Aggregate planning
Introduction
Capacity may be defined as the maximum or limiting capability of a production unit to produce in a specific period. This is expressed in terms of output per unit of time. If stated period of time is one month, the capacity is said to be the limiting capability of the producing unit in one month, e.g. 10,000 per units per month. This capacity is the capability of the producing unit under given (or specified) conditions, e.g. one shift working/ two shifts working or one related to the intensity of the facilities used.
Aggregate planning
It involves planning the best quantity to produce during time periods in the intermediate- range horizon (often 3 months to 1 year) and planning the lowest cost method of providing the adjusting capacity to accommodate the production requirements. For manufacturing operations, aggregate planning involves planning workforce size, production rate (work hours per week) and inventory levels.
Features of aggregate planning
Aims at minimizing total cost of manufacturing.
Follow capacity planning.
Period-intermediate range of 3 months to 1 year.
Dynamic process.
Requirement of resources are aggregated into common unit.
Concerned with finding optimal mix of strategies foe meeting demand.
Objectives
1. To develop plan that are:
Feasible: The plan should provide for the portion of demand that the firm intends to meet and should be with in the financial and physical capacity of the firm.
Optimal: The firm should aim for plans which will ensure that resources are used as wisely as possible and costs kept as low as possible.
2. To increase the range of alternative of capacity use, that can be considered by the management of the firm.
3. To meet overall level of demand in intermediate range.
4. Efficient utilization of production capacity.
5. Meeting company’s goals and policies about employees.
Needs for aggregate planning
1. It facilities fully loaded facilities and minimizes overloading and under-loading and keeps production costs low.
2. adequate production capacity is provided to meet expected aggregate demand.
3. in times of scarce production resources, getting the maximum output for the amount of resources is enhanced.
4. to manage change in production/operation management by planning for production resources that adapt to the changes in customer demands.
Operations planning and scheduling systems:
They are concerned with the volume and timing of outputs, the utilization of operations capacity and balancing outputs with capacity at the desired levels of competitive effectiveness.
Those persons who want to get diagram of this system then mail me himanshu143goel@gmail.com
Various strategies involved in aggregate planning
The objectives of the various strategies of aggregate planning is to smooth out the peaks and voltages of the demand during the planning horizon. This is achieved through actions briefed below:
Without changing production output rate.
Varying production output rate.
Appropriate inventory level.
Subcontracting
Capacity utilization
Without changing production level
(a) during periods of low demand, the increase of sales of goods can be done through special discount schemes/ cutting prices etc.
(b) during periods of high demand, the method of back logging orders can be adopted but depends upon the willingness of the customer if he could wait for that much time. However, backlogging of orders is not without danger of loosing goodwill.
Change in production level:
(a) when demand is on the increasing side, the output rate can be changed by hiring workers temporarily. Whenever, it is possible to increase production through change workforce or by keeping workers on overtime (OT) or through some special incentives scheme’ by altering the capacity through increase of few equipments or machinery or sometimes by changing the planned plant shut downs.
(b) When demand is decreasing, changing the output rate by logging of casual or temporary workers or by paying full salary to employees but reducing output rate for a short period- without demoralizing or demotivating the workforce or by reducing capacity by switching off part machinery whenever possible.
Appropriate inventory level
Inventory of furnished goods is increased during periods of low demand and the same can be used to meet high demand or seasonal demand in other periods. Manufacturing firms can use this strategy very well.
Sub-contracting
It means demand meeting demand through acquiring part of goods from other manufactures or producers rather than making in-house. House benefits must be weighted against cost and quantity.
Capacity utilization
It is very common to service industries. Organizations or companies which cannot store products or services. They must arrange to meet peal load through sharing capacity utilizations. Example: telephone companies, electric power companies and computer time sharing companies.
Introduction
Capacity may be defined as the maximum or limiting capability of a production unit to produce in a specific period. This is expressed in terms of output per unit of time. If stated period of time is one month, the capacity is said to be the limiting capability of the producing unit in one month, e.g. 10,000 per units per month. This capacity is the capability of the producing unit under given (or specified) conditions, e.g. one shift working/ two shifts working or one related to the intensity of the facilities used.
Aggregate planning
It involves planning the best quantity to produce during time periods in the intermediate- range horizon (often 3 months to 1 year) and planning the lowest cost method of providing the adjusting capacity to accommodate the production requirements. For manufacturing operations, aggregate planning involves planning workforce size, production rate (work hours per week) and inventory levels.
Features of aggregate planning
Aims at minimizing total cost of manufacturing.
Follow capacity planning.
Period-intermediate range of 3 months to 1 year.
Dynamic process.
Requirement of resources are aggregated into common unit.
Concerned with finding optimal mix of strategies foe meeting demand.
Objectives
1. To develop plan that are:
Feasible: The plan should provide for the portion of demand that the firm intends to meet and should be with in the financial and physical capacity of the firm.
Optimal: The firm should aim for plans which will ensure that resources are used as wisely as possible and costs kept as low as possible.
2. To increase the range of alternative of capacity use, that can be considered by the management of the firm.
3. To meet overall level of demand in intermediate range.
4. Efficient utilization of production capacity.
5. Meeting company’s goals and policies about employees.
Needs for aggregate planning
1. It facilities fully loaded facilities and minimizes overloading and under-loading and keeps production costs low.
2. adequate production capacity is provided to meet expected aggregate demand.
3. in times of scarce production resources, getting the maximum output for the amount of resources is enhanced.
4. to manage change in production/operation management by planning for production resources that adapt to the changes in customer demands.
Operations planning and scheduling systems:
They are concerned with the volume and timing of outputs, the utilization of operations capacity and balancing outputs with capacity at the desired levels of competitive effectiveness.
Those persons who want to get diagram of this system then mail me himanshu143goel@gmail.com
Various strategies involved in aggregate planning
The objectives of the various strategies of aggregate planning is to smooth out the peaks and voltages of the demand during the planning horizon. This is achieved through actions briefed below:
Without changing production output rate.
Varying production output rate.
Appropriate inventory level.
Subcontracting
Capacity utilization
Without changing production level
(a) during periods of low demand, the increase of sales of goods can be done through special discount schemes/ cutting prices etc.
(b) during periods of high demand, the method of back logging orders can be adopted but depends upon the willingness of the customer if he could wait for that much time. However, backlogging of orders is not without danger of loosing goodwill.
Change in production level:
(a) when demand is on the increasing side, the output rate can be changed by hiring workers temporarily. Whenever, it is possible to increase production through change workforce or by keeping workers on overtime (OT) or through some special incentives scheme’ by altering the capacity through increase of few equipments or machinery or sometimes by changing the planned plant shut downs.
(b) When demand is decreasing, changing the output rate by logging of casual or temporary workers or by paying full salary to employees but reducing output rate for a short period- without demoralizing or demotivating the workforce or by reducing capacity by switching off part machinery whenever possible.
Appropriate inventory level
Inventory of furnished goods is increased during periods of low demand and the same can be used to meet high demand or seasonal demand in other periods. Manufacturing firms can use this strategy very well.
Sub-contracting
It means demand meeting demand through acquiring part of goods from other manufactures or producers rather than making in-house. House benefits must be weighted against cost and quantity.
Capacity utilization
It is very common to service industries. Organizations or companies which cannot store products or services. They must arrange to meet peal load through sharing capacity utilizations. Example: telephone companies, electric power companies and computer time sharing companies.
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