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Sem 5 Prep
← OperationsAggregate planning: options and strategies

Formulas for this chapter

Level output rate

Level rate per period = total demand over the horizon / number of periods Level rate per day = total demand / total production days

Sizing a level plan. Check it against total demand before costing anything, or the plan may be infeasible.

total demand
Sum of the period forecasts across the whole horizon
production days
Working days in each period; they usually differ

Inventory and backlog balance

Output - forecast, cumulated = ending inventory If the cumulative balance is negative, it is a BACKLOG, not negative inventory

Building the inventory rows of an aggregate plan. Cumulate; never recompute each period from scratch.

ending inventory
Stock at the end of the period, never below zero
backlog
Unmet demand carried into the next period, charged per unit per period
Step 3 of 21
The real wordsTheory

Inputs and outputs

Inputs: resources, meaning workforce and production rates, facilities and equipment; the demand forecast; policies on workforce changes, subcontracting, overtime, inventory levels and back orders; and costs, meaning inventory carrying, back orders, hiring and firing, overtime, inventory changes and subcontracting.

Outputs: the total cost of a plan, and the projected levels of inventory, output, employment, subcontracting and backordering.

Note that the output is a cost and a set of levels, not a schedule. The schedule comes next, from the master production schedule.

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