3325p11h13aggregate planning

Sop is aimed at 1 the coordination and integration of

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Unformatted text preview: with all areas of the firm over all planning horizons over ▶ S&OP is aimed at 1. The coordination and integration of the The internal and external resources necessary for a successful aggregate plan successful 2. Communication of the plan to those charged Communication with its execution with 13 – 11 Sales and Operations Planning ▶ Requires ▶ A logical overall unit for measuring sales and logical output output ▶ A forecast of demand for an intermediate forecast planning period in these aggregate terms planning ▶ A method for determining relevant costs ▶ A model that combines forecasts and costs so model that scheduling decisions can be made for the planning period planning 13 – 12 Aggregate Planning The objective of aggregate planning is The usually to meet forecast demand while minimizing cost over the planning period minimizing 13 – 13 Aggregate Planning QUARTER 1 Jan. Feb. March 150,000 120,000 110,000 QUARTER 2 April May June 100,000 130,000 150,000 QUARTER 3 July Aug. Sept. 180,000 150,000 140,000 13 – 14 Aggregate Planning ▶ Combines appropriate resources into Combines general terms general ▶ Part of a larger production planning Part system system ▶ Disaggregation breaks the plan down into greater detail greater ▶ Disaggregation results in a master Disaggregation production schedule production 13 – 15 Aggregate Planning Strategies 1. Should inventories be used to absorb changes in demand? 2. Should changes be accommodated by varying the size of the workforce? 3. Should part-timers, overtime, or idle time be used to absorb changes? 4. Should subcontractors be used and maintain a stable workforce? 5. Should prices or other factors be changed to influence demand? 13 – 16 Capacity Options 1. Changing inventory levels ▶ Increase inventory in low demand periods Increase to meet high demand in the future to ▶ Increases costs associated with storage, Increases insurance, handling, obsolescence, and capital investment capital ▶ Shortages may mean lost sales due to long Shortages lead times and poor customer service lead 13 – 17 Capacity Options 2. Varying workforce size by hiring or Varying layoffs layoffs ▶ Match production rate to demand ▶ Training and separation costs for hiring and Training laying off workers ▶ New workers may have lower productiv...
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