Due shortages to long lead times and poor customer

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Unformatted text preview: mes and poor customer service Capacity Options Varying production rate through Varying overtime or idle time Allows constant workforce Allows May be difficult to meet large May increases in demand Overtime can be costly and may Overtime drive down productivity Absorbing idle time may be Absorbing difficult Aggregate Planning Strategies 1. Use inventories to absorb changes in demand 2. Accommodate changes by varying workforce size 3. Use part-timers, overtime, or idle time to partabsorb changes 4. Use subcontractors and maintain a stable workforce 5. Change prices or other factors to influence demand Capacity Options Varying workforce size by hiring Varying or layoffs Match production rate to demand Match Training and separation costs for Training hiring and laying off workers New workers may have lower New productivity Laying off workers may lower Laying morale and productivity Capacity Options Subcontracting Subcontracting Temporary measure during Temporary periods of peak demand May be costly May Assuring quality and timely Assuring delivery may be difficult Exposes your customers to a Exposes possible competitor Capacity Options Capacity Demand Options Using part-time workers Using part- Influencing demand Influencing Useful for filling unskilled or low Useful skilled positions, especially in services Use advertising or promotion to Use increase demand in low periods Attempt to shift demand to slow Attempt periods May not be sufficient to balance May demand and capacity Demand Options Demand Options Back ordering during highBack highdemand periods Counterseasonal product and Counterseasonal service mixing Requires customers to wait for an Requires order without loss of goodwill or the order Develop a product mix of Develop counterseasonal items May lead to products or services May outside the company’s areas of company’ expertise Most effective when there are few Most if any substitutes for the product or service Often results in lost sales Often Aggregate Planning Options Disadvantages Some Comments Changing inventory levels Option Inventory Changes in holding cost human may increase. resources are Shortages may gradual or none;...
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This note was uploaded on 05/21/2011 for the course ECON 123 taught by Professor Day during the Spring '11 term at Arab Open University, Amman.

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