Operation Control

755 Words Apr 19th, 2015 4 Pages
CHAPTER 13
AGGREGATE PLANNING

The planning Process [pic]

Aggregate Planning • Combines appropriate resources into general terms • Part of a larger production planning system • Disaggregation breaks the plan down into greater detail • Disaggregation results in a master production schedule

Aggregate planning Strategies 1. Use inventories to absorb changes in demand 2. Accommodate changes by varying workforce size 3. Use part-timers, overtime, or idle time to absorb changes 4. Use subcontractors and maintain a stable workforce 5. Change prices or other factors to influence demand

Capacity Options • Changing inventory levels o Increase inventory in low demand periods to meet high
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Shortages may result |not service, operations. |
| |production changes. |in lost sales. | |
|Varying workforce size by |Avoids the costs of other |Hiring, layoff, and training |Used where size of labor pool |
|hiring or layoffs |alternatives. |costs may be significant. |is large. |
|Varying production rates |Matches seasonal fluctuations |Overtime premiums; tired |Allows flexibility within the |
|through overtime or idle time |without hiring/ training costs.|workers; may not meet demand. |aggregate plan. |
|Sub-contracting |Permits flexibility and |Loss of quality control; |Applies mainly in production |
| |smoothing of the firm’s output.|reduced profits; loss of future|settings. |
| | |business. | |
|Using part-time workers |Is less costly and more |High turnover/ training costs; |Good for unskilled jobs in |

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