Outline
The Planning Process
Sales and Operations Planning
(S&OP)
The Nature of Aggregate Planning
Aggregate Planning Strategies
Capacity Options
Demand Options
2
Mixing Options to Develop a Plan
Outline – Continued
Methods for Aggregate Planning
Graphical Methods
Mathematical Approaches
Comparison of Aggregate
Planning Methods
Aggregate Planning in Services
Restaurants, Hospitals, National
Chains of Small Service Firms,
Airline Industry
Miscellaneous Services
3
Revenue (Yield) Management
Learning Objectives
When you complete this chapter you should be able to:
1. Define sales and operations planning and aggregate planning
2. Identify optional strategies for developing an aggregate plan
3. Prepare a graphical aggregate plan
4. Solve an aggregate plan via the transportation method and linear programming 5. Understand and solve a revenue
(yield) management problem
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Planning Horizons
Figure 13.1
Sales and Operations Planning
(S&OP)
▶Coordination of demand forecasts with
functional areas and the supply chain
▶Typically done by cross-functional teams
▶Determine which plans are feasible
▶Limitations must be reflected
▶Provides warning when resources do not match expectations
▶Output is an aggregate plan
Sales and Operations Planning
(S&OP)
▶ Decisions must be tied to strategic planning
and integrated with all areas of the firm over all planning horizons
▶ S&OP is aimed at
1. The coordination and integration of the internal and external resources necessary for a successful aggregate plan
2. Communication of the plan to those charged with its execution
Sales and Operations
Planning
▶ Requires
▶A logical overall unit for measuring sales
and output
▶A forecast of demand for an intermediate planning period in these aggregate terms
▶A method for determining relevant costs
▶A model that combines forecasts and costs so that scheduling decisions can be made for the planning period
Aggregate Planning
(or Aggregate Scheduling)
Aggregate Planning is a high level approach
to planning. It translates annual and quarterly business plans into intermediate term production plans.
Objective:
- To meet forecasted demand while minimizing cost over the planning period
Provides the quantity and timing of
production for intermediate future
Usually 3 to 18 months into future
aggregate planning means determining the size of the work-force, the rate of production and inventory level that are needed to implement a production plan.
In service organizations aggregate planning means scheduling staff to meet customers' service needs.
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ADM 3301 ~ Rim Jaber
S&OP and the
Aggregate
Plan
Figure 13.2
Steps in Planning Process
Forecasting the demand for the planning period:
Total demand for each product is aggregated.
Determination of the aggregate production plan:
Production and work-force levels, as well as
production capacity requirements are determined.
Determination of the Master Production
Schedule (MPS):
Production levels by product type by time period over the planning horizon are calculated.
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ADM 3301 ~ Rim Jaber
Steps in Planning Process
Material Requirements Planning (MRP):
The master production schedule is “exploded"
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to obtain requirements for sub-assemblies, components and raw materials for each time period. Determination of the detailed job shop schedule: Detailed production schedules for components, sub-assemblies and final products and order quantities for raw materials are determined to meet the specification of production quantities from the MRP system.
ADM 3301 ~ Rim Jaber
