Test 2 Flashcards
aggregate plan
production plan to meet aggregate demand (medium term; 6-18 months)
aggregate demand
demand for product lines or product families
aggregate production plan
a period-by-period plan of production, workforce, and inventory levels
active strategy
an aggregate planning strategy; influence demand through incentives, sales promo, advertising, etc. / products with countercyclical demand
reactive strategy
an aggregate planning strategy; manage supply and capacity through inventory, back orders, subcontracting, overtime, undertime, hiring, firing
level approach
reactive strategy approach; constant production rate by no hiring/firing
chase approach
reactive strategy approach; varying production rate by hiring/firing
design capacity
maximum output rate under IDEAL conditions; utilization = (actual output rate)/(design capacity)
effective capacity
maximum output rate under NORMAL conditions; utilization = (actual output rate)/(effective capacity) ; if this is over 100% then we may want to consider expanding
capacity lead strategy
capacity expansion strategy for companies who expect constant growth (expand capacity above demand over time)
average capacity strategy
safer alt. to cap. lead strat bc not all $ is spent. expand capacity over time in line with the average demand (like level but for capacity)
capacity lag strategy
expand after capacity is too little; risks losing customers. as demand increase over time, capacity expands to meet it (like chase but for capacity)
one-step expansion strategy
expanding our capacity all at once (bulk/large scale)
incremental expansion strategy
expanding our number of units gradually (on a smaller scale) over time
How would you develop an aggregate production plan with a level approach based on the average demand?
Example 1A
1. Find avg demand
2. Make changes to WF (but since it’s level, there’s no change)
3. Find reg. prod
4. OT or sub?
5. Calculate total cost
How would you develop an aggregate production plan with a level approach based on the highest demand?
Example 1B:
1. Locate period with highest demand
2. Make changes to WF( but since it’s level, no change)
3. Find reg. prod for that period
4. Add OT/sub (Total prod - reg. prod of that period) **pAY ATTENTION TO OVERTIME UNIT LIMITS
5. Calculate total cost (leverage given inputs)
How would you develop an aggregate production plan with a level approach based on the max of the cumulative average demand?
Example 1C
1. Calculate the cumulative average (C.A.) for each period
2. Use formula sheet for C.A. formula (total cumulative demand is demand1 + demand 2 etc.), and # of cumulative periods is how many periods you took the demands from
3. Select the highest number out of all the calculations
4. This becomes the total production number (ALWAYS rounded up so there are no shortages)
How would you develop an aggregate production plan with a chase approach?
Example 1D
1. TP is given for chase
2. Calculate WF (TP/prod. rate; both should be given)
3. Do this ^ for each period and hire/fire accordingly (aka based on the WF, subtract the total prod needed from it to determine how many to fire, or x it by the prod. rate and if it’s less than however many u need then you divided then you take the difference and /2 to find # of ppl you need to hire) ex. 20 in workforce, x2 = 40 but demand is 70, then with the difference of 30, /2 = hire 15 more workers
If there is an opening inventory balance, subtract it from demand for the first period.
How would you modify an aggregate production plan by keeping the initial workforce level and only using overtime and subcontracting when needed?
Example 2A
1. Check each period, starting from period 1, to see if reg. prod. + inventory is enough to meet demand
2. If enough, do not use OT/Sub
3. If not enough, then use OT/Sub as needed
How would you modify an aggregate production plan by hiring/firing to eliminate OT and sub?
Example 2b
1.Determine the level of workforce that would eliminate the need for overtime and subcontracting by looking at the columns for OT and sub, and add that to the workforce of the respective periods
How would you modify an aggregate production plan through setting a target inventory level? Ex. at the end of period 6 our target inventory is 10 units
Example 2C
1. Start from your example and check what the ending period is
2. If it’s over the target (10 in this case), reduce inventory by X amount of units through reducing production
2a. Do this by starting from the last period and work your way up - eliminate units from Sub and OT, as max as possible until you reach the target
3. If it’s under the target, we need to increase production
3a. Can do this by shifting production through increasing WF etc. starting from period 1 (? this is my assumption)
4. Afterwards, when prod #s change we need to revise other columns as well i.e. TP and inventory. (Reg + OT + Sub)
How would you modify an aggregate production plan through limiting the number of hiring to a max of X in each period? i.e. 10
Example 2D
1. Start from example 1D
2. Find where hiring exceeds the limit and try to fix it
3. Try shifting production, hiring, firing, etc. to different periods
4. No fixed approach -> more than one solution
disaggregation
the process of breaking an aggregate plan into more detailed plans
material requirements planning (MRP)
computerized inventory and production control system that determines the reqs of dependent demand inventory
Determine what is required, how much is required, and when it is required
dependent demand inventory
parts, components, raw materials
explosion
step 1 of MRP: disassembly of the end product into its components (product tree)
