OPERATION MANAGEMENT
CHAPTER 8:
AGGREGATE PLANNING
LEARNING OUTCOMES
At the end of this chapter, you should
be able to:
Define aggregate planning
Explain the concept of aggregate
planning
Explain and apply the aggregate
planning strategies
AGGREGATE
PLANNING
8.1) 8.5) 8.6)
8.2) 8.3) 8.4) AGGREGATE AGGREGATE
OVERVIE CONCEPT OBJECTIVE STRATEGY PLANNING PLANNING
W
FORMULA
LEVEL CHASE
STRATEGY STRATEGY
8.1) OVERVIEW
• Definition - Determine the quantity and
timing of production for intermediate future
(usually 3 to 18 months into future)
• A planning method, which evaluates future
work schedule for one/more products so
that forecasted sales can be satisfied.
• Operations managers try to determine the
best way to meet forecasted demand by
adjusting production rates, labor levels,
inventory levels, overtime work,
subcontracting rates and other
controllable variables.
8.2) CONCEPT
1) Aggregate planning determining the quantity
and timing of production for the immediate
future.
2) An effective aggregate planning entails:
A logical overall unit for measuring sales
and outputs.
A forecast demand for the intermediate
planning period in aggregate terms.
A method for determining costs.
A model that combines forecasts and costs
to enable scheduling decisions to be made
for the planning period
A model that
combines forecasts
and costs to
enable scheduling
decisions to be
made for the
planning period
To meet
forecasted
A method for
demand and
determining
minimize costs
costs. 8.3) over the planning
period
AGGREGATE
PLANNING
OBJECTIVE
A forecast
A logical
demand for the
overall unit for
intermediate
measuring
planning period
sales and
in aggregate
outputs.
terms.
Constant Workforce,
Vary Inventory
Using Part-time
workers (especially in Constant Workforce,
the service Vary Overtime and
sector)during period Inventory
of excess demand.
Vary Workforce, Hire 8.4) Constant Workforce,
AGGREGATE Changing Production
and Lay Off Strategy
Rates through
or Exact Demand PLANNING Overtime and
Strategy.
STARTEGY Subcontract
Constant Workforce,
Vary
Constant Workforce,
Overtime/Subcontract
Changing Production
and Inventory,
Constant Workforce, Rates through
allowing Backordering
Vary Inventory and Subcontract
during period of high
demand. Allowing
Backordering during
High Demand
8.5) AGGREGATE
PLANNING
STRATEGY
LEVEL STRATEGY CHASE STRATEGY
A level strategy (or level A chase strategy attempts to
scheduling) is an aggregate plan achieve output rates for each period
that match the demand forecast for
in which daily production is that period.
uniform from period to period.
For example: Vary workforce level,
For example: Firms like Toyota vary production by means of
and Nissan keep production at overtime, idle time, part time
uniforms level. employee or subcontracting.
8.6)
AGGREGATE
PLANNING
TEMPLATES
CONSTANT VARY
WORKFORCE WORKFORCE
STRATEGIES STRATEGIES
OUTPUT OR
ACTUAL
LAYOFF
PRODUCTION REGULAR
COST
PRODUCTION
COST
HIRING
COST OVERTIME
COST
8.7)
AGGREGATE
PLANNING
FORMULA
INVENTORY
TOTAL HOLDING
WAGES COST
NO. OF SUBCONTRA
WORKERS MONTHLY
CTING COST
REQUIRED OUTPUT PER
WORKER
