products
labor
Types of Aggregate Planning
Production Plan
Staffing Plan
things to aggregate
products
labor
