3-Aggregate_Planning_Part_I - AGGREGATE PL ANNI NG(AP SAL...

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AGGREGATE PLANNING (AP) / SALES & OPERATIONS PLANNING (S&OP) PART I
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Aggregate Planning (Topla k şı Planlama) AP is also called macro production planning. Decisions made at the macro level: involves translating demand forecasts into a blueprint for planning work force, production levels and inventory levels over a medium range planning horizon tactical level decisions. Covers a planning horizon of 4 months to a year out. Spring 2010 2 IE 324 – AP / S&OP 
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Aggregate Planning (Topla k şı Planlama) Focus on resource use through the medium range in face of dynamic demand (found by forecasts). AP (S&OP) requires that demand is deterministic or known in advance. Focus on managing groups of products. S&OP is constrained by the longer term strategic decisions, like the size of facilities, technology used. Spring 2010 3 IE 324 – AP / S&OP 
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Competing Objectives in Aggregate Planning 1. React quickly to anticipated changes in demand. Use a chase strategy : Allow for sufficient capacity to enable production output to match the demand. A poor strategy in the long run. Production rate may vary widely, and therefore make frequent changes in size of labor force. Avoid high inventory carrying costs. Spring 2010 4 IE 324 – AP / S&OP 
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Competing Objectives in Aggregate Planning 1. Maintain a stable work force Use a level production strategy: Allow for the same production rate throughout the year.
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