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    • H Dangi, FMS
      1
      Aggregate Planning Lecture No 5
      Hamendra Dangi
      hkdangi@fms.edu
      9968316938
    • H Dangi, FMS
      2
      Session Break Up
      Aggregate Planning
      Master Production Schedule
    • H Dangi, FMS
      3
      Long range
      Intermediate range
      Short
      range
      Now
      2 months
      1 Year
      Planning Horizon
      Aggregate planning: Intermediate-range capacity planning, usually covering 2 to 12 months.
    • H Dangi, FMS
      4
      Economic,
      competitive,
      and political
      conditions
      Corporate
      strategies
      and policies
      Aggregate
      demand
      forecasts
      Establishes operations
      and capacity strategies
      Business Plan
      Establishes
      operations capacity
      Aggregate plan
      Establishes schedules
      for specific products
      Master schedule
      Planning Sequence
      Figure 13.1
    • H Dangi, FMS
      5
      Aggregate Planning
      Begin with forecast of aggregate demand
      Forecast intermediate range
      General plan to meet demand by setting
      Output levels
      Employment
      Finished goods inventory level
      Production plan is the output of aggregate planning
      Update plan periodically – rolling planning horizon always c overs the next 12 – 18 months
    • H Dangi, FMS
      6
      Aggregate Planning Inputs
      Costs
      Inventory carrying
      Back orders
      Hiring/firing
      Overtime
      Inventory changes
      Subcontracting
      Resources
      Workforce
      Facilities
      Demand forecast
      Policies
      Subcontracting
      Overtime
      Inventory levels
      Back orders
    • H Dangi, FMS
      7
      Aggregate Planning Strategies
      Maintain a level workforce
      Maintain a steady output rate
      Match demand period by period
      Use a combination of decision variables
    • H Dangi, FMS
      8
      Basic Strategies
      Level capacity strategy:
      Maintaining a steady rate of regular-time output while meeting variations in demand by a combination of options.
      Chase demand strategy:
      Matching capacity to demand; the planned output for a period is set at the expected demand for that period.
    • H Dangi, FMS
      9
      Chase Approach
      Advantages
      Investment in inventory is low
      Labor utilization in high
      Disadvantages
      The cost of adjusting output rates and/or workforce levels
    • H Dangi, FMS
      10
      Level Approach
      Advantages
      Stable output rates and workforce
      Disadvantages
      Greater inventory costs
      Increased overtime and idle time
      Resource utilizations vary over time
    • H Dangi, FMS
      11
      Cumulative output/demand
      Cumulative
      production
      Cumulative
      demand
      6
      7
      1
      2
      3
      4
      5
      8
      9
      10
      Cumulative Graph
    • H Dangi, FMS
      12
      Average
      inventory
      Beginning Inventory + Ending Inventory
      =
      2
      Average Inventory
    • H Dangi, FMS
      13
      Example
      In a textile firm , a worker is capable of tailoring 3 garments per day. Assume time taken for each garment is same
      Given
      Hiring Cost : Rs 3000
      Layoff Cost : Rs 4000
      Current employee strength: 40
    • H Dangi, FMS
      14
      Aggregate demands for next four month is given in the following table :
      Month Jun July Aug Sep
      Demand 3170 3000 2900 2660
      Working Days 24 23 23 24
      Based on given information generate production plan following varying workforce strategy
    • H Dangi, FMS
      15
      Production Plan
    • H Dangi, FMS
      16
      Example ; Varying the Size of Inventory
      Aggregate Demand for product X for next four month is given below
      Demand 5000 4600 5200 4800
      W.Days 23 24 22 23
      Given : Opening Stock = 500 units
      Inventory holding cost = Rs 40
      Worker productivity = 20 units /day
      Worker strength = 10
      Shortage Cost : Rs 30/Units
      Generate production plan with varying inventory levels
    • H Dangi, FMS
      17
      Production Plan
    • H Dangi, FMS
      18
      Planners for a company that makes several models of skateboards are about to prepare the aggregate plan that will cover six periods. Theyhave assembled the following information:
      They now want to evaluate a plan that calls for a steady rate of regular-time output, mainly using inventory to absorb the uneven demand but allowing some backlog. Overtime and subcontracting are not used because they want steady output. They intend to start with zero inventory on hand in the first period. Prepare an aggregate plan and determine its cost using the preceding information. Assume a level output rate of 300 units (skateboards) per period with regular time (i.e., 1,800÷6 = 300). Note that the planned ending inventory is zero. There are 15 workers, and each can produce 20 skateboards per period.
      18
      http://www.baskent.edu.tr/~kilter
      Example
    • H Dangi, FMS
      19
    • H Dangi, FMS
      20
      20
      http://www.baskent.edu.tr/~kilter
    • H Dangi, FMS
      21
      21
      http://www.baskent.edu.tr/~kilter
      Example
      After reviewing the plan developed in the preceding example, planners have decided to develop an alternative plan. They have learned that one person is about to retire from the company. Rather than replace that person, they would like to stay with the smaller workforce and use overtime to make up for the lost output. The reduced regular-time output is 280 units per period. The maximum amount of overtime output per period is 40 units. Develop a plan and compare it to the previous one.
    • H Dangi, FMS
      22
      22
      http://www.baskent.edu.tr/~kilter
    • H Dangi, FMS
      23
      23
      http://www.baskent.edu.tr/~kilter
      Aggregate Planning in Services
      • Services occur when they are rendered.
      • Demand for service can be difficult to predict.
      • Capacity availability can be difficult to predict.
      • Labor flexibility can be an advantage in services.
    • H Dangi, FMS
      24
      24
      http://www.baskent.edu.tr/~kilter
      Master Scheduling
      • The duties of the master scheduler generally include
      • Evaluating the impact of new orders.
      • Providing delivery dates for orders.
      • Dealing with problems:
      Evaluating the impact of production delays or late deliveries of purchased goods.
      Revising the master schedule when necessary because of insufficient supplies or capacity.
      Bringing instances of insufficient capacity to the attention of production and marketing personnel so that they can participate in resolving conflicts.
    • H Dangi, FMS
      25
      25
      http://www.baskent.edu.tr/~kilter
      The Master Scheduling Process
    • H Dangi, FMS
      26
      Weekly forecast requirements for industrial pumps.
      Eight-week schedule showing forecasts, customer orders, and beginning inventory
      26
      http://www.baskent.edu.tr/~kilter
    • H Dangi, FMS
      27
      27
      http://www.baskent.edu.tr/~kilter
      Projected on-hand inventory is computed week by week until it becomes negative
    • H Dangi, FMS
      28
      28
      Determining the MPS and projected on-hand inventory
    • H Dangi, FMS
      29
      29
      Projected on-hand inventory and MPS are added to the master schedule
    • H Dangi, FMS
      30
      Discussion on Minor Test
      No of Questions : 20
      Weight age : 10 Marks
      Time : 45 Min
      (6.45 PM to 7.30 PM)
    • H Dangi, FMS
      31
      Syllabus
      Site Selection and Facility Location
      Scheduling
      Work Measurement
      Scheduling
      Quality Management
      Aggregate Planning