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Chapter 13. Production Planning. Production Planning in Manufacturing. Aggregate Demand Example. Aggregate Planning How many workers are needed each quarter? (each worker works 520 hours per quarter) Labor hrs needed: # workers needed:. Quarter. Aggregate Planning. 2 basic strategies:

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chapter 13

Chapter 13

Production Planning

slide4
Aggregate Planning

How many workers are needed each quarter? (each worker works 520 hours per quarter)

Labor hrs needed:

# workers needed:

Quarter

aggregate planning
Aggregate Planning

2 basic strategies:

Matching Demand

  • matching capacity with aggregate demand
  • carry little inventory
  • change work force size

Level Capacity

  • stable work force size
  • use inventory or backlog as buffer
slide6

Level Capacity:

Produce-to-Stock

slide7

Level Capacity:

Produce-to-Order

slide8
Level Capacity: Produce-to-stock

For each period,

Beg.Inv. + Production = Demand + End.Inv.

Given: beg. inv. in Qtr. 1 = 24; CC = $15 per unit per qtr.

slide9
Level Capacity: Produce-to-order

For each period,

Production - Demand = Beg.Backlog - End.Backlog

Given: beg. BL in Qtr. 1 = 31

slide10
Quarterly demands for the coming year are 145, 150, 226, and 95 for a make-to-stock product. The company uses a level capacity plan. In any quarter that demand cannot be met by production and inventory on hand, a costly stockout will occur. What is the least amount of beginning inventory for the first quarter that can be used without having any stockout during the year? Show what the ending inventory level for each quarter would be.
slide11
Level Capacity Plan or Matching Demand Plan

Quarterly demand forecasts: 85, 107, 136, 124

Carrying cost rate: $68 per unit left at end of each qtr.

Hiring/training cost rate: $125 per new person

Layoff cost rate: $50 per person

Initial inventory = 0

Currently 57 employees prior to Quarter 1

Labor standard = 250 hours per unit

Each employee works 520 hours per quarter

Which costs less, a level capacity plan or a matching demand plan?

slide14
Rough-Cut Capacity Planning

Labor standard = 24 hours per unit

Weekly capacity = 5000 labor hours

Week

slide15

Week

Shifting Production Earlier

Produce:

slide16
Straight-time vs. Overtime vs. Outsourcing

Straight-time cost rate = $10 per hour

Straight-time capacity = 20,000 hours per quarter

Labor standard = 4 hours per unit

Overtime cost rate = time-and-a-half

Overtime capacity = 20% of straight-time capacity

Outsourcing capacity = 1,000 units

Outsourcing cost = $70 per unit (plus materials)

Forecasted demand next quarter = 6,700 units

Develop a production plan that minimizes total cost.

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