2. Planning Horizon
• Aggregate planning:
Intermediate-range capacity planning, usually covering 2 to 12
months. The goal of aggregate planning is to achieve a
production plan that will effectively utilize the organization’s
resources to satisfy expected demand.
Short
range
Intermediate
range
Long range
Now 2 months 1 Year
3. Planning Levels
Organizations make capacity decisions on three
levels:
• Short-range plans (Detailed plans)
– Machine loading
– Job assignments
• Intermediate plans (General levels)
– Employment
– Output, and inventories
• Long-range plans
– Long term capacity
– Location / layout
4. Planning Sequence
Business Plan
Establishes operations
and capacity strategies
Aggregate plan
Establishes
operations capacity
Master schedule Establishes schedules
for specific products
Corporate
strategies
and policies
Economic,
competitive,
and political
conditions
Aggregate
demand
forecasts
5. Aggregate planning
• Aggregate planning begins with a forecast of aggregate
demand for the intermediate range.
• This is followed by a general plan to meet demand
requirements by setting output, employment, and finished-
goods inventory or service capacities.
• Managers must consider a number of plans, each of which
must be examined in light of feasibility and cost.
• Aggregate plans are updated periodically, often monthly, to
take into account updated forecast and other changes.
6. Aggregate Plan – Managerial Inputs
Supplier capabilities
Storage capacity
Materials availability
Materials
Current machine capacities
Plans for future capacities
Workforce capacities
Current staffing level
Operations
New products
Product design changes
Machine standards
Engineering
Labor-market conditions
Training capacity
Human resources
Cost data
Financial condition
of firm
Accounting and finance
Aggregate
plan
Customer needs
Demand forecasts
Competition behavior
Distribution and marketing
7. Aggregate Plan – Outputs
Units or
dollars
subcontracted
Size of
Workforce and
Workforce Adjustment
Production
per month
(in units or $)
Inventory
Levels
Aggregate
plan
Units or dollars
Of Backlogs,
backorders , or
stockout
Reactive Alternatives
Complementary
Products
Competitive
Pricing
Aggressive Alternatives
8. Relationships of Aggregate Schedule
Forecast &
Firm Orders
Material
Requirements
Planning
Aggregate
Production
Planning
Resource
Availability
Shop
Floor
Schedules
Capacity
Requirements
Planning
Realistic?
Yes
No, modify CRP, MRP, or MPS
Work force
Inventory
Subcontractors
Master
Production
Scheduling
9. Aggregate Level Scheduling
• Aggregate Schedule:
Month Jan Feb Mar Apr May
No. of Chips 600 650 620 630 640
Master Production Schedule:
Month Jan Feb Mar Apr May
P4 1.5 ghz 300 200 310 300 340
P4 1.7 ghz 300 450 310 330 300
11. Aggregate Planning Objectives
• Minimize Costs/Maximize Profits
• Maximize Customer Service
• Minimize Inventory Investment
• Minimize Changes in Production Rates
• Minimize Changes in Workforce Levels
• Maximize Utilization of Plant and Equipment
12. Examples of Capacity Adjustment to Meet
Demand
1. Producing at a constant rate and using inventory to absorb
fluctuations in demand
2. Hiring and firing workers to match demand
3. Maintaining resources for high demand levels
4. Increase or decrease working hours (overtime and under
time)
5. Subcontracting work to other firms
6. Using part-time workers
7. Providing the service or product at a later time period
(backordering)
13. PLANNING STRATEGIES
• Chase Strategies
– Match demand during the planning horizon by
either
– Vary workforce or vary output rate
• Level Strategies
– Maintain a constant workforce level or constant
output rate during the planning horizon
– Constant workforce or constant output rate
• Mixed Strategies
– Combined several strategies
15. PLANNING STRATEGIES FOR AGGREGATE PLANS
Strategy Possible alternative s
during slack season
Possible alternative s
during peak season
1.Chase #1: vary workforce
level to match demand Layoffs Hiring
2.Chase#2: vary output to
match demand
Layoffs, under time, vacations
Hiring, overtime,
subcontracting
3.Level#1: Constant workforce
level
No layoffs, building
anticipation inventory, under
time, vacations
No hiring, depleting
anticipation inventory,
overtime, subcontracting,
backorders, stockouts
4.Level#2: constant output
rate
Layoffs, building anticipation
inventory, under time,
vacations
Hiring, depleting anticipation
inventory, overtime,
subcontrating, backorders,
stockouts
16. Techniques for aggregate planning are classified into two categories:
•Informal trial-and-error techniques (frequently used)
•Mathematical techniques
Chase approach Level approach
Advantage Investment in inventory
is low, Labor utilization
is high
Stable output rates and
workforce levels
Disadvantage The cost of adjusting
output rates and/or
workforce levels
Greater inventory costs,
Increased overtime and
idle time, Resource
utilizations vary over
time
17. A GENERAL PROCEDURE FOR AGGREGATE
PLANNING
1. Determine demand for each period
2. Determine capacities (regular time, over time, and
subcontracting) for each period
3. Identify policies that are pertinent
4. Determine units costs for regular time, overtime,
subcontracting, holding inventories, back orders, layoffs, and
other relevant costs
5. Develop alternative plans and compute the costs for each
6. Select the best plan that satisfies objectives. Otherwise return
to step 5.
18. MATHEMATICAL TECHNIQUES
Linear programming: Methods for obtaining optimal
solutions to problems involving allocation of scarce
resources in terms of cost minimization.
Linear decision rule: Optimizing technique that seeks to
minimize combined costs, using a set of cost-
approximating functions to obtain a single quadratic
equation.
Simulation models: Developing a computerized models that
can be tested under a variety of conditions in an attempt
to identify reasonably acceptable (although not always
optimal) solutions to problem
19. PLANNING TECHNIQUES
Technique Solution Characteristics
Graphical/charting Trial and
error
Intuitively appealing, easy to
understand; solution not
necessarily optimal.
Linear
programming
Optimizing Computerized; linear
assumptions not always valid.
Linear
decision rule
Optimizing Complex, requires considerable
effort to obtain pertinent cost
information and to construct
model; cost assumptions not
always valid.
Simulation Trial and
error
Computerized models can be
examined under a variety of
conditions.
20. AGGREGATE PLANNING COST
• Regular-Time Costs
• Overtime Costs
• Hiring and
Layoff Costs
• Inventory
Holding Costs
• Backorder and Stock out Costs
21. EXAMPLE 1
• Materials Cost: $100/unit
• Labor: 5 hours per unit, $4/hr RT, $6/hr OT
– Subcontract $20/unit ($120 - $100 mat’l savings)
– Holding cost $1.5/unit/month
– Stockout cost $5/unit/month
– Hiring cost $200/employee
– Firing cost $250/employee
– Starting inventory 400 units, safety stock 25%
Jan Feb Mar Apr May June
Forecasted
Demand
(units)
1800 1500 1100 900 1100 1600
22. • Goal of 25% of sales as “safety stock”
• For planning, assume safety stock never used
EXAMPLE 1
23. HIRE AND FIRE, NO OT
Jan Feb Mar Apr May June
Production Requirement
(Forecast+SS-Begin Inv) 1,850 1,425 1,000 850 1,150 1,725
Hours needed 9,250 7,125 5,000 4,250 5,750 8,625
Days per month 22 19 21 21 22 20
Hrs/mo/worker 176 152 168 168 176 160
Workers needed 53 47 30 25 33 54
Workers hired 0 0 0 0 8 21
Workers Laid off 0 6 17 5 0 0
Production Labor Cost 37,000
$ 28,500
$ 20,000
$ #### #### ####
Hiring Cost -
$ -
$ -
$ -
$ 1,600
$ 4,200
$
Firing Cost -
$ 1,500
$ 4,250
$ 1,250
$ -
$ -
$
Labor cost = 160,000
$
Hiring Cost = 5,800
$
Firing Cost = 7,000
$
Total 172,800
$
24. CONSTANT WORKFORCE
(40 workers per month)
Jan Feb Mar Apr May June
Starting Inv 400 8 (276) (32) 412 720
Production Req 1,850 1,425 1,000 850 1,150 1,725
Work Days 22 19 21 21 22 20
Work Hours 7,040 6,080 6,720 6,720 7,040 6,400
Actual Production 1,408 1,216 1,344 1,344 1,408 1,280
Demand Forecast 1,800 1,500 1,100 900 1,100 1,600
Ending Inventory 8 (276) (32) 412 720 400
Shortage Cost - 1,380 160 - - -
Safety Stock 450 375 275 225 275 400
Excess Inventory - - - 187 445 -
Holding Cost - - - 281 668 -
Labor Cost 160,000
$
Holding Cost 948
$
Shortage Cost 1,540
$
162,488
$
25. SUBCONTRACT
Jan Feb Mar Apr May June
Production Req. 1,850 1,425 1,000 850 1,150 1,725
Work Days 22 19 21 21 22 20
Work Hrs 4,400 3,800 4,200 4,200 4,400 4,000
Actual production 880 760 840 840 880 800
Subcontracted 970 665 160 10 270 925
Subcontr. Cost 19,400
$ 13,300
$ 3,200
$ 200
$ 5,400
$ 18,500
$
Labor Cost 17,600
$ 15,200
$ 16,800
$ 16,800
$ 17,600
$ 16,000
$
Workers = 25
Subcontr. Cost = 60,000
$
Labor Cost = 100,000
$
Total Cost = 160,000
$
April has lowest demand
21 days * 8 hrs = 168
850*5/168 = 25.3 workers
Subcontract rest
26. CONSTANT WORKERS WITH OT
# workers 38
Jan Feb Mar Apr May June
Work Days 22 19 21 21 22 20
Work Hrs 6,688 5,776 6,384 6,384 6,688 6,080
Reg. Production 1,338 1,155 1,277 1,277 1,338 1,216
Dem Forecast 1,800 1,500 1,100 900 1,100 1,600
Starting Inv 400 - - 177 554 792
Net Inv before OT (62) (345) 177 554 792 408
Units OT 62 345 - - - -
Ending Inv - - 177 554 792 408
Safety Stock 450 375 275 225 275 400
Excess Inv - - - 329 517 8
Holding Cost -
$ -
$ -
$ 494
$ 776
$ 12
$
OT Cost 1,860
$ 10,350
$ -
$ -
$ -
$ -
$
RT Cost 26,752
$ 23,104
$ 25,536
$ 25,536
$ 26,752
$ 24,320
$
Holding Cost = 1,281
$
OT Cost = 12,210
$
RT Cost = 152,000
$
165,491
$
Find # workers to do all except
biggest mos in RT
Trial and error
Not enough safety stock
27. EXAMPLE 2
Planners for a company that makes several models of
skateboards are about to prepare the aggregate plan that
will cover six periods. They now want to evaluate a plan
that calls for a steady rate of regular output, mainly using
inventory to absorb the uneven demand but allowing some
backlog. Overtime and subcontracting are not used
because they want a 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 following
information. Assume a level of output rate of 300 unit per
period with regular time. Note that the planned ending
inventory is zero. There are 15 workers, and each can
produce 20 units per period.
28. EXAMPLE 2
Cost:
• Regular time = $2 per skateboard
• Overtime = $3 per skateboard
• Subcontract = $6 per skateboard
• Inventory = $1 per skateboard per period on average inventory
• Back orders = $5 per skateboard per period
period 1 2 3 4 5 6 total
Forecast 200 200 300 400 500 200 1800
30. Aggregate Planning in Services
• Aggregate planning for services: takes into account projected
customer demands, equipment, capacities, and labor capabilities.
The resulting plan is a time-phased projection of service staff
requirements.
• Aggregate planning for manufacturing and aggregate planning for
services share similarities in some respect, but there are some
important differences which are:
– 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
31. Disaggregating the aggregate plan
• For the production plan to be translated into meaningful terms of
production, it is necessary to disaggregate the aggregate plan.
• This means breaking down the aggregate plan into specific product
requirements in order to determine labor requirements (skills, size of
workforce), materials, and inventory requirements.
• To put the aggregate production plan into operation, one must
convert, or decompose, those aggregate units into units of actual
product or services that are to be produced or offered.
32. For example: televisions manufacturer may have an
aggregate plan that calls for 200 television in January, 300 in
February, and 400 in March. This company produce 21, 26,
and 29 inch TVs, therefore the 200, 300, and 400 aggregate
TVs that are to be produced during those three months must be
translated into specific numbers of TVs of each type prior to
actually purchasing the appropriate materials and parts,
scheduling operations, and planning inventory requirements.
33. Master scheduling
• The result of disaggregating the aggregate plan is a master schedule
showing the quantity and timing of specific end items for a scheduled
horizon, which often covers about six to eight weeks ahead.
• The master schedule shows the planned output for individual products
rather than an entire product group, along with the timing of production.
• It should be noted that whereas the aggregate plan covers an interval of,
say, 12 months, the master schedule covers only a portion of this. In other
words, the aggregate plan is disaggregated in stages , or phases, that may
cover a few weeks to two or three months.
• The master schedule contains important information for marketing as well
as for production. It reveals when orders are scheduled for production and
when completed orders are to be shipped
34. Aggregate Plan to Master Schedule
Jan Feb Mar.
200 300 400
Aggregate
Planning
Disaggregation
Master
Schedule
Type Jan. Feb. Mar
21 inch 100 100 100
26 inch 75 150 200
29 inch 25 50 100
total 200 300 400
Aggregate plan
Master
schedule
35. • Master schedule
– Determines quantities needed to meet demand
– Interfaces with
• Marketing: it enables marketing to make valid
delivery commitments to warehouse and final
customers.
• Capacity planning: it enables production to
evaluate capacity requirements
• Production planning
• Distribution planning
36. Master schedule
• Inputs:
– Beginning inventory; which is the actual inventory on hand
from the preceding period of the schedule
– Forecasts for each period demand
– Customer orders; which are quantities already committed to
customers.
• Outputs
– Projected inventory
– Production requirements
– The resulting uncommitted inventory which is referred to
as available-to-promise (ATP) inventory
Production time 5 hours/ unit
Working days per month are assigned => Working hours/ worker (working 8 hours/ day)
Constant workforce -> use inventory
There are 40 workers at beginning (each worker work a shift of 8 hours)
Each product need 5 hours for production => actual production
Work hours = 22*40*5 = 4400
Actual production = work hour/5
Subcontract = production requirement – actual production
Labor cost = actual production * 20$
Labor cost = 25*$4/ 5 units= $20/ units
Work hours = 22*38*8= 6688
SS = 0.25*demand forecast (danh nghĩa)
Khi có inventory thi mới bù vào
