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OPRMGMT_-Aggregate-Planning - Aggregate Planning Archie Ang...

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Aggregate Planning Archie Ang, Isadora Espino, Sam Laureola, Sandra Poblete, Eizel Sanchez
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Aggregate Planning Objective To meet forecast demand while minimizing cost over the planning period
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Nature of Aggregate Planning Strategies may be used to: - Smooth employment - Drive down inventory levels - Meet high level of service
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Aggregate Planning - Output of Sales and Operations Planning - Concerned with determining the quantity and timing of production - Combines appropriate resources into general terms - Part of a larger production planning system
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Aggregate Planning Strategies Questions to answer when generating an aggregate plan Should inventories be used to absorb changes in demand? Should changes be accommodated by varying the size of the workforce? Should part-timers, overtime, or idle time be used to absorb changes? Should subcontractors be used and maintain a stable workforce? Should prices or other factors be changed to influence
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Introduction The Planning Process 1. Long Range Plans (1 year) - capacity and capital investment, facility location, new products and processes 2. Intermediate Plans (3-18 months) - Job of operations manager working with other functional areas of the firm 3. Short-range plans - (less than 3 months) - Jobs for operations personnel
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OPTION ADVANTAGES DISADVANTAGES COMMENTS Changing inventory levels Changes in human resources are gradual or none; no abrupt production changes. Inventory holding cost may increase. Shortages may result in lost sales. Applies mainly to production, not service, operations. Varying workforce size by hiring or layoffs Avoids the costs of other alternatives. Hiring, layoff, and training costs may be significant. Used where size of labor pool is large. 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. Subcontracting Permits flexibility and smoothing of the firm’s output.
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