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Production Management > Chapter 4 > Flashcards

Chapter 4 Flashcards

1
Q

What is aggregate planning?

A
  • To determine the quantity and timing of production for the immediate future
  • Objective is to minimize cost by adjusting: production rates, labor levels, inventory levels, overtime work, subcontracting rates
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2
Q

What are top executives in charge of?

A
  • long-range plans
  • r&d
  • new product plans
  • capital investments
  • facility location/expansion
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3
Q

What are operations managers in charge of?

A 
1 intermediate-range plans
2 sales planning 
3 production planning & budgeting
4 setting employment, inventory, subcontracting levels
5 analyzing operating plans
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4
Q

What are operations managers, supervisors, foremen in charge of?

A
  • short-range plans
  • job assignments
  • ordering
  • job scheduling
  • dispatching
  • overtime
  • part-time help
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5
Q

What are the aggregate planning options?

A
  1. changing inventory levels
  2. varying workforce size by hiring or layoffs
  3. varying production rates through overtime or idle time
  4. subcontracting
  5. using part-time workers
  6. influencing demand
  7. backordering during high-demand periods
  8. counter-seasonal product & service mixing
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6
Q

Comment on changing inventory levels:

A

advantages:

  • changes in human resources are gradual or none
  • no abrupt production changes

disadvantages:
- inventory holding cost may increase
- shortages may result in lost sales

comments:
- applies mainly to production, not service or operations

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7
Q

Comment on varying workforce size by hiring or layoffs:

A

advantages:
- avoids the costs of other alternatives

disadvantages:
- hiring, layoff and training costs may be significant

comments:
- used where size of labor pool is large

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8
Q

Comment on varying production rates through overtime or idle time:

A

advantages:
- matches seasonal fluctuations without hiring/training costs

disadvantages:
- overtime premiums
- tired workers
- may not meet demand

comments:
- allows flexibility within the aggregate plan

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9
Q

Comment on sub-contracting:

A

advantages:
- permits flexibility and smoothing of the firm’s output

disadvantages:
- loss of quality control
- reduced profits
- loss of future business

comments:
- applies mainly in production settings

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10
Q

Comment on using part-time workers:

A

advantages:
- is less costly and more flexible than full-time workers

disadvantages:
- high turnover/training costs
- quality suffers
- scheduling difficult

comments:
- good for unskilled jobs in areas with large temporary labor pools

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11
Q

Comment on influencing demand:

A

advantages:

  • tries to use excess capacity
  • discounts draw new customers

disadvantages:
- uncertainty in demand
- hard to match demand to supply exactly

comments:

  • creates marketing ideas
  • overbooking used in some businesses
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12
Q

Comment on back ordering during high-demand periods:

A

advantages:

  • may avoid overtime
  • keeps capacity constant

disadvantages:
- customers must be willing to wait, but goodwill is lost

comments:
- many companies back order

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13
Q

Comment on counter-seasonal product and service mixing:

A

advantages:

  • fully utilizes resources
  • allows stable workforce

disadvantages:
- may require skills or equipment outside the firm’s areas of expertise

comments:
- risky finding products or services with opposite demand patterns

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14
Q

What are the different strategies to plan the production in the mid-term?

A
  1. chase strategy:
  2. level strategy
  3. some combination of capacity options, a mixed strategy, might be the best solution
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15
Q

What is chase strategy?

A
  • match output rates to demand forecast for each period
  • vary workforce levels or vary production rate
  • favored by many service organizations
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16
Q

What is level strategy?

A
  • daily production is uniform
  • use inventory or idle time as buffer
  • stable production leads to better quality and productivity
17
Q

Graphical methods are popular techniques, easy to understand and use, trial-and-error approaches that do not guarantee an optimal solution, require only limited computations. The steps are:

A
  1. determine the demand for each period
  2. determine the capacity for regular time, overtime, and subcontracting each period
  3. find labor costs, hiring and layoff costs, and inventory holding costs
  4. consider company policy on workers and stock levels
  5. develop alternative plans and examine their total costs

Production Management (4 decks)

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