Option Advantage Disadvantage Some Comments Using part time workers Less costly

Option advantage disadvantage some comments using

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Option Advantage Disadvantage Some Comments Using part-time workers Less costly and more flexible than full-time workers High turnover/training costs; quality suffers; scheduling difficult Good for unskilled jobs in areas with large temporary labor pools Influencing demand Tries to use excess capacity. Discounts draw new customers. Uncertainty in demand. Hard to match demand to supply exactly. Creates marketing ideas. Overbooking used in some businesses .
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20 ADVANTAGE/DISADVANTAGE - CONTINUED Option Advantage Disadvantage Some Comments Back ordering during high- demand periods May avoid overtime. Keeps capacity constant Customer must be willing to wait, but goodwill is lost. Many companies backorder. Counterseasonal products and service mixing Fully utilizes resources; allows stable workforce. May require skills or equipment outside a firm's areas of expertise . Risky finding products or services with opposite demand patterns.
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MIXING OPTIONS TO DEVELOP A PLAN A mixed strategy may be the best way to achieve minimum costs There are many possible mixed strategies Finding the optimal plan is not always possible Chase strategy Match output rates to demand forecast for each period Vary workforce levels or vary production rate Favored by many service organizations Level strategy Daily production is uniform Use inventory or idle time as buffer Stable production leads to better quality and productivity 21
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AGGREGATE PLANNING IN SERVICES Most services use combination strategies and mixed plans Controlling the cost of labor is critical 1. Accurate scheduling of labor-hours to assure quick response to customer demand 2. An on-call labor resource to cover unexpected demand 3. Flexibility of individual worker skills 4. Flexibility in rate of output or hours of work 22
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EXAMPLES Restaurants 1. Smoothing the production process 2. Determining the optimal workforce size Airline industry Extremely complex planning problem Involves number of flights, number of passengers, air and ground personnel, allocation of seats to fare classes Resources spread through the entire system 23
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MASTER PRODUCTION SCHEDULE (MPS) Specifies what is to be made and when Must be in accordance with the aggregate production plan Inputs from financial plans, customer demand, engineering, supplier performance As the process moves from planning to execution, each step must be tested for feasibility The MPS is the result of the production planning process 24
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MASTER PRODUCTION SCHEDULE (MPS) MPS is established in terms of specific products Schedule must be followed for a reasonable length of time The MPS is quite often fixed or frozen in the near term part of the plan The MPS is a rolling schedule The MPS is a statement of what is to be produced, not a forecast of demand 25
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Figure 14.1 THE PLANNING PROCESS 26
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Figure 14.1 27 THE PLANNING PROCESS Schedule and execute plan Change master productio n schedule?
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