chapter-19

Report
19–1
Chapter Nineteen
McGraw-Hill/Irwin
Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.
19–2
• LO19–2: Construct and evaluate aggregate plans
that employ different strategies for meeting
demand.
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
• LO19–1: Understand what sales and operations
planning is and how it coordinates
manufacturing, logistics, service, and marketing
plans.
• LO19–3: Explain yield management and why it is
an important strategy.
19–3
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
• Sales and operations planning is a process that
helps firms provide better customer service, lower
inventory, shorten customer lead times, stabilize
production rates, and give top management a
handle on the business.
• The process consists of a series of meetings,
finishing with a high-level meeting where key
intermediate-term decisions are made.
• This must occur at an aggregate level and also at
the detailed individual product level.
– Aggregate means at the level of major groups of
products.
19–4
19–5
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
The new terminology is meant to capture the
importance of cross-functional work.
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
Sales and operations planning was coined by
companies to refer to aggregate planning.
Aggregation on the supply side is done by product
families, and on the demand side it is done by
groups of customers.
19–6
• Planning focusing on a horizon greater than 1 year,
usually performed annually
Intermediate-range planning
• Planning focusing on a period from 3 to 18 months,
time increments are weekly, monthly, or quarterly
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
Long-range planning
Short-range planning
• Planning covering a period from 1 day to 6 months
with daily or weekly time increments
19–7
– Production rate (units completed per unit of time)
– Workforce level (number of workers needed in a period)
– Inventory on hand (inventory carried from previous
period)
• Product group or broad category (aggregation)
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
• Specifies the optimal combination of
• Planning done over an intermediate-range planning
period of 3 to 18 months
19–8
– In some firms, demand can be managed.
• Complementary products work for firms facing
cyclical demand fluctuations.
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
• In general, the external environment is outside
the production planner’s direct control.
• With services, cycles are more often measured
in hours than months.
19–9
19–10
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
Chase
strategy
Vary the number of hours
worked through flexible work
schedules or overtime
Stable
workforce
—
variable
work
hours
Level
strategy
Hiring and laying off are
translated into
subcontracting
Match the production rate by
hiring and laying off
employees
Must have a pool of easily
trained applicants to draw on
Demand changes are absorbed
by fluctuating inventory
levels, order backlogs, and lost
sales
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
• Production planning
strategies are the
plans for meeting
demand. Trade offs
involved include
workers employed,
work hours,
inventory and
shortages.
• A pure strategy uses
just one of these
approaches, a mixed
strategy uses two or
more.
Subcontract
ing
19–11
Cost Types
Inventory holding
costs
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
Basic production
costs
Costs associated
with changes in the
production rate
Backorder costs
19–12
• Involves costing out various production planning alternatives and
selecting the one that is best
• Elaborate spreadsheets developed to facilitate the decision process
Linear programming
• Use of mathematical analysis to determine an optimal plan
Simulation
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
Cut-and-try approach
• What-if analysis using simulated demand to evaluate effectiveness
of alternative plans
19–13
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
Because
inventory
holding cost is in
$/unit, material
cost is not
relevant
19–14
For the Excel template visit
www.mhhe.com/sie-chase14e
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
January ending
inventory becomes
February beginning
inventory.
Excel: Aggregate
Planning
19–15
Produce to meet expected
average demand by
maintaining a constant
workforce
Produce to meet the
minimum expected demand
using a constant workforce
and subcontract to meet
additional requirements
Produce to meet expected
demand for all but the first
two months using a
constant workforce and use
overtime to meet additional
output requirements
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
Produce to exact monthly
production requirements by
varying workforce size
19–16
Workers are
added or reduced
as needed.
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
Production
exactly matches
requirements.
19–17
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
Number of workers is
set to meet average
demand over the time
horizon. This then
determines production
rate and
inventory/backorders.
19–18
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
Workforce sized to
meet minimum
demand (April).
Demand over
minimum is met with
subcontracting.
19–19
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
Demand in
the first two
months is
high, so
overtime is
used to
compensate.
Then,
inventory
can be built
for high
demand in
June.
19–20
19–21
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
19–22
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
• It is something of a combination of the
strategies mentioned here.
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
• A level schedule holds production
constant over a period of time.
• For each period, it keeps the workforce
constant and inventory low, and depends
on demand to pull products through.
19–23
– The entire system can be
planned to minimize inventory
and work-in-process.
– Product modifications are up-todate because of the low amount
of work-in-process.
– There is a smooth flow
throughout the production
system.
– Purchased items from vendors
can be delivered when needed,
often directly to the production
line.
• Requirements
– Production should be repetitive
(assembly-line format).
– The system must contain excess
capacity.
– Output of the system must be
fixed for a period of time.
– There must be a smooth
relationship among purchasing,
marketing, and production.
– The cost of carrying inventory
must be high.
– Equipment costs must be low.
– The workforce must be multiskilled.
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
• Advantages
19–24
– Can be a powerful approach to making demand more
predictable
• Has existed as long as there has been limited
capacity for serving customers.
• Widespread scientific application began with
American Airlines’ computerized reservation system
(SABRE).
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
• Yield management: the process of allocating the
right type of capacity to the right type of customer
at the right price and time to maximize revenue or
yield
19–25
Fixed costs are
high and
variable costs
are low
Product can be
sold in advance
Inventory is
perishable
Demand is
highly variable
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
Demand can be
segmented by
customer
19–26
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
• Hotels offer one set of rates during the week and
another set during the weekend.
• The variable costs associated with a room are low in
comparison to the cost of adding rooms to the
property.
• Available rooms cannot be transferred from night to
night.
• Blocks of rooms can be sold to conventions or tours.
• Potential guests may cut short their stay or not
show up at all.
19–27
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
Yield management
is most common
when price is
variable and
duration is
predictable.
19–28
Copyright © 2014 by McGraw Hill Education (India) Private Limited. All rights reserved.
• Pricing structures must appear logical to the
customer and justify the different prices.
• Must handle variability in arrival or starting
times, duration, and time between customers.
• Must be able to handle the service process.
• Must train employees to work in an
environment where overbooking and price
changes are standard occurrences that directly
impact the customer.
• The essence of yield management is the ability
to manage demand.
19–29

similar documents