Bài giảng Operations Management - Chapter 13: Aggregate Planning

Operations ManagementAggregate PlanningChapter 131OutlineGLOBAL COMPANY PROFILE: ANHEUSER-BUSCHTHE PLANNING PROCESSTHE NATURE OF AGGREGATE PLANNINGAGGREGATE PLANNING STRATEGIESCapacity OptionsDemand OptionsMixing Options to Develop a Plan2Outline - ContinuedMETHODS FOR AGGREGATE PLANNINGGraphical and Charting MethodsMathematical Approaches to PlanningComparison of Aggregate Planning MethodsAGGREGATE PLANNING IN SERVICESRestaurantsHospitalMiscellaneous Services National Chains of Small Service FirmsAirline IndustryYIELD MANAGEMENT3Learning ObjectivesWhen you complete this chapter, you should be able to :Identify or Define:Aggregate planningTactical schedulingGraphic technique for aggregate planningMathematical techniques for aggregate planningDescribe or Explain:How to do aggregate planningHow service firms develop aggregate plans4Anheuser-BuschAnheuser-Busch produces nearly 40% of the beer consumed in the U.S.Matches fluctuating demand by brand to specific plant, labor, and inventory capacityHigh facility utilization requiresmeticulous cleaning between batcheseffective maintenanceefficient employeesefficient facility scheduling5Aggregate Planning RequiresLogical overall unit for measuring sales and outputsForecast of demand for intermediate planning period in these aggregate unitsMethod for determining costsModel that combines forecasts and costs so that planning decisions can be made6Setting goals & objectivesExample: Meet demand within the limits of available resources at the least costDetermining steps to achieve goalsExample: Hire more workersSetting start & completion datesExample: Begin hiring in Jan.; finish, Mar.Assigning responsibility Planning7Planning Tasks and Responsibilities8Planning HorizonsToday3 Months1 year5 yearsPlanning HorizonShort-range plansJob assignmentsOrderingJob schedulingDispatchingIntermediate-range plansSales planningProduction planning and budgetingSetting employment, inventory, subcontracting levelsAnalyzing operating plansLong-range plansR&DNew product plansCapital expensesFacility location, expansionResponsible: Operations managers, supervisors, foremenResponsible: Operations managersResponsible: Top executives9Relationships of the Aggregate PlanAggregatePlan forProductionDemandForecasts, ordersMasterProductionSchedule, and MRP systemsDetailed WorkSchedulesExternalCapacity SubcontractorsInventory OnHandRaw MaterialsAvailableWork ForceMarketplaceand DemandResearch andTechnologyProductDecisionsProcessPlanning & CapacityDecisions10A mathematically based aggregate planning model requires considerable:timeproblem definitionmodel developmentmodel verificationmodel applicationexpertisepeople who understand the problempeople who understand both the modeling process, and the specific modelmoneymoney to pay for all of the aboveoften requires funding for several people for several months!What’s Needed for Aggregate Planning11Provides the quantity and timing of production for intermediate futureUsually 3 to 18 months into futureCombines (‘aggregates’) productionOften expressed in common unitsExample: Hours, dollars, equivalents (e.g., FTE students)Involves capacity and demand variablesAggregate Planning12Meet demandUse capacity efficientlyMeet inventory policyMinimize costLaborInventoryPlant & equipmentSubcontractAggregate Planning Goals13Aggregate Planning StrategiesPure StrategiesCapacity Options — change capacity:changing inventory levelsvarying work force size by hiring or layoffsvarying production capacity through overtime or idle timesubcontractingusing part-time workers14Aggregate Planning StrategiesPure StrategiesDemand Options — change demand:influencing demandbackordering during high demand periodscounterseasonal product mixing15Aggregate Scheduling Options - Advantages and DisadvantagesOptionAdvantageDisadvantageSomeCommentsChanginginventory levelsChanges inhuman resourcesare gradual, notabruptproductionchangesInventoryholding costs;Shortages mayresult in lostsalesApplies mainlyto production,not service,operationsVaryingworkforce sizeby hiring orlayoffsAvoids use ofother alternativesHiring, layoff,and trainingcostsUsed where sizeof labor pool islarge16OptionAdvantageDisadvantageSomeCommentsVaryingproduction ratesthrough overtimeor idle timeMatches seasonalfluctuationswithouthiring/trainingcostsOvertimepremiums, tiredworkers, may notmeet demandAllowsflexibility withinthe aggregateplanSubcontractingPermitsflexibility andsmoothing of thefirm's outputLoss of qualitycontrol; reducedprofits; loss offuture businessApplies mainlyin productionsettingsAdvantages/Disadvantages - Continued17Advantages/Disadvantages - ContinuedOptionAdvantageDisadvantageSomeCommentsUsing part-timeworkersLess costly andmore flexiblethan full-timeworkersHighturnover/trainingcosts; qualitysuffers;schedulingdifficultGood forunskilled jobs inareas with largetemporary laborpoolsInfluencingdemandTries to useexcess capacity.Discounts drawnew customers.Uncertainty indemand. Hard tomatch demand tosupply exactly.Createsmarketing ideas.Overbookingused in somebusinesses.18Advantage/Disadvantage - ContinuedOptionAdvantageDisadvantageSomeCommentsBack orderingduring high-demand periodsMay avoidovertime. Keepscapacity constantCustomer mustbe willing towait, butgoodwill is lost.Many companiesbackorder.Counterseasonalproducts andservice mixingFully utilizesresources; allowsstable workforce.May requireskills orequipmentoutside a firm'sareas ofexpertise.Risky findingproducts orservices withopposite demandpatterns.19The ExtremesLevel StrategyChase StrategyProduction equals demandProduction rate is constant20Mixed strategyCombines 2 or more aggregate scheduling optionsLevel scheduling strategyProduce same amount every dayKeep work force level constant Vary non-work force capacity or demand optionsOften results in lowest production costsAggregate Planning Strategies21Graphical & charting techniquesPopular & easy-to-understandTrial & error approachMathematical approachesTransportation method Linear decision ruleManagement coefficients modelSimulationAggregate Planning Methods22The Graphical Approach to Aggregate PlanningForecast the demand for each periodDetermine the capacity for regular time, overtime, and subcontracting, for each periodDetermine the labor costs, hiring and firing costs, and inventory holding costsConsider company policies which may apply to the workers or to stock levelsDevelop alternative plans, and examine their total costs23Forecast and Average Forecast Demand22 18 21 21 22 2024Cumulative Demand Graph for Plan 1Jan Feb Mar Apr May JunCumulative forecast requirementsCumulative level production using average monthly forecast requirementsReduction of inventoryExcess inventoryCumulative Demand (Units)7,0006,0005,0004,0003,0002,0001,00025Farnsworth’s Transportation TablePeriod 1(Mar)Period 2(Apr)Period 3(May)Unused Capacity(Dummy)Total Capacity Available(Supply)Beginning Inventory0100240100Regular4070042440700Overtime50525054050Subcontract7072150740150RegularX40700420700OvertimeX505052050SubcontractX7050720100150RegularXX407000700OvertimeXX5050050SubcontractXx700130Total Demand80010007502302780Period 3 Period 2 Period 126Comparison of Three Major Aggregate Planning Methods Charting/graphical methodsTransportation methodManagement coefficient modelTrial and errorOptimizationHeuristicSimple to understand, easy to use. Many solutions; one chosen may not be optimalLP software available;permits sensitivity analysis and constraints. Linear function may not be realisticSimple, easy to implement; tries to mimic manager’s decision process; uses regression Techniques Approaches Aspects27Controlling the Cost of Labor in Service FirmsSeek: Close control of labor hours to ensure quick response to customer demandOn-call labor resource that can be added or deleted to meet unexpected demandFlexibility of individual worker skills to permit reallocation of available laborFlexibility of individual worker in rate of output or hours of work to meet demand28Making Yield Management WorkMultiple pricing structures must be feasible and appear logicalForecast the use and duration of use.Manage the changes in demand.29Hotel: Single Price Level$15 variable cost of room$150 Price charged for roomPriceSales$sales = Net price * 50 rooms =150*50=$7500Demand CurvePassed up profit contributionsMoney left on the tablePotential customers exist who are willing to pay more than the $15 variable costSome customers who paid $150 for the room were actually willing to pay more30Hotel: Two Price Levels$15 variable cost of roomDemandSales$100Price #1$200Price #2Total sales = 1st net price *30 + 2nd net price *30= $8100Net prices are:Price #1 => $85Price #2 => $17531Yield Management MatrixFixedVariableDurat I on o f usePredictable useQuadrant 1Movies, stadiums, arenas, convention centers, hotel meeting spaceQuadrant 2Hotels, Airlines, Rental cars,Cruise linesUnpredictable useQuadrant 3Restaurants,Golf courses, Internet service providersQuadrant 4Continuing care hospitals32