1 what should take in to consideration when applying aggregate planning for services
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After a firm determines its corporate strategy and establishes its long-term capacity needs and production operation policies, focus shifts to aggregate planning. Aggregate planning usually presents a detailed plan for sales and operations that covers a period of 2 to 12 months. A company’s aggregate plan
typically addresses the following three specific operational considerations: Employment levels: How much manpower is needed to meet the set production rates? Inventory levels: How much inventory (both raw material and finished goods) does the company need? Production or output rates: How much will the company produce in the designated time period? Develop an aggregate plan by following these steps: Determine
demand for each time period covered in the plan. You can use forecasting methods to predict demand. Determine the available capacities for each time period. Be sure to calculate capacities for all resources, including labor and machine capacities. Identify corporate policies and external constraints such as regulation and market forces that may influence the plan. These policies include limitations on workers over time, inventory targets, and
outsourcing policies. Determine product cost, based on direct labor and material costs as well as indirect or overhead (fixed) manufacturing expenses. Develop contingency plans to account for surges and downturns in the market. For example, each plan may utilize different levels of overtime, outsourcing, and inventory to meet the demand requirements, thus resulting in a different product cost and availability. Select the plan that best meets the corporate objectives. Compare your various plans and determine how well each one meets your business objectives. Some plans may present tradeoffs in different performance metrics such as utilization versus inventory levels. Test the plan for robustness (its ability to perform well under varying conditions). This may involve changing the demand requirements or the unit costs for things such as overtime to simulate different scenarios. If the outcome of the plan varies greatly from your ideal scenario, revisit one of the alternative plans available in Step 5. Aggregate planning is an ongoing process. A plan usually provides details at the monthly level over the course of a year, and you should update it as conditions change. For example, you need to account for changes in expected demand as well as unexpected events such as material shortages and production disruptions. Avoid the temptation to change your aggregate plan too often. The purpose of the plan is to provide an intermediate path into the future. Reacting too quickly to perceived changes in demand or variability in production output can create unnecessary disruptions in your overall plan, such as layoffs, unnecessary hiring, or changes in supply purchasing contracts. Until you recognize an undisputable, reoccurring change in demand or production output, allow your short-term planning to accommodate the blips in demand that are only temporary because of such things as weather events or short-term shifts in customer preference. About This ArticleAbout the book authors:Mary Ann Anderson is Director of the Supply Chain Management Center of Excellence at the University of Texas at Austin. Edward Anderson, PhD, is Professor of Operations Management at the University of Texas McCombs School of Business. Geoffrey Parker, PhD, is Professor of Engineering at Dartmouth College. Mary Ann Anderson is Director of the Supply Chain Management Center of Excellence at the University of Texas at Austin. Edward Anderson, PhD, is Professor of Operations Management at the University of Texas McCombs School of Business. Geoffrey Parker, PhD, is Professor of Engineering at Dartmouth College. Mary Ann Anderson is Director of the Supply Chain Management Center of Excellence at the University of Texas at Austin. Edward Anderson, PhD, is Professor of Operations Management at the University of Texas McCombs School of Business. Geoffrey Parker, PhD, is Professor of Engineering at Dartmouth College. This article can be found in the category:
Aggregate planning involves developing, analyzing and maintaining the operational schedule of an organization. It organizes areas of business that include targeted sales forecasts, production levels, inventory levels and customer backlogs. When aggregate planning is carried out effectively, the effects of short-sighted, daily scheduling are minimized. Capacity and demand are balanced in a way that minimizes costs where aggregate resources may include the total number of workers, hours of equipment and machine time, or tons of raw materials. Techniques
Manufacturing
Services
Differentiation
What should take in to consideration when applying aggregate planning for services?TECHNIQUES FOR AGGREGATE. Determine demand for each period.. Determine capacity for each period. ... . Identify company, departmental, or union policies that are pertinent. ... . Determine unit costs for units produced. ... . Develop alternative plans and compute the cost for each.. Can aggregate planning be used for services?Because most services pursue combinations of the eight capacity and demand options discussed earlier, they usually formulate mixed aggregate planning strategies. In industries such as banking, trucking, and fast foods, aggregate planning may be easier than in manufacturing.
What is the importance of aggregate planning in the service industry?Aggregate planning helps companies achieve their financial goals and improve the bottom line. It allows for maximum utilization of the available production capabilities while meeting customer demand and reducing their wait time, as well as reducing the cost of stocking excess inventory.
What aggregate planning usually use in services?Aggregate Planning for Services
It involves developing, monitoring and sustaining an organization's operational schedule. It arranges areas of business that consists of targeted sales prediction, levels of production, customer backlogs and inventory levels.
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