Chapter 12 Power Point Presentation Ppt 2240k4845

8/3/2019 Chapter 12 Power Point Presentation Ppt 2240k4845

1/25

McGraw-Hill/Irwin The McGraw-Hill Companies, Inc. 2007, All Rights Reserved

Facilities and Aggregate

PlanningChapter 1215


2/25

12-2

Chapter 12 Outline

Facilities Decisions

Facilities Strategy

Aggregate Planning Definition

Planning Options

Basic Strategies

Aggregate Planning Costs

Example of Costing

Sales and Operations Planning


3/25

12-3

Hierarchy of Capacity Decisions

Facilities

decisions

Aggregate

planning

Scheduling

0 6 12 18 24Months

Planning Horizon

Scheduling

Facilities

decisions

Aggregate

Planning


4/25

12-4

Definition of Capacity

Capacity is defined as the maximum output that can beproduced over a given period of time.

Primarily determined by Physical assets

Labor availability

Nominal capacity Subtracts downtime, shift breaks, etc.

Is the actual capacity that should be used in planning


5/25

12-5


How much total capacity is needed?

How large should each unit of capacity be?

When is the capacity needed?What type of facilities/capacity are needed?


6/25

12-6

Factors Affecting FacilitiesStrategy

Predicted demand

Cost of facilities

Likely behavior of competitorsBusiness strategy

International considerations


7/25

12-7

How Much?: Strategies forCapacity Cushion

Try not to run out (e.g. utilities)

Build to average forecast

Maximize utilization at bottlenecks

Reduce rejects and rework

Reduce throughput time


8/25

12-8

How Large?What is Optimum Unit Size?

Economies of scale

Diseconomies of scale


9/25

12-9

When?

Timing of Facility Additions

Preempt the competition

Wait-and-see strategy


10/25

12-10

What Type?

Types of Facilities

Product-focused (55%) - computers, chain

saws, dishwashers

Market-focused (30%) - electricity, bakeries

Process-focused (10%) - computer chips

General purpose (5%)several products and

processes.


11/25

12-11

Aggregate Planning Characteristics

A time horizon of about 12 months

An aggregatedlevel of demand for one or few

categories of product

The possibility of changing both supply and demand

A variety of management objectives

Facilities that are considered fixed (cannot be

expanded or reduced)


12/25

12-12

Planning Options

Options for managing demand.

influencing demand from customers

delivering orders as promisedOptions for managing supply

delivering what is promised

managing capacity & other resources


13/25

12-13

Options for Influencing(Managing) Demand

Pricing

Advertising and promotion

Backlog or reservations (shifting demand)

Development of complementary products


14/25

12-14

Options for Influencing(managing) Supply

Hiring and layoff of employees

Using overtime and undertime

Using part-time or temporary labor

Carrying inventory

Outsourcing or SubcontractingMaking cooperative arrangements


15/25

12-15

Basic Production Strategies

Level strategy (constant work

force, use inventory as buffer)Chase strategy (produce to

demand, vary workforce)


16/25

Level Load Strategy

Deliver products and services at a

constant rate

Avoid making changes to

operations

5-27


17/25

Chase Strategy

Produce only what you sell

Produce products or services just-in-time

If there are no salesdo not produce

Typical for services

5-29


18/25

12-18

Comparison of Chase versus Level

Strategy

Chase Demand Level Capacity

Level of labor skill required Low High

Job discretion Low High

Compensation rate Low HighWorking conditions Sweatshop Pleasant

Training required per employee Low High

Labor turnover High Low

Hire-fire cost High Low

Error rate High LowAmount of supervision required High Low

Type of budgeting and forecasting required Short-run Long-run


19/25

12-19


Hiring and firing costs (chase)

Overtime and undertime costs (chase)

Subcontracting costs (chase)

Part-time labor costs (chase)

Inventory-carrying costs (level)Cost of stockout or back order (level)


20/25

12-20

Underlying Purpose of S&OP

The underlying purpose of Sales and

Operations Planning is to balance demand

and supply.Monthly time buckets over a rolling 12

month horizon.

Based on families of products

Input into detailed planning and scheduling


21/25


22/25

12-22

S&OP Outputs

Output Responsibility

Sales plan Marketing and sales

Production plan Manufacturing

Inventory plan (MTS) Management

Backlog plan (MTO) Management

Purchasing plan Purchasing

Financial plan FinanceEngineering plan Engineering

Workforce plan Human resources


23/25

12-23

Iterative Nature of S&OP(made possible by concurrent planning)

1. Developproduction plan.

2. Check implications for inventory/backlog plan.

3. If necessary, adjustproduction plan.

4. Check against resource plan and availability.

5. If necessary, adjustproduction plan.

6. Recheck against inventory/backlog andresources.

7. Continue(go to 5) until you meet all constraints.


24/25

12-24

Summary


Facilities Strategy

Aggregate Planning Definition

Planning Options

Basic Strategies


Example of Costing

Sales and Operations Planning


25/25

12-25

End of Chapter Twelve

Documents

Chapter 12 Power Point Presentation Ppt 2240k4845