AGGREGATE PLANNING

Long-range capacity planning time?

• > 1 year

•  6 -18 month

• 1 - 6 month

• 2 - 12 month

_______ helps manufacturers optimize resource utilization despite significant variations in demand for individual products, which arise from changes in customer orders, supply chain dynamics, and other elements.

• Aggregate production planning

• Level production

• Chase demand

• Quality planning

Aggregate planning is capacity planning for:

• the long range

• the intermediate range

• the short range

• typically one to three months

The input of an aggregate plan is

• Bill of material

• Demand forecast

• Total cost

• Overtime

Plans for new product development generally fall within the scope of aggregate planning.

• True

• False

The aggregate planning process usually includes dispatching of individual jobs.

• True

• False

Frito-Lay uses aggregate planning to match capacity with demand because of the ________ associated with its specialized processes.

• high variable cost and high fixed cost

• high variable cost and low fixed cost

• low variable cost and high fixed cost

• low variable cost and low fixed cost

Answer explanation

Variable costs increase as production rises and with high fixed costs because some manufacturers need equipment and space for their operations, even if they haven’t sold a single product. Reason why A company with high fixed costs and low variable costs has high operating leverage.

Capacity/supply options include:

• Hire and layoff workers - Overtime/ slack time - Part-time workers - Subcontracting – Inventories

• Hire and layoff workers - Overtime/ slack time - Part-time workers – Subcontracting

• Hire and layoff workers – Demand forecast - Part-time workers - Subcontracting – Inventories

• Hire and layoff workers - Overtime/ slack time - Full-time workers - Subcontracting – Labor cost

The correct sequence of operation in production planning and control is:

• Routing - Scheduling - Dispatching - Follow up

• Scheduling - Dispatching - Follow up - Routing

• Dispatching - Routing - Scheduling - Follow up

• Routing - Follow up - Dispatching - Scheduling

Answer explanation

Steps to create a complete Aggregate planning:

- Aggregate planning begins with a forecast of aggregate demand for the intermediate range. (Routing)

- This is followed by a general plan to meet demand requirements by setting output, employment, and finished-goods inventory or service capacities. (Scheduling)

- Managers must consider a number of plans, each of which must be examined in light of feasibility and cost. (Dispatching)

- Aggregate plans are updated periodically, often monthly, to take into account updated forecasts and other changes. (Follow up)

Alternatives in Aggregate Plan – Outputs?

• Aggressive and Reactive

• Complementary Products and Competitive Pricing

• Inventory Levels and Competitive Pricing

• Size of Workforce and Workforce Adjustment