Discuss the information required for aggregate planning
What will be an ideal response?
Answer: An aggregate planner requires the following information:
• Demand forecast F t for each Period t in the planning horizon that extends over T periods
• Production costs
• Labor costs, regular time ($/hour), and overtime costs ($/hour)
• Cost of subcontracting production ($/unit or $/hour)
• Cost of changing capacity; specifically, cost of hiring/laying off workforce ($/worker) and cost of adding or reducing machine capacity ($/machine)
• Labor/machine hours required per unit
• Inventory holding cost ($/unit/period)
• Stockout or backlog cost ($/unit/period)
• Constraints:
• Limits on overtime
• Limits on layoffs
• Limits on capital available
• Limits on stockouts and backlogs
• Constraints from suppliers to the enterprise
This information is used to create an aggregate plan that in turn helps a company make the following determinations:
• Production quantity from regular time, overtime, and subcontracted time: used to determine number of workers and supplier purchase levels.
• Inventory held: used to determine how much warehouse space and working capital is needed.
• Backlog/stockout quantity: used to determine what the customer service levels will be.
• Workforce hired/laid off: used to determine any labor issues that will be encountered.
• Machine capacity increase/decrease: used to determine if new production equipment needs to be purchased or idled.
The quality of an aggregate plan has a significant impact on the profitability of a firm. A poor aggregate plan can result in lost sales and lost profits if the available inventory and capacity are unable to meet demand. A poor aggregate plan may also result in a large amount of excess inventory and capacity, thereby raising costs. Therefore, aggregate planning is a very important tool in helping a supply chain maximize profitability.
You might also like to view...
Which of the following is often the strongest selling point for recent college graduates, and should be highlighted on a résumé?
A) Career Summary B) Work Experience C) Volunteer Activities D) Education E) Honors and Awards
______ are constraints that form the corner points at the boundaries of the feasible solution region and limit the values of the decision variables, which in turn, limit the objective function values.
a. Binding constraints b. Nonbinding constraints c. Redundant constraints d. Optimal constraints
Which one of the following statements concerning options is correct?
A) One option covers 1,000 shares of stock. B) A put gives the option holder the right to buy a stated amount of securities. C) The owner of a call is entitled to the dividends paid on the underlying shares of stock. D) Option holders can profit on movements of the price of the underlying security.
Use cases written at the fish and ________ levels (sometimes called the clam level) are much more detailed and focus on sub-function goals
A) Black B) White C) Kite D) Sea