Agplan_insights - Copy

Agplan_insights - Copy - MANAGERIAL INSIGHTS IN AGGREGATE...

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MANAGERIAL INSIGHTS IN AGGREGATE PLANNING
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2 Aggregate Planning: Interpreting the Graphics and Managerial Insights 1. General Concepts a. Inventory vs. Shortage i. When Cumulative Production line is above Cumulative Demand forecast (sales forecast), there is inventory in the system (= Cumulative Production - Cumulative Demand). ii. When Cumulative Production line is below Cumulative Demand (sales forecast), there is shortage in the system (=Cumulative Demand - Cumulative Production). b. Identifying the Strategy (Note Slope of Cum. Production Line = rate of Production) i. When Cumulative Production line has a constant slope all the way through, the production rate is constant and that means we have a level work force with no overtime strategy in effect. Level Workforce, No OT
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3 ii. When Cumulative Production line has a constant slope all the way through, except in few periods in which production rate is higher (but at the same rate), we have a level work force with overtime strategy in effect. Level WF with OT in period 3 and 4.
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