1. Production Planning Dr. Everette S. Gardner, Jr.

2. Production Planning2 Aggregate planning Definition Choosing production rates, work force levels, and inventory levels Horizon 6-18 months into future Prerequisites Forecasting Company policies on Max./min. inventories Hiring/firing Overtime

3. Production Planning3 Policy considerations in aggregate planning Flexibility Are work force and inventories maintained at a level sufficient to meet unexpected demand? Work force stability Improves quality, productivity, union relations Production rate stability Makes materials planning easier, reduces uncertainty in physical distribution APP.xls

4. Production Planning4 Policy considerations in aggregate planning (cont.) Production capacity Will overtime reduce quality? When will physical capacity (space, machinery, equipment) become inadequate? Customer service Have lead time and stock availability goals been met?

5. Production Planning5 Aggregate planning in services Definition Balancing service capacity with demand Tactics Change operating hours Change staffing Nbr. of workers Full vs. part-time Modify type of service Influence demand Advertising Pricing Build more service outlets

6. Production Planning6 Aggregate planning in services (cont.) Evaluation Waiting time Throughput Service time Nbr. of lost customers

7. Production Planning7 Production – Inventory System Information Flow Material Flow Days for transit time Days to process or to handle and issue orders 25 Day De- 5 Day Delay 25 Day Delay 13 Day Delay lay to sense to sensefor Review for Review needs, place needs, place and and and transmit and transmit Transmission Transmission orders M.O.s of orders of orders Demand Raw Factory Factory Distributor Retail Ultimate Material Warehouse Inventory Inventory Customer Vendor 50 Independent 500 Independent Distributors Retailers 35 421 3011051 # # Company System Under Managerial Control Dynamo.xls

8. Production Planning8 Response of inventories Weeks 7500 5000 2500 10,000 0 10 7.5 5 2.5 0 Retail inventory (units) -4% +45% Factory production output (units/week) Distributor inventory (units) +10% +32% +12% Retail sales RRR (units/week) -10% -15% -3% Factory warehouse inventory (units) Jan Feb Mar AprMay JunJuly Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun J