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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

Michael F. Gorman, Ph.D.

MBA 691


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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


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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


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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


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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?


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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?


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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?