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Operations Management > Aggregate planning and MPS > Flashcards

Aggregate planning and MPS Flashcards

1
Q

What is aggregate planning?

A

A process businesses use aggregate planning to assess their capacity needs
(e.g., labor, inventories) and costs
over an intermediate time period (2–12 months). Mostly used for grouped products rather than individual products

  • Goal: Achieve a plan that effectively uses the organizations resources to match expected demand
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2
Q

Tell me about the procedure of aggregate planning

A
  • Begins with a forecast of aggregate demand for the intermediate range
  • This is followed by a general plan describing how to meet demand setting employment , finished goods inventory and/or service capacities
  • Output: an aggregate plan addressing future capacity to meet demand
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3
Q

There are 3 different strategies of aggregate planning, what are these?

A
  1. Demand strategies: Alter demand so it matched capacity
  2. Capacity strategies: Alter capacity so it matches demand
  3. Mixed strategies: involve both of these approaches to find an optimal balance
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4
Q

In what ways can aggregate planning alter demand to match capacity?

A
  1. Pricing: pricing differentials
  2. Promotion: Advertising and other forms of promotion
  3. New demand/complementary products: Even out demand peaks/lows by creating new demand
  4. Backorders: Demand fulfillment is shifted to other periods by allowing backorders
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5
Q

In what ways can aggregate planning alter capacity to match demand?

A
  1. Hiring/laying off workers
  2. Overtime/slack time (peak demand= overtime, low demand= slack time)
  3. Part tome or temporary workers
  4. Inventories
  5. Subcontractors: Outsource activities
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6
Q

What is skeleton crew?

A

The smallest team needed to keep things running in a business

  • usually during low demand
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7
Q

What is outsourcing?

A

Paying suppliers and distributors to perform processes/activites and provide needed services and materials

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8
Q

What is offshoring?

A

Moving processes to another country

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9
Q

What is next shoring?

A

Locating processes/activites in close proximity to customer demand or product R&D

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10
Q

What are 2 important factors to think about when outsourcing activities?

A

Proximity: how close related the activites are to the core business of the company

Management complexity: How advance the activites are

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11
Q

What kinds of classifications of outsourcing are there? Draw figure and explain

A

För diagram: se facit

  1. Strategic outsourcing: High proximity and high management complexity
  2. Tactical outsourcing: Low proximity and high management complexity
  3. Solutions outsourcing: High proximity and low management complexity
  4. Traditional outsourcing: Low proximity and low management complexity
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12
Q

What is BPO? Name the 3 levels of core

A

Business Process Outsourcing. A business model used to classify different internal activities by how much they relate to the coreactivities of a company. This can then be used to assess what processes should be outsourced to one or more external suppliers.

  1. Core activity: all the activites with a very high value that differentiates the company
  2. Core related: The activites that are closely related to strategic ones
  3. Core distinct: All activities that exclusively support core processes without having any relationship with it
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13
Q

What is beneficial with outsourcing?

A
  1. Economic convenience
  2. Aquisition of knowledge and technologies
  3. Market flexibility
  4. Reduced time to market
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14
Q

What can be the disadvantages of outsourcing

A
  1. Risk of losing contact with the end customer
  2. Know how: Risk of losing skills and competencies within the company if outsourcing too many activites
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15
Q

How can you maintain a constant level of output?

A
  • Subcontracting: use suppliers for certain processes
  • Backlogs
  • Invcentories
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16
Q

What is idle time?

A

Periods when employees, machinery, or other resources are available but not actively used/utilized.

17
Q

What is the difference between normal and abnormal idle time?

A

Normal idle time: Expected idle time: scheduled maintenance, services, lunch breaks

Abnormasl idle time: Unexpected idle time: Production stops, strikes

18
Q

There are two different approaches for how to respond to market demand, name those and illustrate them by drawing graphs

A
  1. Chase demand. Capacities are adjusted to match demand requirements
    +: Low investment in inventory
    -: Cost of adjusting output rates and workforce levels
  2. Level approach: Capacities are kept constant over the planning horizon
    +: Stable output rates and workforce levels
    -: Bigger inventory costs and increased idle time/overtime and higher risks of stockout during peak demand
19
Q

What is aggregate planning? What are the procedure for aggregate planning?

A

Aggregate planning is a method to plan production, inventory, and staffing over a medium-term period (2-12 months) to meet customer demand while minimizing costs. Usually for grouped items.

  1. Forecast Demand: Predict how much product customers will need in the future.
  2. Analyze Capacity: Check your factory’s production limits, workforce, and resources.
  3. Develop Strategies: Decide how to meet demand, such as:
    - Increasing/decreasing production.
    - Using overtime, hiring, or subcontracting.
    - Adjusting inventory levels.
  4. Choose the Best Plan: Pick the option that balances costs, demand, and capacity.
20
Q

What are the numerous techniques for aggregate planning?

A
  1. Informal trial-and-error techniques (spreadsheet)
  2. Mathematical techniques:
    - Linear programming: aims to optimize
    - Simulation: trial and error under a variety of conditions
21
Q

Can you tell me about the levels of plans? I want 3

A

Business plan –> Aggregate plan –> Master Production Schedule

22
Q

What is the result of disaggregating? What has to be done to the aggregate plan?

A

Master Production Schedule (MPS)

  • To translate the aggregate plan to production, the aggregate plan has to be disaggregated by breaking it down to specific product requirements
  • This to determine labor requirements, materials and inventory requirements
23
Q

What is a MPS? What are the inputs and outputs?

A
  • Master production schedule: the core of production planning and control for short range planning. Is a detailed plan that outlines what a company intends to produce, in what quantities, and when it will produce them
  • Shows the timing and quantity of specific individual end items, usually covers about 6-8 weeks ahead

Input:
- beginning inventory
- forecasts for each period of the schedule
- customer orders

Output:
- Projected inventory
- Production requirement
- Resulting uncommitted inventory (ATP)
- Master production Schedule!!

24
Q

What does ATP stand for

A

“Available to promise”

25
Q

What does “capable to promise” mean?

A

When product is not available, the system proposes a capable-to-promise date that is subject to customer approval

26
Q

When a MPS has been developed, what has to be done?

A

It must be validated through RCCP: Rough capacity planning

  • Tests the feasibility of a proposed master schedule by looking at capacities of production and warehouse facilities, labor and vendors
27
Q

How often is MPS updated?

A

Monthly

28
Q

What is a key component of MPS?

A

The use of time fences that separates different phases of the MPS planning horizon. The phases can be describes as:

  • Frozen. The most immediate period: Changes are difficult and expensive
  • Slushy. Changes are still possible with some tradeoffs: it may be more expensive to change a plan aiming for efficiency than stick to the plan but be less efficient.
  • Liquid. The time period farthest away: changes are easy and flexible and not as costly for the business
29
Q

What is the difference between efficiency and effectiveness?

A

Efficiency = Doing things right: choose the right methods to utilize materials, time and money in the best possible way
- Focus on how things are accomplished

Effectiveness = Doing the right things: Achieving the desired goal or outcome, ec. fulfill customer needs
- Focus on what is accomplished

Operations Management (20 decks)

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