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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 4 of 21
The real wordsTheory

Demand options

Four ways to move demand towards the capacity you already have.

  • Pricing: used to shift demand from peak to off-peak periods. Price elasticity is important, since a discount that does not move volume simply loses revenue
  • Promotion: advertising and other forms of promotion
  • Back orders: orders are taken in one period and delivery is promised for a later one
  • New demand: finding counter-seasonal products or markets to fill the trough
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