Professional Documents
Culture Documents
Long-term
(years)
Aggregate Planning 1. Facility Utilization 2. Personnel needs 3. Subcontracting Master Production Scheduling 1. MRP 2. Disaggregation of master plan Short-term Scheduling 1. Work center loading 2. Job sequencing
Intermediate-term
(6 to 18 months)
Short-term
(weeks)
Very Short-term
(hours days)
changing inventory levels varying work force size by hiring or layoffs varying production capacity through overtime or idle time subcontracting using part-time workers Influencing demand backordering during high demand periods counterseasonal product mixing
Fully load facilities and minimize overloading and underloading Make sure enough capacity available to satisfy expected demand Plan for the orderly and systematic change of production capacity to meet the peaks and valleys of expected customer demand Get the most output for the amount of resources available
Inputs
A forecast of aggregate demand covering the selected planning horizon (6-18 months) The alternative means available to adjust short- to medium-term capacity, to what extent each alternative could impact capacity and the related costs The current status of the system in terms of workforce level, inventory level and production rate
Outputs
A production plan: aggregate decisions for each period in the planning horizon about
Compact Line
Executive Line
Durable Line
Inventory Management
Inventory-A physical resource that a firm holds in stock with the intent of selling it or transforming it into a more valuable state.
Inventory System- A set of policies and controls that monitors levels of inventory and determines what levels should be maintained, when stock should be replenished, and how large orders should be
Types of Inventories
Raw Materials Works-in-Process Finished Goods Distribution Inventory Supplies: Maintenance, Repair and Operating (MRO)
Factory
Wholesaler
Distributor
Retailer
Customer
Production Delay
Shipping Delay
Shipping Delay
Item Withdrawn
Wholesaler Inventory
Distributor Inventory
Retailer Inventory
Raw Materials
Works in Process
Finished Goods
Inadequate control of inventories can result in both under- and overstocking of items.
Understocking (too few) results in missed deliveries, lost sales, dissatisfied customers, and production bottlenecks (idle workers or machines). Resulting underage cost. Overstocking (too many) ties up funds that might be more productive elsewhere. Resulting overage cost.
Goal: matching supply with demand!
Improve customer service Economies of purchasing Economies of production Transportation savings Hedge against future Unplanned shocks (labor strikes, natural disasters, surges in demand, etc.) To maintain independence of supply chain
Non-value added costs Opportunity cost Complacency Inventory deteriorates, becomes obsolete, lost, stolen, etc.
Out-of-Stock Costs
Capital (opportunity) costs Inventory risk costs Space costs Inventory service costs
Independent demand items are finished products or parts that are shipped as end items to customers. Dependent demand items are raw materials, component parts, or subassemblies that are used to produce a finished product.
1) Maximize the level of customer service by avoiding understocking. 2) Promote efficiency in production and purchasing by minimizing the cost of providing an adequate level of customer service.
When should the company replenish its inventory, or when should the company place an order or manufacture a new lot? How much should the company order or produce? Next: Economic Order Quantity (EOQ)
Lower
Order Quantity
ABC Classification (Pareto Principle) A Items: very tight control, complete and accurate records, frequent review B Items: less tightly controlled, good records, regular review C Items: simplest controls possible, minimal records, large inventories, periodic review and reorder
A B C
Low
High
Percentage of Items