Chapter 7Aggregate Planningin the Supply Chain,8-1,Learning Objectives,Identify the decisions that are best solved by aggregate planning Understand the important of aggregate planning as a supply chain activity Describe the information needed to produce an aggregate plan Explain the basic trade-offs to consider when creating an aggregate plan Formulate and solve basic aggregate planning problem using Microsoft Excel,2,Outline,Role of aggregate planning in a supply chain The aggregate planning problem Aggregate planning strategies(三种策略) Aggregate planning using linear programming Implementing linear programming for aggregate planning using Microsoft Excel Implementing aggregate planning in practice,3,Role of Aggregate Planning in a Supply Chain,Capacity has a cost, lead times are greater than zero Question Should a company invest in a plant with large capacity that is able to produce enough to satisfy demand even in the busiest month? Should a company build a smaller plant but incur the costs of holding inventory built during slow period in anticipation of demand in later months? These are types of questions that aggregate planning helps companies answer,4,Role of Aggregate Planning in a Supply Chain,Aggregate planning (总体计划): process by which a company determines ideal levels of capacity, production, subcontracting, inventory, stockouts, and pricing over a specified time horizon The goal is to satisfy demand while maximize profit 供应链综合计划之上，是供应链战略； 供应链综合计划之下，是企业资源计划； 综合计划介于之间。对上细化，对下驱动内部供应链，驱动“企业资源计划”。,5,Role of Aggregate Planning in a Supply Chain,Aggregate planning is an important supply chain issue To be effective, it requires inputs from throughout the supply chain, and its results have a tremendous impacts on supply chain performance. Collaborative forecasts are created by multiple supply chain enterprises and are an important input for aggregate planning Many constraints in aggregate planning come from supply chain partners outside the enterprise The output from aggregate planning is also of value to both upstream and downstream partners,6,Role of Aggregate Planning in a Supply Chain,The main objective of aggregate planner is to identify the following operational parameters over the specified time horizon: Production rate (生产率): the number of units to be completed per unit time (such as per week or per month) Workforce (劳动力数量): the number of the workers/units of capacity needed for production. Overtime (加班量): the amount of overtime production planned. Machine capacity level (机器生产能力): the number of units of machine capacity needed for production.,7,Role of Aggregate Planning in a Supply Chain,Subcontracting (转包合同): the subcontracted capacity required over the planning horizon. Backlog: demand not satisfied in the period in which it arises but carried over to future period. Inventory on hand (现有库存): the planned inventory carried over the various periods over to future periods. All supply chain stages should work together on an aggregate plan that will optimize supply chain performance,8,The Aggregate Planning Problem,Given the demand forecast for each period in the planning horizon (计划期), determine the production level (生产水平), inventory level (库存水平), and the capacity level (生产能力水平) for each period that maximizes the firms (supply chains) profit over the planning horizon Specify the planning horizon (typically 3-18 months) Specify the duration of each period,9,Information Needed for in Aggregate Plan,Demand forecast in each period Production costs (生产成本) labor costs, regular time ($/hr) and overtime ($/hr) subcontracting costs ($/hr or $/unit) cost of changing capacity: hiring or layoff ($/worker) and cost of adding or reducing machine capacity ($/machine) Labor/machine hours required per unit Inventory holding cost (库存成本) ($/unit/period) Stockout or backlog cost (库存缺货或积压成本）($/unit/period) Constraints: limits on overtime, layoffs, capital available, stockouts and backlogs. Constraints from suppliers to the enterprise,10,Outputs of Aggregate Plan,Production quantity from regular time, overtime, and subcontracted time； Inventory held； Backlog/stockout quantity； Workforce Hired/Laid off； Machine capacity increase/decrease； A poor aggregate plan can result in lost sales, lost profits, excess inventory, or excess capacity,11,Fundamental Tradeoffs in Aggregate Planning,Capacity (regular time, overtime, subcontract) Inventory Backlog / lost sales Basic Strategies（三种基本策略） Chase strategy Time flexibility from workforce or capacity Level strategy,12,Aggregate Planning Strategies,These strategies involve trade-offs among capital investment, workforce size, work hours, inventory, and backlogs/lost sales Chase strategy (追逐战略） using capacity as the lever Time flexibility （弹性时间）from workforce or capacity strategy using utilization as the lever Level strategy (水平战略） using inventory as the lever Mixed strategy a combination of one or more of the first three strategies,13,Chase Strategy,Production rate is synchronized with