MRP - or fewer categories of product • The possibility of...

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Click to edit Master subtitle style 5/12/09 MRP
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5/12/09 Facility Decisions How much total capacity is needed? How large should each unit of capacity be? When is the capacity needed? How much capacity Level of Capacity Cushion When to obtain capacity Economies of scale
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5/12/09 “Capacity Cushion” Difference between average demand and actual capacity Capacity decisions determine capacity cushion Try not to run out Build to average forecast Maximize utilization
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5/12/09 Timing of Facility Additions
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5/12/09 Economies & Diseconomies of Scale Economies of scale occur when the average unit cost decreases as the capacity increases Diseconomies of scale occur when the average unit cost increases as the capacity increases
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5/12/09 Aggregate Planning Definition Facilities that are considered fixed (cannot be expanded or reduced) A time horizon of about 12 months Aggregated level of demand for one
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Unformatted text preview: or fewer categories of product • The possibility of changing both supply and demand variable • A variety of management objectives 5/12/09 Options for Influencing Demand • Pricing 5/12/09 Options for Influencing Supply • Hiring and layoff of employees • Using overtime and undertime • Using part-time or temporary labor • Carrying inventory • Subcontracting • Making cooperative arrangements 5/12/09 Basic Strategies • “level” strategy (level work force) – How can we produce in such a way that we do not have to hire and fire workers. • “Chase” strategy (chase the demand) – Hiring and firing workers all the time. 5/12/09 Aggregate Planning Costs • Hiring and firing costs • Overtime and undertime costs • Part-time and temporary labor costs • Subcontracting costs 5/12/09...
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