5 - EGMP09-OM-Chapter 15 Aggregate plan.pdf - EXECUTIVE...

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03/02/2018 1 OM-APP EXECUTIVE GENERAL MANAGEMENT PROGRAMME (EGMP09) Operations Management Dr. S. Venkat OM Area IIM Lucknow Noida Campus Email : [email protected]
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Aggregate Planning 2 OM-APP 03/02/2018
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Business Planning Exercise Business plan is strategic in nature and addresses the following questions: Should we meet the projected demand entirely or a portion of the projected demand? What are the implications of this decision on the overall competitive scenario and the firm’s standing in the market? How is this likely to affect the operating system and planning in other functional areas of the business such as marketing and finance? What resources should we commit to meet the chosen demand during the planning horizon? Aggregate production planning seeks to translate business plans to operational decisions 03/02/2018 OM-APP 3
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Business Plan Marketing Plan Financial Plan Production Plan (rough cut capacity) Master Production Schedule Materials Requirement Plan Capacity Requirement Plan Detailed Scheduling Shop Floor Control Level 1 Level 2 Level 3 Planning Hierarchies in Operations 03/02/2018 OM-APP 4
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Aggregate Production Planning Decision Variables: An illustration The decisions involve Amount of resources (productive capacity and labour hours) to be committed Rate at which goods and services needs to be produced during a period Inventory to be carried forward from one period to the next An example from Garment Manufacturing Produce at the rate of 9000 metres of cloth everyday during the months of January to March Increase it to 11,000 metres during April to August Change the production rate to 10,000 metres during September to December Carry 10% of monthly production as inventory during the first 9 months of production. Work on a one-shift basis throughout the year with 20% over time during July to October 03/02/2018 OM-APP 5
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Aggregate Units for Capacity Examples Sl. No Product Aggregate Unit of capacity 1 Phenyl Acetic Acid Metric tonnes 2 Data Entry Systems Numbers 3 Mini computer Value (ex-factory) in Rs. 4 Printed Circuit Board Square Metres 5 Alloy Iron Castings Metric tonnes 6 Cement Metric tonnes 03/02/2018 OM-APP 6
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Aggregate Production Planning Why is it necessary? Demand fluctuations Capacity fluctuations Difficulty level in altering production rates Production systems are complex and varying the rate of production requires prior planning and co-ordination with supplier and distributor Benefits of multi-period planning Aggregate Production Planning is done in an organisation to match the demand with the supply on a period-by-period basis in a cost effective manner 03/02/2018 OM-APP 7
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Targeted Demand to be fulfilled Arriving at effective Period-by-period Demand to be met Arriving at Period-by-Period Supply Schedules - Actual period-by-period Supply Schedules Forecasting Alternatives for Modifying demand Alternatives for Modifying supply Aggregate Production Planning Framework 03/02/2018 OM-APP 8
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Alternatives for managing demand
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