Skip to content
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 5 of 21
The real wordsTheory

Supply options

Five ways to move capacity towards the demand you have been given.

  • Hire and lay off workers: fast, and expensive in hiring, training, severance and morale
  • Overtime and slack time: flexible, limited in size, and overtime is paid at a premium
  • Part-time workers: cheaper and more flexible, usually less skilled
  • Inventories: build in the trough, sell from stock in the peak. Costs carrying, and risks obsolescence
  • Subcontracting: buys capacity without commitment, at a higher unit cost and with less control over quality
← BackContinue →