Operation Control

In: Business and Management

Submitted By ReginaRahajeng
Words 742
Pages 3

The planning Process

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 demand in the future
o Increases costs associated with storage, insurance, handling, obsolescence, and capital investment 15% to 40%
o Shortages can mean lost sales due to long lead times and poor customer service
• Varying workforce size by hiring or layoffs
o Match production rate to demand
o Training and separation costs for hiring and laying off workers
o New workers may have lower productivity
o Laying off workers may lower morale and productivity
• Varying production rate through overtime or idle time
o Allows constant workforce
o May be difficult to meet large increases in demand
o Overtime can be costly and may drive down productivity
o Absorbing idle time may be difficult
• Subcontracting
o Temporary measure during periods of peak demand
o May be costly
o Assuring quality and timely delivery may be difficult
o Exposes your customers to a possible competitor
• Using part-time workers
o Useful for filling unskilled or low skilled positions, especially in services

Demand Options
• Influencing demand
• Back ordering…...

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