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hr_om11_ism_ch13 - 13 CHAPTER AggregatePlanning...

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13 C H A P T E R Aggregate Planning D ISCUSSION  Q UESTIONS 1. Sales and Operations Planning (S&OP) balances resources and forecast demand and aligns the organization’s competing demand (from supply chain to final customer) while linking strategic planning with operations overall planning horizons. 2. S&OP teams are typically cross-functional because all internal and external resource must be coordinated and integrated for a successful aggregate plan. 3. Aggregate planning is concerned with the quantity and timing of production for the intermediate future; typically encompasses a time horizon of 3 to 18 months. 4. Aggregate means combining the appropriate products and resources into general, or overall, terms. 5. Strategic objectives: minimize cost over the planning period, smooth fluctuations in work force, drive down inventory levels for time-sensitive stock, and meet a high level of service regardless of cost. Cost minimization is the most often treated quantitatively and is generally the most important. 6. With a chase strategy, production rates or workforce levels are adjusted to match demand requirements over the planning horizon. 7. Level scheduling is an aggregate plan in which daily capacities are uniform from month to month. The underlying philosophy is that stable employment leads to better quality, less turnover, less absenteeism, and more employee commitment. 8. Mixed strategy is a planning approach in which two or more options, such as overtime, subcontracting, hiring and layoff, etc., are used. There are both inventory changes and work force and production rate changes over the planning horizon. Typically, mixed strategies are better (result in lower costs) than pure strategies. 9. The advantage of varying the size of the workforce as required to adjust production capacity is that one has a fundamental ability to change production capacity in relatively small and precise increments. The disadvantages are that a ready supply of skilled labor is not always available, newly hired personnel must be trained, and layoffs undermine the morale of all employees and can lead to a widespread decrease in overall productivity. 10. Aggregate planning in services differs from aggregate planning in manufacturing in the following ways: Most services are perishable and cannot be inventoried. It is virtually impossible to produce the service early in anticipation of higher demand at a later time. Demand for services is often difficult to predict. Demand variations may be more severe and more frequent. 187
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188 CHAPTER 13 A G G R E G A T E  P L A N N I N G Services are more customized than manufactured goods and can be offered in many different forms. This variability makes it difficult to allocate capacity. Units of capacity may also be hard to define.
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