Ch. 3: Sales and Operations Planning

Aggregate Planning

• AKA micro planning

• Decides the quantity and mix of products to be produced

• Plan for operations using data

• Forecasts into production

• Assumes demand forecast is accurate

Aggregate Planning Inputs

• Resources

• Demand forecast

• Policies

  • Overtime, subcontracting, back orders and inventory

• Costs

  • Labour, inventory changes, subcontracting and back orders

Aggregate Planning Outputs

• Total cost of plan

• Projected levels of

  • Inventory

  • Output

  • Employment

  • Subcontracting

  • Back ordering

Aggregate Planning Strategies

• Proactive: Involve demand

• Reactive: Involve capacity options

• Mixed

Procedure for Aggregate Planning

• Determine demand

• Determine capacities

• Identify policies

• Unit costs for labour

• Alt plans and its costs

• Select the best

S&OP

• Sales and operations Planning

• High level plans of management with:

  • Sales

  • Manufacturing

  • Purchasing

  • Capacity planning systems

• Support objectives

• Precise forecast for next 6-18 months

Capacity

Total number of units per time period that can be produced

Demand

Total units needed per period of time

Pure Level Strategies

• Not disturb current production system

• Maintain steady rate of regular time output while meeting demand vibration through large inventory

Pure Chase Strategy

• Matching capacity and don’t carry inventories

• Planned for period is set at expected demand or that period

• Flexible

Linear Programming

• LP

• Obtaining optimal solutions to problems involving allocation of scarce resources in terms of cost minimization

Linear Decision Rule

• Optimizing techniques that seeks to minimize combines costs, using set of cost-approximating functions to obtain a single quadratic equation

Simulation Model

• Developing computerized models that’s can be tested

• Variety of conditions to find acceptable solution