ch05 Aggregate Planning in the Supply Chain.pptVIP

8/29/00 S. Chopra / Demand Planning Chapter 5Aggregate Planningin the Supply Chain Outline Role of aggregate planning in a supply chain The aggregate planning problem Aggregate planning strategies Implementing aggregate planning in practice Role of Aggregate Planning in a Supply Chain Capacity has a cost, lead times are greater than zero Aggregate planning: process by which a company determines levels of capacity, production, subcontracting, inventory, stockouts, and pricing over a specified time horizon goal is to maximize profit decisions made at a product family not SKU stock-keeping unit level time frame of 3 to 18 months how can a firm best use the facilities it has? Role of Aggregate Planning in a Supply Chain Specify operational parameters over the time horizon: production rate workforce overtime machine capacity level subcontracting backlog inventory on hand All supply chain stages should work together on an aggregate plan that will optimize supply chain performance The Aggregate Planning Problem Given the demand forecast for each period in the planning horizon, determine the production level, inventory level, and the capacity level for each period that maximizes the firm’s supply chain’s profit over the planning horizon Specify the planning horizon typically 3-18 months Specify the duration of each period Specify key information required to develop an aggregate plan Information Needed foran Aggregate Plan Demand forecast in each period Production costs labor costs, regular time $/hr and overtime $/hr subcontracting costs $/hr or $/unit cost of changing capacity: hiring or layoff $/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, layoffs, capital available, stockouts and backlogs Outputs of Aggregate Plan Production quantity from regular time, overtime, and subcontracted