Lecture 16

Lecture 16 - 540:453 Production Control Lecture 16:...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
540:453 Production Control Lecture 16: Aggregate Planning (Ch. 4) Prof. T. Boucher 1 Aggregate Production Planning Problem •G i v e n – Forecasted aggregate demand covering the selected planning horizon – The alternative means available to adjust capacity, to what extent each alternative could impact capacity and the related costs – The current status of the system in terms of workforce level, inventory level and production rate • Solution – A production plan: aggregate decisions for each period in the planning horizon about:
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Example: APP Input Hiring cost = $100 per worker Firing cost = $500 per worker Regular production cost per pound = $2.00 Inventory carrying cost = $0.50 pound per quarter Production per employee = 1,000 pounds per quarter Beginning work force = 100 workers QUARTER SALES FORECAST (LB) Spring 80,000 Summer 50,000 Fall 120,000 Winter 150,000 Example: Quantitative Techniques For APP • Pure Strategies – Level Production (Constant Workforce) Strategy • Allows a constant rate of production and uses inventory levels to absorb fluctuations in demand. – Chase Demand Strategy • matches production and demand by hiring and firing workers as necessary to control output • Mixed Strategies = Level + Chase • Linear Programming (Optimization)
Background image of page 2
• Production rate is held level (constant) over the planning horizon • The difference between the constant production rate and the demand rate is made up (buffered) by inventory, backlog, overtime, part-time labor and/or subcontracting Demand Units Time Production • Cost of strategy – holding items in inventory. • Tends to be the preferred strategy of many organizations, including labor unions . • Pros: Worker levels are stable, Production output is stable. • Cons: High inventory costs, Increased labor costs. Developing and Evaluating the Level Production Plan • Assume that the amount produced each period is constant, no hiring or firing • The gap between the amount planned to be produced and the forecasted demand is filled with either inventory or backorders , i.e., no overtime, no idle time, no subcontracting • The primary costs of this strategy are inventory carrying and backlogging costs • Period-ending inventories or backlogs are
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 11

Lecture 16 - 540:453 Production Control Lecture 16:...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online