Chap0016 - Chapter 16 Aggregate Sales Operations Planning...

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CHAPTER 16 AGGREGATE SALES AND OPERATIONS PLANNING Review and Discussion Questions 1. What is the major difference between aggregate planning in manufacturing and aggregate planning in services? Variable affecting services operations can increase the need for overtime, a costly alternative. Also, services operations often have unique rules concerning the hours an employee may work (e.g., airlines, and trucking). Also intangibility of the product can make the use of MRP difficult. 2. What are the basic controllable variables of a production planning problem? What are the four major costs? Basic controllable variables: production rate, work force levels, and inventories. Major costs: production costs (fixed and variable), production rate change costs, inventory holding costs, and backlog costs. 3. Distinguish between pure and mixed strategies in production planning. Pure strategies use only one variable to absorb demand fluctuations. Mixed strategies involve two or more pure strategies. 4. Define level scheduling. How does it differ from the pure strategies in production planning. A Japanese approach, level scheduling focuses on holding production constant over a period of time. It is more like a combination of strategies in that for the period it keeps work force constant, inventory low and depends on a demand backlog to pull products through. 5. Compare the best plans in the JC Company and the Tucson Parks and Recreation Department. What do they have in common? The plans have little in common. The JC plans used a constant low work force and subcontracting. The Tucson Parks plan, on the other hand, used a constant high work force and no subcontracting. 6. How does forecast accuracy relate, in general, to the practical application of the aggregate planning models discussed in the Chapter? A highly accurate forecast encourages the use of deterministic techniques such as linear programming which in turn permits the development of near optimal plans. Clearly, though, any reduction in uncertainty enhances the likely accuracy of any production planning method. 206
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7. In which way does the time horizon chosen for an aggregate plan determine whether it is the best plan for the firm? Many factors affect the selection of an appropriate time horizon. Perhaps, the most important is what the firm intends to plan during that time period. An aggregate plan implies a period of up to 18 months wherein the firm takes its forecast and plans production using inventory, work force size, overtime and under time, subcontracting, and backlogging orders to achieve a reasonable schedule at reasonable costs. A very stable firm in a very stable environment with a very stable demand really doesn’t need to go out very far with its aggregate plan. However, when there is variation, especially when this variation is considerable, then a longer aggregate plan will show the need to find subcontractors, new workforce availability, etc. Planning for
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Chap0016 - Chapter 16 Aggregate Sales Operations Planning...

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