CBA 390 (H/R)
I
Chapter 13 – Aggregate Planning
Aggregate Planning
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Provides the quantity and timing of production for intermediate future
 Combines (‘aggregates’) production
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Involves capacity and demand variables
II
What’s needed for Aggregate Planning?

A mathematically based aggregate planning model requires: o Time
- problem definition
- model development
- model verification
- model application o Expertise
- people who understand the problem
- people who understand both the modeling process, and the specific model o Money
- money to pay for all of the above
- often requires funding for several people for several months
III Aggregate Planning Goals
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Meet Demand

Use capacity efficiently

Meet inventory policy

Minimize cost o Labor o Inventory o Plants & equipment o Subcontract
IV Aggregate Planning Strategies

Capacity Options – change capacity o Changing inventory levels o Varying work force size by hiring or layoffs o Varying production capacity through overtime or idle time o Subcontracting

Demand Options – change demand: o Influencing demand o Back ordering during high demand periods o Counterseasonal product mixing

Mixed Strategy o Combines 2 or more aggregate scheduling options

Level scheduling strategy o Produce same amount every day o Keep work force level constant o Vary non-work force capacity or demand options o Often results in lowest production costs

V Aggregate Planning Methods

Graphical and charting techniques o Popular and easy-to-understand o Trial and error approach

Mathematical approaches o Transportation method o Linear decision rule o Management coefficient model o Simulation
VI Yield Management