Aggregate Planning Flashcards
(27 cards)
What is the role of aggregate planning?
- integral to part of the business planning process
- supports the strategic plan
- also known as the production plan
- identifies resources required for operations for the next 6-18 months
- details the aggregate production rate and size of work force required
Basic types of aggregate plans
- Level capacity - the capacity stays the same even if the demand increases
- Chase demand - the capacity changes when the demand increases
What is a level aggregate plan?
- maintains a constant workforce
- sets capacity to accommodate average demand
- often used for make-to-stock products like appliances
- disadvantage - builds inventory and/or uses back orders
What is a chase aggregate plan?
- produces exactly what is needed each period
- sets labour/equipment capacity to satisfy period demands
- disadvantage - constantly changing short term capacity
What is a hybrid aggregate plan?
- uses a combination of options
- options should be limited to facilitate execution
- HR - use a level workforce with overtime and temps
- IM - allow inventory buildup and some back ordering
- may use short term sourcing to manage demand peaks
Aggregate planning options:
Demand-based options
Reactive: uses a finished goods inventories and back orders for fluctuations
Proactive: shifts the demand patterns to minimise fluctuations e.g early bird dinner prices at a restaurant
Capacity based options
- changes output capacity to meet demand
- used overtime, under time, subcontracting, hiring, firing, and part timers - cost and operational implications
Important to evaluate current situation in terms of:
Point of departure
- current % of normal capacity
- options are different depending on present situation
Magnitude of change
- larger changes need more dramatic measures
Duration of change
- is the length of time a brief seasonal change
- is a permanent change in capacity needed?
Developing the aggregate plan
Step 1: choose strategy: level, chase, hybrid
Step 2: determine the aggregate production rate
Step 3: calculate the size of the workforce
Step 4: test the plan as follows: calculate inventory, expected hiring/firing , overtime needs, calculate total cost of plan
Step 5: evaluate performance: cost, service, hr, and operations
Aggregate plans for companies with tangible/intangible products
Plan A: level aggregate plan using inventories and back orders
Plan B: chase aggregate plan using hiring and firing
Plan C: level aggregate plan with no back orders or tangible product
Plan D: hybrid plan using initial work force and overtime as needed
What is Operations Management (OM)?
The activity of managing the resources devoted to the production and delivery of products and services.
Operations management focuses on managing activities, decisions, and responsibilities related to production and delivery.
List the major historical developments in Operations Management.
- Industrial revolution
- Scientific management
- Human relations movement
- Management Science
- Computer age
- Environmental Issues
- Just-In-Time systems (JIT)
- Total Quality Management (TQM)
- Business Process Reengineering
- Global competition
- Flexibility
- Time-Based Competition
- Supply Chain Management
- Electronic commerce
- Outsourcing and flattening of the world
Each development marked a significant shift in how operations were managed.
What are the Four V’s of Operations Management?
- Volume
- Variety
- Variation in demand
- Visibility
The Four V’s help in analyzing the characteristics of operating processes.
Describe the transformation process in Operations Management.
All operations are transformation processes that transform inputs into outputs.
Inputs can include materials, information, and customers while outputs are products and services that add value.
Fill in the blank: The _______ focuses on the development of quantitative techniques to solve operations problems.
Management Science
How do manufacturing and service organizations differ in terms of product tangibility?
- Manufacturing: Tangible products that can be inventoried
- Service: Intangible products that cannot be inventoried
This distinction highlights the operational challenges faced by each type of organization.
True or False: Manufacturing often provides services and services often provide tangible goods.
True
What is the main goal of Just-In-Time systems (JIT)?
To achieve high-volume production with minimal inventories.
JIT systems emphasize efficiency and waste reduction.
Identify the inputs and outputs in the transformation process.
Inputs: * Transformed Resources (Materials, Information, Customers)
Outputs: * Products and Services
Transformed resources refer to what is changed in the process, while outputs are the final goods and services.
What are the implications of the Four V’s in Operations Management?
They help in understanding capacity, anticipation, flexibility, and customer satisfaction.
Each ‘V’ influences operational strategy and decision-making.
Fill in the blank: The _______ of Operations Management includes People, Plants, Parts, Processes, Planning and Control.
5Ps
Explain the significance of the 1950-1960 era in U.S. Operations Management.
It was the golden era where primary opportunities were in marketing, leading to a focus on improving operations.
This era marked a shift in operational strategies towards efficiency.
