Operations Management - Aggregate Planning - Assignment Example

Operations Management - Aggregate Planning 1a.Aggregate planning is regarded as an operational activity whereby a comprehensive plan is prepared based on the production process. It must have a planning horizon of about 3 to 18 months prior to the production. This operational activity is required by the management because they need to be informed of the materials and resources that are needed. The demand options we use in in aggregate planning are price, backorders, promotion and new demand while the capacity options we use are inventories, hire and the lay off workers, overtime, subcontracting and part-time workers (Reid, 2002). Aggregate plan Month 1 2 3 4 5 6 Total Forecast 80 100 120 120 100 80 600 Policy Level of output rate 100 per period             Output               Cost Regular 100 100 100 100 100 100 600 $2 Overtime               Output-Forecast 20 0 -20 -20 0 20 0 Inventory               Beginning 0 0 0 0 0 0   Ending 100 100 100 100 100 100   Average 50 50 50 50 50 50   Costs               Regular $200 $200 $200 $200 $200 $200 $1200 Inventory $50 $50 $50 $50 $50 $50 $300 Backorders $8 $8 $8 $8 $8 $8 $48 Total Cost of Plan $258 $258 $258 $258 $258 $258 $1548 b. Disaggregation refers to the process of breaking down the contents of the aggregate plan into particular product requirements to determine the inventory requirements, labour requirement and materials (Reid, 2002). The inputs of the master schedule are forecast demand; inventory costs, production costs, inventory levels, lot size, customer orders, capacity, supply and production lead time. On the other hand the outputs of the master schedule are projected available balance, staffing levels, amounts to be produced and quantity available that is promised (Reid, 2002). Master schedule Beginning inventory 145 week1 week2 week3 week4 week5 week6 week7 week8 Forecast Demand 100 100 120 120 150 150 180 180 customer orders 106 94 65 40 21 9 2 0 Project on hand inventory 39 -55 -120 -160 -181 -190 -192 -192 Lot size 250 MPS Production 250 250 250 250 Available to promise 156 78 60 58 project inventory=Beginning inventory - customer order 2 MRP, which is the acronym for Materials Requirements Planning is regarded as an inventory control and production planning system that is mainly used to manage the manufacturing processes. It acts like a bridge between both production and master planning. The MRP inputs are a single or a multi-level bill of materials as well as the quantity of all the final products to be produced, which are derived from the sales orders or the sales projections. The outputs for MRP are the recommended production schedule and the recommended purchasing schedule (Reid, 2002). The MRP process is quite extensive and it passes through a number of stages in order to manage the manufacturing processes via the inventory control and production planning system. Starting with the end items, the first step is to establish all the gross requirements needed. Secondly, the net requirements are determined by subtracting both the receipts as well as the projected hand inventory from gross requirements. The third step is to time phase all the net requirements. Finally, the last step is to determine the order releases that are planned (Reid, 2002). Below is an example of a table illustrating the MRP process Week 1 2 3 4 5 6 7 Gross requirements 25 10 30 15 20 30 45 Schedule receipts 10 25 Net requirements 15 30 20 30 45 Time phase net requirement 45 15 20 30 30 Planned order releases 45 45 50 0 3 The main goals of JIT are to have a balance rapid flow. The supporting goals are to make the system to be flexible, to eliminate waste particularly the excess inventory and to eliminate disruptions. The building blocks for JIT are product design, the process design, personnel elements and manufacturing planning. Product design involves modular design; standard parts, concurrent engineering as well as well-structured production systems. Process design consists of small lot sizes, manufacturing cells, quality improvement, little inventory storage, production flexibility, limited work in progress and setup time production. Personnel elements comprises of cross-trained workers, workers as assets, continuous improvement, leadership management and cost accounting. Finally manufacturing and planning control include level loading, visual systems, pull systems, preventive maintenance and close vendor relationships (Reid, 2002). 4 Scheduling refers to the process of establishing the specific time of use of the facilities, human activities as well as equipment in an organization. The main aim of this process is to be able to achieve trade-offs based on conflicting goals that involve efficient use of equipment, utilization of staff as well as facilities and also the minimization of the customer waiting, process times and inventories (Reid, 2002). Example of loading with Hungarian method A construction firm has four cranes and each of them have a distance indicated from four construction sites. The table below shows the distance in km of each crane from the construction sites: construction site 1 2 3 4 1 45 110 95 115 Crane 2 125 95 90 105 3 35 85 55 65 4 90 75 75 80 Cost matrix: 45 110 95 115 125 95 90 105 35 85 55 65 90 75 75 80 Select the row minimum and subtract it from all entries. 0 65 50 70 35 5 0 15 0 50 20 30 15 0 0 5 Select the minimum entry in each column and subtract from all entries 0 65 50 65 35 5 0 10 0 50 20 25 15 0 0 0 Draw lines covering the zeros across the columns until n is equal to the number of cost matrix 0 45 30 45 55 5 0 10 0 30 0 5 35 0 0 0 0 40 30 40 55 0 0 5 0 25 0 0 40 0 5 0 n is now equals to 4 the number of rows of the cost matrix. Solution=crane 4-construction site1, crane 3-construction site 2, crane 2- construction 3, Crane 1-construction site 4= 275 km. Sequencing Given various jobs determine their sequence, average days late, average time flow as well the average number of the jobs in the workstation for the FCFS and the SPT rule Job Processing Time Due date 1 8 16 2 4 4 3 10 17 FCFS Job Sequence Processing time1 Flow time2 Due date 2-3 3 1 8 10 16 0 2 4 14 4 10 3 10 24 17 7 22 48 17 Average flow time=total flow time/number of jobs=48/3=16days Average Tardiness=17/3=5.67 The makespan= 22 days Average number of jobs at the workstation=48/22=2.18 jobs per workstation SPT=1-3-2 SPT=1-3-2 Job Sequence processing time flow time 2 Due date 2-3 3 1 8 12 16 3 3 10 22 17 12 2 4 26 4 2 22 60 17 Average flowtime=60/3=20 Average Tardiness=17/3=5.67 The makespan=22days Average number of jobs at work station=60/22=2.73 jobs per workstation. Reference Reid, R.D., & Sanders, N.R. (2002). Operations Management. New York: Wiley. Read More