ch13_ISM[1] - CHAPTER Aggregate Planning 13 DISCUSSION...

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199 13 CHAPTER Aggregate Planning D ISCUSSION Q UESTIONS 1. Aggregate planning is concerned with the quantity and timing of production for the immediate future; typically encompasses a time horizon of three to eighteen months. 2. Aggregate means combining the appropriate products and resources into general, or overall, terms. 3. Strategic objectives: minimize cost over the planning period, smooth fluctuations in work force, drive down inventory levels for time-sensitive stock, and meet a high level of service regardless of cost. Cost minimization is the most often treated quantitatively and is generally the most important. 4. With a chase strategy production rates or work force levels are adjusted to match demand requirements over the planning horizon. 5. A pure strategy is one that varies only one factor—for example, maintain a constant work force level or maintain a constant inventory. Trade-offs are ignored. 6. Level scheduling is an aggregate plan in which daily capaci- ties are uniform from month to month. The underlying philosophy is that stable employment leads to better quality, less turnover, less absenteeism and more employee commitment. 7. Mixed strategy is a planning approach in which two or more options such as overtime, subcontracting, hiring and layoff, etc., are used. There are both inventory changes and work force and pro- duction rate changes over the planning horizon. Typically, mixed strategies are better (result in lower costs) than pure strategies. 8. The advantage of varying the size of the workforce as re- quired to adjust production capacity is that one has a fundamental ability to change production capacity in relatively small and precise increments. The disadvantages are that a ready supply of skilled labor is not always available, newly hired personnel must be trained, and firings or layoffs undermine the morale of all employ- ees and can lead to a widespread decrease in overall productivity. 9. Mathematical models are not more widely used because they tend to be relatively complex and are seldom understood by those persons performing the aggregate planning activities. 10. Aggregate planning in services differs from aggregate planning in manufacturing in the following ways: ¡# Most services are perishable and cannot be inventoried. It is virtually impossible to produce the service early in anticipation of higher demand at a later time. ¡# Demand for services is often difficult to predict. Demand variations may be more severe and more frequent. ¡# Services are more customized than manufactured goods and can be offered in many different forms. This variabil- ity makes it difficult to allocate capacity. Units of capacity may also be hard to define. ¡# Because most services cannot be transported, service capacity must be available at the appropriate place as well as at the appropriate time.
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This note was uploaded on 07/05/2010 for the course OPER 2P91 taught by Professor Eugenekaciak during the Spring '10 term at Brock University, Canada.

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ch13_ISM[1] - CHAPTER Aggregate Planning 13 DISCUSSION...

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