Chapter 13                Aggregate Planning             Operations Management - 5th Edition       Roberta Russell & Berna...
Aggregate Planning    Determine the resource capacity needed to     meet demand over an intermediate time     horizon   ...
Meeting Demand Strategies   Adjusting capacity          Resources necessary to meet demand           are acquired and ma...
Strategies for Adjusting Capacity Level production                           Overtime and under-time    Producing at a ...
Level Production                                         Demand                                         Production      Un...
Chase Demand                                         Demand                                                Production     ...
Strategies for Managing Demand Shifting demand into  other time periods       Incentives       Sales promotions       ...
SMILE A man checked into a hotel in Pretoria. There was a computer in his  room, so he decided to send an e-mail to his w...
Aggregate Versus DetailedForecasts Sales forecasts can be aggregated with  respect to time:           January February Ma...
Aggregate Versus Detailed Forecasts Sales forecasts can be aggregated with  respect to time:          January February M...
Aggregate Versus Detailed Forecasts Sales forecasts can be aggregated with  respect to product:          JanuaryProduct ...
Aggregate Versus Detailed Forecasts Sales forecasts can be aggregated with  respect to product:          JanuaryProduct ...
Aggregate Versus Detailed Forecasts Why? Aggregate forecasts are more  accurate than individual detailed forecasts      ...
Aggregate Versus Detailed Forecasts Why? Aggregate forecasts are more  accurate than individual detailed forecasts      ...
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Aggregrate planning

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Aggregrate planning

  1. 1. Chapter 13 Aggregate Planning Operations Management - 5th Edition Roberta Russell & Bernard W. Taylor, III Beni AsllaniCopyright 2006 John Wiley & Sons, Inc. University of Tennessee at Chattanooga
  2. 2. Aggregate Planning  Determine the resource capacity needed to meet demand over an intermediate time horizon  Objectives  Establish a company wide game plan for allocating resources  Develop an economic strategy for meeting demandCopyright 2006 John Wiley & Sons, Inc. 13-2
  3. 3. Meeting Demand Strategies  Adjusting capacity  Resources necessary to meet demand are acquired and maintained over the time horizon of the plan  Minor variations in demand are handled with overtime or under-time  Managing demand  Proactive demand managementCopyright 2006 John Wiley & Sons, Inc. 13-3
  4. 4. Strategies for Adjusting Capacity Level production  Overtime and under-time  Producing at a constant rate  Increasing or decreasing and using inventory to working hours absorb fluctuations in  Subcontracting demand  Let outside companies Chase demand complete the work  Hiring and firing workers to match demand  Part-time workers  Hiring part time workers to Peak demand complete the work  Maintaining resources for high-demand levels  Backordering  Providing the service or product at a later time period Copyright 2006 John Wiley & Sons, Inc. 13-4
  5. 5. Level Production Demand Production Units TimeCopyright 2006 John Wiley & Sons, Inc. 13-5
  6. 6. Chase Demand Demand Production Units TimeCopyright 2006 John Wiley & Sons, Inc. 13-6
  7. 7. Strategies for Managing Demand Shifting demand into other time periods  Incentives  Sales promotions  Advertising campaigns Partnering with suppliers to reduce information distortion along the supply chainCopyright 2006 John Wiley & Sons, Inc. 13-7
  8. 8. SMILE A man checked into a hotel in Pretoria. There was a computer in his room, so he decided to send an e-mail to his wife. However, he accidentally typed the wrong e-mail address, and without realizing his error, he sent the e-mail. Meanwhile... somewhere in Cape Town a widow had just arrived home from her husbands funeral. The widow decided to check her e-mail, expecting messages from relatives and friends. After reading the first message, she fainted. The widows son rushed into the room, found his mother on the floor, and saw the computer screen which Read: To: My Loving Wife Subject: Ive arrived I know youre surprised to hear from me. They have computers here now. And you are allowed to send e-mails to your loved ones. Ive just arrived and have been checked in. I see that everything has been prepared for your arrival tomorrow. Looking forward to see you then! 13-8 13-8
  9. 9. Aggregate Versus DetailedForecasts Sales forecasts can be aggregated with respect to time: January February March Aggregate Product A 100 150 200
  10. 10. Aggregate Versus Detailed Forecasts Sales forecasts can be aggregated with respect to time: January February March AggregateProduct A 100 150 200 450
  11. 11. Aggregate Versus Detailed Forecasts Sales forecasts can be aggregated with respect to product: JanuaryProduct A 100Product B 200Aggregate
  12. 12. Aggregate Versus Detailed Forecasts Sales forecasts can be aggregated with respect to product: JanuaryProduct A 100Product B 200Aggregate 300
  13. 13. Aggregate Versus Detailed Forecasts Why? Aggregate forecasts are more accurate than individual detailed forecasts January January Forecast Forecast Actual Error % Error Product A 100 120 Product B 200 180 Aggregate 300
  14. 14. Aggregate Versus Detailed Forecasts Why? Aggregate forecasts are more accurate than individual detailed forecasts January January Forecast Forecast Actual Error % Error Product A 100 120 -20 -17% Product B 200 180 20 11% Aggregate 300 300 0 0
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