ChIV-AggregatePlanning_I-Sp10

ChIV-AggregatePlanning_I-Sp10 - Aggregate Planning MGMT...

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Unformatted text preview: Aggregate Planning MGMT 46000 Operations Management (OM) Decision Strategic Tactical Operational OM Examples New Plants, Capacity Expansion, … Aggregate planning, Master Production Schedule planning, MRP, Detailed scheduling, … Ch IV: Aggregate Planning – Par t I Ch Pl Terminology: Planning horizon, planning strategy Planning horizon, planning strategy (chase, (chase, level), constraints, aggregate production plan (basic plan, adjustments, final plan). Objective: to develop a feasible production plan to on an aggregate level based on demand, capacities, costs and other factors. ChIV‐AggregatePlanning‐Sp10 1 ChIV‐AggregatePlanning‐Sp10 2 MGMT 36100 MGMT 36100 Aggregate Planning 1 pickup = 1.6 cars If we want to produce 500 pickups and 1600 cars, it is equivalent to: • (500 * 1.6) + 1600 = 2400 cars, or • 500 + (1600 / 1.6) = 1500 pickups. Example 1 Demand for 4 products for the next month is given Part (a): Calculate aggregate (demand) requirement in term of Calculate the standard product “AA” Time [Hrs. /unit] AA 2.0 3.0 1.5 1.0 BB CC DD Demand [units] 2000 1000 2400 1200 Demand in standard units 2.0 * 2000 / 2.0 = 2000 2.0 3.0 * 1000 / 2.0 = 1500 1.5 * 2400 / 2.0 = 1800 1.0 * 1200 / 2.0 = 600 = 5900 Our approach Ex. 1. Calculate aggregate demand for each period. Ex. 1 and 2 2. 2. Preparing aggregate plan over the planning horizon: a) Select a strategy and obtain the basic plan. strategy b) Make adjustments to satisfy policies (constraints) to get the Ex. final plan. Ex. 3, 4, 5 and 6. 3. 3. Prepare Budget: Break down the final plan (giving preference to Ex. least cost production method) and calculate costs. Ex. 6. 4. Budget improvement: Make further adjustments to improve Ex. costs. (Demonstration only, no questions on the exams ). Ex. 7. Aggregate requirement How much time do we need to meet demand for each product? product? How many standard units can we make in the same time? Generally we will use one period = one month ChIV‐AggregatePlanning‐Sp10 3 Part (b): What to do if capacity in standard units is 5000? What Overtime / temporary workers / subcontract (out sourcing), produce in the prior period, back order (produce in future periods), don’t meet demand. ChIV‐AggregatePlanning‐Sp10 4 MGMT 36100 MGMT 36100 product? Ex.2 How much time do we need to meet demand for each product? How many standard units can we make in the same time? Rate [unit/day] E D I 200 160 60 Demand [units] 3000 880 120 Demand in standard units (3000 (3000 / 200) * 160 = 2400 ( 880 / 160) * 160 = 880 ( 120 / 60) * 160 = 320 = 3600 Examples 1 and 2: comparison How much time do we need to meet demand for each product? How many standard units can we make in the same time? Time [Hrs. /unit] AA BB CC DD 2.0 3.0 1.5 1.0 Demand 2000 1000 2400 1200 1200 Demand in standard units 2.0 * 2000 / 2.0 = 2000 3.0 * 1000 / 2.0 = 1500 1.5 * 2400 / 2.0 = 1800 1.0 * 1200 / 2.0 = 0600 1200 0600 5900 Demand in standard units (3000 / 200) * 160 = 2400 (880 / 160) * 160 = 0880 (120 / 60) * 160 = 0320 3600 6 15.0 days 5.5 days 2.0 days 22.5 days Aggregate requirement requirement Production time: 3600 [units] / 160 [units/day] = 22.5 [days]. If we have 21 days available during the next month, we need to plan for the excess units. Any product can be a standard Back ordering problems: product. Customer Customer satisfaction. Lost sales. What if demand remains high? We still need the same amount of time to make all products. Will Will need a long term solution. ChIV‐AggregatePlanning‐Sp10 5 Aggregate requirement Rate [unit/day] E D I 200 160 60 ChIV‐AggregatePlanning‐Sp10 Demand 3000 880 120 Aggregate requirement MGMT 36100 MGMT 36100 ChIV-AggregatePlanning-Sp10 1 Developing Aggregate Plan. For aggregate planning, we consider a number of periods; the total span is called the planning horizon. For planning, we can planning use different strategies: Chase, Level or a combination. Chase, Chase Strategy: produce quantity equal to aggregate demand for each period in order to keep inventory level zero. Level Strategy: Produce quantity equal to the average requirement over the planning horizon. Example 3 Chase Strategy Period Capacity Requirement 1 5000 2 Constraints: Cannot exceed capacity. No shortages are permitted. What’s wrong with the basic plan? 8000 8000 Policies (constraint) examples: 1. Capacity in each period may be limited. 2. No shortages may be permitted (customer satisfaction). 3. No inventory is kept. 4. Must leave certain inventory at the end of period X. 5. Must meet demand during planning horizon. 6. Hiring and firing of workers. Sometime we may have soft constraints. We try to meet these soft constraints as much as possible. ChIV‐AggregatePlanning‐Sp10 7 Basic Plan 5000 End Inventory Inventory 0 Adjusted Plan 5000 End Inventory 0 3 4 Capacity exceeded in P3. P3. 8000 8000 What can we do? 6000 8500 4500 Shift 500 units to P1. Shift 500 units to P2. 6000 8500 4500 Shift 500 units to P4. 0 0 0 A combination? 6500 8000 4500 500 0 0 Shift 500 units to P2. -- Produce close to desirable period. Why? Adjusted plan is ok. This is the final plan plan. Requirement also means demand. Plan represents production quantity. ChIV‐AggregatePlanning‐Sp10 8 MGMT 36100 MGMT 36100 Constraints: Cannot exceed capacity. No shortages are permitted. Level Strategy Average demand = (5000+6000+8500+4500)/4 = 6000 Example 3 . cont Inv. for period X = Inv. for (X-1) + Production for X - Demand for X (XPeriod Capacity Demand Basic plan plan Inventory Adjust. 1 Inventory Adjust. 2 Inventory 0 Ex 4: Chase Period Requirement Basic Plan Inventory Adjusted plan Inventory Inventor Final Plan Inventory Constraints: No shortages. Capacity 4000. Must have at least 600 units at the end of April. Jan. 2000 Feb. March April 4500 4800 4300 May 2900 2900 0 2900 600 2300 0 June 2700 2700 0 2700 600 2700 0 0 1 2 8000 8000 5000 6000 6000 6000 6000 0 0 6500 6500 1500 2000 4 What’s wrong? 8000 8000 Shortage of 1500 in P3. 8500 4500 Increase production by 6000 6000 500 in P1, P2 and P3. 6000 6000 3 1000 1000 -1500 0 What’s wrong? 6500 6000 We have inventory in P4. 0 1500 Generally, we want zero inventory at the end of 6500 6500 6500 4500 planning horizon. 1500 2000 0 0 Reduce P4 by 1500. You could do these two adjustments in one step. 9 1200 4500 4800 4300 800 0 0 0 0 3400 4000 4000 4000 800 800 2200 1700 900 600 3400 4000 4000 4000 800 2200 1700 900 600 800 on hand at the start of planning horizon. What’s wrong with the basic plan? Capacity exceeded in Feb., Mar. and Apr. Incorrect inventory: Apr. Adjustment 1: Move 500 + 800 + 300 to Jan. + Add 600 to Jan. What’s wrong with the adjusted plan? 600 left after June. Reduce 600 in May ChIV‐AggregatePlanning‐Sp10 10 ChIV‐AggregatePlanning‐Sp10 MGMT 36100 MGMT 36100 Ex 4. Level Period Period Constraints: No shortages. Capacity 4000. Must have at least 600 units at the end of April. Average = (2000+4500+4800+4300+2900+2700 – 800)/6 = 3400 800)/6 Jan. Feb. March 2000 4500 800 3400 2200 3850 2650 3400 1100 3850 2000 4800 April 4300 May 2900 3400 -700 3400 1100 June 2700 3400 0 3400 1800 Requirement Basic Plan Inventory Adjusted plan Inventory 800 3400 3400 -300 -1200 3850 3850 1050 600 Final Plan 3850 3850 3850 3850 2500 2500 Inventory 800 2650 2000 1050 600 200 0 What’s wrong with the basic plan? Negative inventory: Mar., Apr. and May & incorrect inventory for April We will start with correction for April. Action: Add 1800 units in the first 4 moths (450) each. What’s wrong with the adjusted plan? 1800 left after June. Reduce 900 each from the last two months. ChIV‐AggregatePlanning‐Sp10 11 MGMT 36100 ChIV-AggregatePlanning-Sp10 2 ...
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This note was uploaded on 12/14/2010 for the course MGMT 361 taught by Professor Panwalker during the Spring '10 term at Purdue University-West Lafayette.

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