3325p11h13aggregate planning

Varying production rates through varying overtime or

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Unformatted text preview: ity ▶ Laying off workers may lower morale and Laying productivity productivity 13 – 18 Capacity Options 3. Varying production rates through Varying overtime or idle time overtime ▶ Allows constant workforce ▶ May be difficult to meet large increases in May demand demand ▶ Overtime can be costly and may drive Overtime down productivity down ▶ Absorbing idle time may be difficult 13 – 19 Capacity Options 4. Subcontracting ▶ Temporary measure during periods of peak Temporary demand demand ▶ May be costly ▶ Assuring quality and timely delivery may be Assuring difficult difficult ▶ Exposes your customers to a possible Exposes competitor competitor 13 – 20 Capacity Options 5. Using part-time workers ▶ Useful for filling unskilled or low skilled Useful positions, especially in services positions, 13 – 21 Demand Options 1. Influencing demand ▶ Use advertising or promotion to increase demand Use in low periods in ▶ Attempt to shift demand to slow periods ▶ May not be sufficient to balance demand and May capacity capacity 13 – 22 Demand Options 2. Back ordering during high-demand Back periods periods ▶ Requires customers to wait for an order Requires without loss of goodwill or the order without ▶ Most effective when there are few if any Most substitutes for the product or service substitutes ▶ Often results in lost sales 13 – 23 Demand Options 3. Counterseasonal product and service Counterseasonal mixing mixing ▶ Develop a product mix of counterseasonal Develop items items ▶ May lead to products or services outside May the company’s areas of expertise the 13 – 24 Aggregate Planning Options Aggregate Planning Options OPTION ADVANTAGES DISADVANTAGES COMMENTS Changing inventory levels Changes in human resources are gradual or none; no abrupt production changes. Inventory holding cost may increase. Shortages may result in lost sales. Applies mainly to production, not service, operations. Varying workforce size by hiring or layoffs Avoids the costs of other alternatives. Hiring, layoff, and training costs may be significant. Used where size of labor pool is large. 13 – 25 Aggregate Planning Options Aggregate Planning Options OPTION ADVANTAGES DISADVANTAGES COMMENTS Varying production rates through over...
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