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Aggregate Planning and Scheduling. Michael F. Gorman, Ph.D. MBA 691. Presentation Outline. Aggregate Planning – Long term: monthly, quarterly time periods for an annual or quarterly horizon Demand Variability: seasonality, monthly swings, lumpiness of orders

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aggregate planning and scheduling

Aggregate Planning and Scheduling

Michael F. Gorman, Ph.D.

MBA 691

presentation outline
Presentation Outline
  • Aggregate Planning –
    • Long term: monthly, quarterly time periods for an annual or quarterly horizon
    • Demand Variability: seasonality, monthly swings, lumpiness of orders
    • Costs of Change: changing production levels is costly
    • Components of Aggregate Planning
      • Hiring/Firing
      • Overtime
      • Inventory
  • Scheduling
    • Detailed assignment of tasks, given a production plan
    • Assignment of tasks
    • Scheduling of shifts
aggregate planning
Aggregate Planning
  • Basic facts:
    • Demand is typically not stable over time
    • It is inherently costly to change production levels
    • It is costly to carry inventory
  • Aggregate Planning balances the costs of changing production levels with the costs of carrying inventories
    • We explicitly model the costs of change over time.
  • Aggregate Planning is an “intertemporal” – between periods, or over time – model
    • Until now, we have looked at single-period models
components of aggregate planning
Components of Aggregate Planning
  • Demand
    • Monthly, quarterly, annual
    • Varies over time
  • Production
    • A function of the number of workers, N, and the intensity of their work (regular time or overtime)
  • Inventory
    • It = It-1 + (Pt – Dt)
    • When Pt<>Dt, then inventory changes up or down
  • As Dt <> Dt-1 we have a number of options: (assuming Pt = Dt)
    • Dt > Dt-1:
      • Hire
      • Overtime workers
      • Pull from inventory
      • Create a backlog of orders (backorders)
    • Dt<Dt-1
      • Fire
      • Reduce OT
      • Add to inventory
      • Reduce backlogs
aggregate planning problem
Aggregate Planning Problem
  • Imagine you are planning the production plan for the next four months, given forecasted orders
  • Inputs:
    • Forecasted demand levels
    • Starting employment, inventory levels
    • Productivity (output per hour)
  • What is the cost-minimizing plan to meet these demands?
job assignment problem
Job Assignment Problem
  • Given a number of different employees and a number of different jobs, what is the best assignment of jobs to employees?
    • Depends on who is best at what…
    • But what if one person is best at everything, or someone else is worse at everything?
    • How do you make the trade-offs?
  • Given a set of jobs that need to be completed, and a number of people that need to be completed, how should the jobs be assigned to minimize the cost (minimize the time) of completion?
shift scheduling problem
Shift Scheduling Problem
  • Within-day and within-week demand patterns are variable, but people prefer or demand a regular work week.
  • Further, you often can’t call them in for one hour a day, or one day per week.
  • Given the constraints on work day and work week, what is the best shift schedule to minimize costs, given a demand pattern?
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