Chapter 4 - Aggregate Planning

Chapter 4 - Aggregate Planning - Chapter 4 Aggregate...

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Chapter 4 – Aggregate Planning I. Introduction a. Aggregate Planning: i. Intermediate-range capacity planning that typically covers a time horizon of 2 to 12 months 1. Useful for companies that experience seasonal or other fluctuations in demand or capacity ii. Goal is to achieve a production plan that will effectively utilize the organization’s resources to match expected demand b. Demand and Supply Options: i. Proactive aggregate planning strategies involve demand options 1. Attempt to alter demand so that it matches capacity a. Pricing: i. Price differentials are commonly used to shift demand from peak periods to off-peak periods 1. Matinees, early bird specials, etc ii. Depends on the elasticity for the product 1. More elastic, more effective b. Promotion: i. Advertising and other forms of promotion, such as displays and direct marketing, can sometimes be very effective in shifting demand 1. Much less control over the timing of demand and can backfire c. Back Orders: i. Orders are taken in one period and deliveries are promised for a later period 1. Success depends on willingness of customers to wait
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d. New Demand:
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This note was uploaded on 04/24/2011 for the course MGMT 361 taught by Professor Panwalker during the Spring '10 term at Purdue University-West Lafayette.

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Chapter 4 - Aggregate Planning - Chapter 4 Aggregate...

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