pom - j. galván 1 production and operations management ch. 14: aggregate scheduling
TRANSCRIPT
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PRODUCTION AND PRODUCTION AND OPERATIONS OPERATIONS
MANAGEMENTMANAGEMENT
Ch. 14: Aggregate SchedulingCh. 14: Aggregate Scheduling
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Learning ObjectivesLearning Objectives
Describe planningDescribe planning Distinguish the types of plansDistinguish the types of plans Define aggregate schedulingDefine aggregate scheduling Relate aggregate scheduling to the Relate aggregate scheduling to the
overall planning processoverall planning process Explain aggregate scheduling optionsExplain aggregate scheduling options Develop aggregate schedulesDevelop aggregate schedules
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Aggregate Planning RequiresAggregate Planning Requires
Logical overall unit for measuring Logical overall unit for measuring sales and outputssales and outputs
Forecast for intermediate planning Forecast for intermediate planning period in these aggregate unitsperiod in these aggregate units
Method for determining costsMethod for determining costs Model that combines forecasts and Model that combines forecasts and
costs so that scheduling decisions costs so that scheduling decisions can be madecan be made
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Setting goals & objectivesSetting goals & objectives• Example: Meet demand within the limits Example: Meet demand within the limits
of available resources at the least costof available resources at the least cost Determining steps to achieve goalsDetermining steps to achieve goals
• Example: Hire more workersExample: Hire more workers Setting start & completion datesSetting start & completion dates
• Example: Begin hiring in Jan.; finish, Mar.Example: Begin hiring in Jan.; finish, Mar. Assigning responsibility Assigning responsibility
PlanningPlanning
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Planning HorizonsPlanning Horizons
Today 3 Months 1 year 5 years
Planning Horizon
Short-range plansJob assignmentsOrderingJob schedulingDispatching
Intermediate-range plansSales planningProduction planning and budgetingSetting employment, inventory, subcontracting levelsAnalyzing operating plans
Long-range plansR&DNew product plansCapital expensesFacility location, expansion
Responsible: Operations managers, supervisors, foremen
Responsible: Operations managers
Responsible: Top executives
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Management Management LevelLevel
Today 3 months 1 year 5 years
Long-Range Facility location
Intermediate-Range Aggregate plans
Short-Range Dispatching
High
Low
Top Executives
Supervisors
Operations Managers
18 months
Types of PlansTypes of Plans
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Relationships of the Aggregate Relationships of the Aggregate PlanPlan
AggregatePlan for
Production
PriorityPlanning &Scheduling
DemandForecasts,
orders
MasterProductionSchedule
Detailed WorkSchedules
PlantCapacity
ExternalCapacity
Inventory OnHand
Raw MaterialsAvailable
Work Force
Marketplaceand Demand
Research andTechnology
ProductDecisions
ProcessPlanning &Decisions
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A mathematically based aggregate planning model requires A mathematically based aggregate planning model requires considerable:considerable:• timetime
problem definitionproblem definition model developmentmodel development model verificationmodel verification model applicationmodel application
• expertiseexpertise people who understand the problempeople who understand the problem people who understand both the modeling process, and people who understand both the modeling process, and
the specific modelthe specific model• moneymoney
money to pay for all of the abovemoney to pay for all of the above often requires funding for several people for several often requires funding for several people for several
months!months!
What’s Needed for Aggregate What’s Needed for Aggregate PlanningPlanning
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Provides the quantity and timing of Provides the quantity and timing of production for intermediate futureproduction for intermediate future• Usually 3 to 18 months into futureUsually 3 to 18 months into future
Combines (‘aggregates’) productionCombines (‘aggregates’) production• Often expressed in common unitsOften expressed in common units
Example: Hours, dollars, equivalents Example: Hours, dollars, equivalents (e.g., FTE students)(e.g., FTE students)
Involves capacity and demand Involves capacity and demand variablesvariables
Aggregate SchedulingAggregate Scheduling
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Meet demandMeet demand Use capacity Use capacity
efficientlyefficiently Meet inventory Meet inventory
policypolicy Minimize costMinimize cost
• LaborLabor• InventoryInventory• Plant & equipmentPlant & equipment• SubcontractSubcontract
Aggregate Scheduling GoalsAggregate Scheduling Goals
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Aggregate Planning StrategiesAggregate Planning StrategiesPure StrategiesPure Strategies
Capacity Options — change Capacity Options — change capacity:capacity:• changing inventory levelschanging inventory levels• varying work force size by hiring or varying work force size by hiring or
layoffslayoffs• varying production capacity through varying production capacity through
overtime or idle timeovertime or idle time• subcontractingsubcontracting• using part-time workersusing part-time workers
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Aggregate Planning StrategiesAggregate Planning StrategiesPure StrategiesPure Strategies
Demand Options — change Demand Options — change demanddemand::
• influencing demandinfluencing demand• backordering during high demand backordering during high demand
periodsperiods• counterseasonal product mixingcounterseasonal product mixing
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Aggregate Planning Options - Aggregate Planning Options - Advantages and DisadvantagesAdvantages and Disadvantages
Option Advantage DisadvantageSome
Comments
Changing INVENTORY levels
Changes in inventories are gradual, not abrupt production changes
Inventory holding costs; shortages resulting in lost sale may occur if demand increases
Applies mainly to production, not service settings
Varying WORKFORCE SIZE by hiring or layoffs
Avoids use of other alternatives
Hiring, layoff, and training costs
Used where many unskilled people seek extra income
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Advantages/Disadvantages - Advantages/Disadvantages - continuedcontinued
Option Advantage DisadvantageSome
Comments
Varying PRODUCTION RATES through overtime or idle time
Matches seasonal fluctuations without hiring/training costs
Overtime premiums, tired workers, may not meet demand
Allows flexibility within the aggregate plan
SUBCONTRACTINGPermits flexibility and smoothing of the firm's output
Loss of quality control; reduced profits; loss of future business
Applies mainly in production settings
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Advantages/Disadvantages - Advantages/Disadvantages - continuedcontinued
Option Advantage DisadvantageSome
Comments
Using PART-TIME WORKERS
Less costly and more flexible than full-time workers
High turnover/training costs; quality suffers; scheduling difficult
Good for unskilled jobs in areas with large temporary labor pools
Influencing DEMAND
Tries to use excess capacity. Discounts draw new customers.
Uncertainty in demand. Hard to match demand to supply exactly.
Creates marketing ideas. Overbooking used in some businesses.
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Advantage/Disadvantage - Advantage/Disadvantage - continuedcontinued
Option Advantage DisadvantageSome
Comments
BACK ORDERING during high-demand periods
May avoid overtime. Keeps capacity constant
Customer must be willing to wait, but goodwill is lost.
Many companies backlog.
COUNTER SEASONAL products and service mixing
Fully utilizes resources; allows stable workforce.
May require skills or equipment outside a firm's areas of expertise.
Risky finding products or services with opposite demand patterns.
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Mixed strategyMixed strategy• Combines 2 or more aggregate scheduling Combines 2 or more aggregate scheduling
optionsoptions Level scheduling strategyLevel scheduling strategy
• Produce same amount every Produce same amount every dayday• Keep work force level constant Keep work force level constant • Vary non-work force capacity or demand Vary non-work force capacity or demand
optionsoptions• Often results in lowest production costsOften results in lowest production costs
Aggregate Scheduling Aggregate Scheduling StrategiesStrategies
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Graphical & charting techniquesGraphical & charting techniques• Popular & easy-to-understandPopular & easy-to-understand• Trial & error approachTrial & error approach
Mathematical approachesMathematical approaches• Transportation method Transportation method • Linear decision ruleLinear decision rule• Management coefficients modelManagement coefficients model• SimulationSimulation
Aggregate Scheduling MethodsAggregate Scheduling Methods
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The Graphical Approach to The Graphical Approach to Aggregate PlanningAggregate Planning
Forecast the demand for each periodForecast the demand for each period Determine the capacity for regular Determine the capacity for regular
time, overtime, and subcontracting, time, overtime, and subcontracting, for each periodfor each period
Determine the labor costs, hiring and Determine the labor costs, hiring and firing costs, and inventory holding firing costs, and inventory holding costscosts
Consider company policies which may Consider company policies which may apply to the workers or to stock levelsapply to the workers or to stock levels
Develop alternative plans, and Develop alternative plans, and examine their total costsexamine their total costs
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Simple to understand, easy to use. Many solutions; one chosen may not be optimal
LP software available;permits sensitivity analysis and constraints. Linear function may not be realistic
Simple, easy to implement; tries to mimic manager’s decision process; uses regression
Trial and error
Optimization
Heuristic
Comparison of Aggregate Comparison of Aggregate Planning Methods Planning Methods
Charting/graphical Charting/graphical methodsmethods
Transportation Transportation methodmethod
Management Management
coefficient modelcoefficient model
Techniques Approaches Aspects
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Controlling the Cost of Labor in Controlling the Cost of Labor in Service FirmsService Firms
Close control of labor hours to ensure Close control of labor hours to ensure quick response to customer demandquick response to customer demand
Some form of-on-call labor resource that Some form of-on-call labor resource that can be added or deleted to meet can be added or deleted to meet unexpected demandunexpected demand
Flexibility of individual worker skills to Flexibility of individual worker skills to permit reallocation of available laborpermit reallocation of available labor
Individual worker flexibility in rate of Individual worker flexibility in rate of output or hours of work to meet demandoutput or hours of work to meet demand