Heizer 13 Aggregate Planning 2016

8/17/2019 Heizer 13 Aggregate Planning 2016

1/59

13 – 1

Aggregate AggregatePlanning Planning Chapter 13Chapter 13


2/59

13 – 2

Learning ObjectivesLearning Objectives

When you complete this chapter youWhen you complete this chapter youshould be able to:should be able to:

1.1. e!ine aggregate planning e!ine aggregate planning ".". #denti!y optional strategies !or#denti!y optional strategies !or

developing an aggregate plandeveloping an aggregate plan

3.3. Prepare a graphical aggregate planPrepare a graphical aggregate plan


3/59

13 – 3

Learning ObjectivesLearning Objectives

When you complete this chapter youWhen you complete this chapter youshould be able to:should be able to:

$.$. %olve an aggregate plan via the%olve an aggregate plan via thetransportation method o! lineartransportation method o! linear

programming programming

&.&. 'nderstand and solve a yield'nderstand and solve a yield

management problemmanagement problem


4/59

13 – 4

e!initione!inition

Aggregate planning is the process o! developing( analy)ing( Aggregate planning is the process o! developing( analy)ing(and maintaining a preliminary( appro*imate schedule o! theand maintaining a preliminary( appro*imate schedule o! theoverall operations o! an organi)ation.overall operations o! an organi)ation.

+he aggregate plan generally contains targeted sales !orecasts(+he aggregate plan generally contains targeted sales !orecasts( production levels( inventory levels( and customer bac,logs. production levels( inventory levels( and customer bac,logs.

+he term aggregate implies that the planning is done !or a+he term aggregate implies that the planning is done !or asingle overall measure o! output or( at the most( a !e-single overall measure o! output or( at the most( a !e-aggregated product categories.aggregated product categories.

+he aim o! aggregate planning is to set overall output levels in+he aim o! aggregate planning is to set overall output levels in

the near to medium !uture in the !ace o! !luctuating or uncertainthe near to medium !uture in the !ace o! !luctuating or uncertaindemands.demands.

Aggregate planning might see, to in!luence demand as -ell as Aggregate planning might see, to in!luence demand as -ell assupply.supply.


5/59

13 – 5

Aggregate Planning Aggregate Planning

Objective is to minimi)e cost over theObjective is to minimi)e cost over the planning period by adjusting planning period by adjusting

Production ratesProduction rates

Labor levelsLabor levels

#nventory levels#nventory levels

Overtime -or, Overtime -or,

%ubcontracting rates%ubcontracting rates

Other controllable variablesOther controllable variables

etermine the uantity and timing o!etermine the uantity and timing o! production !or the immediate !uture production !or the immediate !uture


6/59

13 – 6


A logical overall unit !or measuring sales A logical overall unit !or measuring sales

and output and output A !orecast o! demand !or an intermediate A !orecast o! demand !or an intermediate

planning period in these aggregate terms planning period in these aggregate terms

A method !or determining costs A method !or determining costs

A model that combines !orecasts and A model that combines !orecasts andcosts so that scheduling decisions cancosts so that scheduling decisions canbe made !or the planning period be made !or the planning period

/euired !or aggregate planning /euired !or aggregate planning


7/5913 – 7

+he Planning Process+he Planning Process

Figure 13.1Figure 13.1

Long0range plansover one year2/esearch and evelopment e- product plansCapital investments4acility location5e*pansion

#ntermediate0range plans3 to 16 months2%ales planning Production planning and budgeting %etting employment( inventory(

subcontracting levels Analy)ing operating plans

%hort0range plans

up to 3 months27ob assignmentsOrdering 7ob scheduling ispatching OvertimePart0time help

+ope*ecutives

Operationsmanagers

Operationsmanagers(supervisors(!oremen

/esponsibility /esponsibility Planning tas,s and hori)onPlanning tas,s and hori)on


8/5913 – 8


8uarter 18uarter 1

7an7an 4eb4eb 9ar 9ar

1&( 1&( 1"( 1"( 11( 11(

8uarter " 8uarter "

Apr Apr 9ay 9ay 7un7un

1( 1( 13( 13( 1&( 1&(

8uarter 38uarter 3

7ul 7ul Aug Aug %ep%ep

16( 16( 1&( 1&( 1$( 1$(


9/5913 – 9

Aggregate AggregatePlanning Planning



10/5913 – 10


Combines appropriate resourcesCombines appropriate resourcesinto general termsinto general terms

Part o! a larger production planningPart o! a larger production planningsystemsystem

isaggregation brea,s the planisaggregation brea,s the plan

do-n into greater detail do-n into greater detail isaggregation results in a masterisaggregation results in a master

production schedule production schedule


11/5913 – 11


%trategies%trategies1.1. 'se inventories to absorb changes in'se inventories to absorb changes in

demand demand

".". Accommodate changes by varying Accommodate changes by varying-or,!orce si)e-or,!orce si)e

3.3. 'se part0timers( overtime( or idle time to'se part0timers( overtime( or idle time toabsorb changesabsorb changes

$.$. 'se subcontractors and maintain a stable'se subcontractors and maintain a stable-or,!orce-or,!orce

&.&. Change prices or other !actors toChange prices or other !actors to

in!luence demand in!luence demand


12/5913 – 12

emand Optionsemand Options

#n!luencing demand #n!luencing demand

'se advertising or promotion to'se advertising or promotion toincrease demand in lo- periodsincrease demand in lo- periods

Attempt to shi!t Attempt to shi!tdemand to slo-demand to slo-

periods periods

9ay not be9ay not besu!!icient tosu!!icient tobalance demandbalance demandand capacity and capacity


13/5913 – 13


;ac, ordering during high0;ac, ordering during high0demand periodsdemand periods

/euires customers to -ait !or an/euires customers to -ait !or anorder -ithout loss o! good-ill ororder -ithout loss o! good-ill orthe order the order

9ost e!!ective -hen there are !e-9ost e!!ective -hen there are !e-

i! any substitutes !or the producti! any substitutes !or the productor serviceor service

O!ten results in lost salesO!ten results in lost sales


14/5913 – 14


Counterseasonal product andCounterseasonal product andservice mi*ing service mi*ing

evelop a product mi* o!evelop a product mi* o!counterseasonal itemscounterseasonal items

9ay lead to products or services9ay lead to products or servicesoutside the company


15/5913 – 15

Aggregate Planning Options Aggregate Planning Options

Table 13.1Table 13.1

OptionOption Advantages Advantages isadvantagesisadvantages %ome Comments%ome Comments

ChangingChanginginventoryinventorylevelslevels

Changes inChanges inhumanhumanresources areresources aregradual orgradual or

none= no abruptnone= no abrupt production productionchanges.changes.

#nventory#nventoryholding costholding costmay increase.may increase.%hortages may%hortages may

result in lostresult in lostsales.sales.

Applies mainly to Applies mainly to production( not production( notservice(service(operations.operations.

>arying>arying-or,!orce-or,!orce

si)e bysi)e byhiring orhiring orlayo!!slayo!!s

Avoids the costs Avoids the costso! othero! other

alternatives.alternatives.

?iring( layo!!(?iring( layo!!(and trainingand training

costs may becosts may besigni!icant.signi!icant.

'sed -here si)e'sed -here si)eo! labor pool iso! labor pool is

large.large.


16/5913 – 16




>arying>arying production productionratesratesthroughthrough

overtime orovertime oridle timeidle time

9atches9atchesseasonalseasonal!luctuations!luctuations-ithout hiring5-ithout hiring5

training costs.training costs.

OvertimeOvertime premiums= tired premiums= tired-or,ers= may-or,ers= maynot meetnot meet

demand.demand.

Allo-s !le*ibility Allo-s !le*ibility-ithin the-ithin theaggregate plan.aggregate plan.

%ub0 %ub0 contracting contracting

PermitsPermits!le*ibility and!le*ibility andsmoothing o!smoothing o!

the !irm


17/5913 – 17




'sing part0 'sing part0 timetime-or,ers-or,ers

#s less costly#s less costlyand moreand more!le*ible than!le*ible than!ull0time!ull0time

-or,ers.-or,ers.

?igh turnover5?igh turnover5training costs=training costs=uality su!!ers=uality su!!ers=schedulingscheduling

di!!icult.di!!icult.

@ood !or@ood !oruns,illed jobs inuns,illed jobs inareas -ith largeareas -ith largetemporary labortemporary labor

pools. pools.

#n!luencing#n!luencingdemand demand

+ries to use+ries to usee*cesse*cesscapacity.capacity.iscounts dra-iscounts dra-

ne- customers.ne- customers.

'ncertainty in'ncertainty indemand. ?arddemand. ?ardto matchto matchdemand todemand to

supply e*actly.supply e*actly.

CreatesCreatesmar,etingmar,etingideas.ideas.Overboo,ingOverboo,ing

used in someused in somebusinesses.businesses.


18/5913 – 18




;ac,;ac,orderingorderingduringduringhigh0 high0

demanddemand periods periods

9ay avoid9ay avoidovertime.overtime.eeps capacityeeps capacityconstant.constant.

Customer mustCustomer mustbe -illing tobe -illing to-ait( but-ait( butgood-ill is lost.good-ill is lost.

9any companies9any companiesbac, order.bac, order.

Counter0 Counter0 seasonalseasonal product product

and serviceand servicemi*ing mi*ing

4ully utili)es4ully utili)esresources=resources=allo-s stableallo-s stable

-or,!orce.-or,!orce.

9ay reuire9ay reuires,ills ors,ills oreuipmenteuipment

outside theoutside the!irm


19/59

13 – 19

9ethods !or Aggregate9ethods !or Aggregate

Planning Planning A mi*ed strategy may be the best A mi*ed strategy may be the best

-ay to achieve minimum costs-ay to achieve minimum costs

+here are many possible mi*ed+here are many possible mi*edstrategiesstrategies

4inding the optimal plan is not4inding the optimal plan is notal-ays possibleal-ays possible


20/59

13 – 20

9i*ing Options to9i*ing Options to

evelop a Planevelop a Plan Chase strategy Chase strategy

9atch output rates to demand9atch output rates to demand

!orecast !or each period !orecast !or each period

>ary -or,!orce levels or vary>ary -or,!orce levels or vary production rate production rate

4avored by many service4avored by many serviceorgani)ationsorgani)ations


21/59

13 – 21

9i*ing Options to9i*ing Options to

evelop a Planevelop a Plan Level strategy Level strategy

aily production is uni!ormaily production is uni!orm

'se inventory or idle time as bu!!er 'se inventory or idle time as bu!!er

%table production leads to better%table production leads to betteruality and productivity uality and productivity

%ome combination o! capacity%ome combination o! capacityoptions( a mi*ed strategy( might beoptions( a mi*ed strategy( might bethe best solutionthe best solution


22/59

13 – 22

@raphical 9ethods@raphical 9ethods

Popular techniuesPopular techniues

Basy to understand and useBasy to understand and use

+rial0and0error approaches that do+rial0and0error approaches that donot guarantee an optimal solutionnot guarantee an optimal solution

/euire only limited computations/euire only limited computations


23/59

13 – 23

@raphical 9ethods@raphical 9ethods

1.1. etermine the demand !or each period etermine the demand !or each period

".". etermine the capacity !or regular time(etermine the capacity !or regular time(

overtime( and subcontracting each period overtime( and subcontracting each period

3.3. 4ind labor costs( hiring and layo!! costs(4ind labor costs( hiring and layo!! costs(and inventory holding costsand inventory holding costs

$.$. Consider company policy on -or,ers andConsider company policy on -or,ers andstoc, levelsstoc, levels

&.&. evelop alternative plans and e*amineevelop alternative plans and e*aminetheir total coststheir total costs


24/59

13 – 24

/oo!ing %upplier B*ample 1/oo!ing %upplier B*ample 1


9onth9onth B*pected emand B*pected emand ProductionProduction

aysaysemand Per ayemand Per ay

computed2computed2

7an7an 900900 2222 4141

4eb4eb 700700 1818 3939

9ar 9ar 800800 2121 3838 Apr Apr 1,2001,200 2121 5757

9ay 9ay 1,5001,500 2222 6868

7une7une 1,1001,100 2020 5555

6,2006,200 124124

= = 50= = 50 units per day units per day 6,2006,200

124124

Average Averagereuirement reuirement

+otal e*pected demand +otal e*pected demand

umber o! production daysumber o! production days


25/59

13 – 25



DD E

FF E

&& E

$$ E

33 E

E

7an7an 4eb4eb 9ar 9ar Apr Apr 9ay 9ay 7une7une 9onth9onth

"" "" 16 16 "1"1 "1"1 "" "" " " umber o! umber o! -or,ing days-or,ing days

P

r o d u c t i o n r a t e p

e r - o r , i n g d a y

P



Level production using averageLevel production using averagemonthly !orecast demand monthly !orecast demand

4orecast demand 4orecast demand


26/59

13 – 26

/oo!ing %upplier B*ample " /oo!ing %upplier B*ample "


Cost #n!ormationCost #n!ormation

#nventory carrying cost #nventory carrying cost $ 5$ 5 per unit per month per unit per month

%ubcontracting cost per unit %ubcontracting cost per unit $10$10 per unit per unit

Average pay rate Average pay rate $ 5$ 5 per hour per hour ($40($40 per day per day ))

Overtime pay rateOvertime pay rate $ 7$ 7 per hour per hour((aboveabove 88 hours per day hours per day ))

Labor0hours to produce a unit Labor0hours to produce a unit 1.61.6 hours per unit hours per unit

Cost o! increasing daily production rateCost o! increasing daily production ratehiring and training2hiring and training2

$300$300 per unit per unit

Cost o! decreasing daily production rateCost o! decreasing daily production ratelayo!!s2layo!!s2


Plan 1 E con s

tant -or, ! orce

Plan 1 E con s

tant -or, ! orce


27/59

13 – 27




#nventory carry cost #nventory carry cost $ 5$ 5 per unit per month per unit per month









Plan 1 E con s

tant -or, ! orce

Plan 1 E con s

tant -or, ! orce

9onthProduction at

50 'nits per ay emand4orecast

9onthly#nventoryChange

Bnding#nventory

7an 1,100 900 +200 200

4eb 900 700 +200 400

9ar 1,050 800 +250 650

Apr 1,050 1,200 -150 500

9ay 1,100 1,500 -400 100

7une 1,000 1,100 -100 0

1,850

+otal units o! inventory carried over !rom onemonth to the ne*t = 1,850 units

Wor,!orce reuired to produce 50 units per day = 10 -or,ers


28/59

13 – 28













9onthProduction at

50 'nits per ay emand4orecast

9onthly#nventoryChange

Bnding#nventory

7an 1,100 900 +200 200

4eb 900 700 +200 400

9ar 1,050 800 +250 650

Apr 1,050 1,200 -150 500

9ay 1,100 1,500 -400 100

7une 1,000 1,100 -100 0

1,850

+otal units o! inventory carried over !rom onemonth to the ne*t = 1,850 units

Wor,!orce reuired to produce 50 units per day = 10 -or,ers

Costs Calculations

#nventory carrying $9,250 (= 1,850 units carried * $5 per unit )

/egular0time labor 49,600 (= 10 -or,ers * $40 per

day * 124 days)Other costs overtime(

hiring( layo!!s(subcontracting2 0

+otal cost $58,850


29/59

13 – 29



C u m u l a t i v e d e m

a n d u n i t s

C u m u l a t i v e d e m

a n d u n i t s

D(D( E

F(F( E

&(&( E

$($( E

3(3( E

"( E

1( E

E

7an7an 4eb4eb 9ar 9ar Apr Apr 9ay 9ay 7une7une

Cumulative !orecastCumulative !orecast

reuirementsreuirements

Cumulative levelCumulative level production using production using

average monthlyaverage monthly!orecast!orecast

reuirementsreuirements

/eduction/eductiono! inventory o! inventory

B*cess inventory B*cess inventory

F(" unitsF(" units


30/59

13 – 30





computed2computed2

7an7an 900900 2222 4141

4eb4eb 700700 1818 3939

9ar 9ar

800800

2121

3838

Apr Apr 1,2001,200 2121 5757

9ay 9ay 1,5001,500 2222 6868

7une7une 1,1001,100 2020 5555

6,2006,200 124124

9inimum reuirement 9inimum reuirement = 38= 38 units per day units per day

Plan " E subc

ontracting

Plan " E subc

ontracting


31/59

13 – 31


DD E

FF E

&& E

$$ E

33 E

E



P



P r o d u c t i o n r a t e p


Level productionLevel productionusing lo-estusing lo-est

monthly !orecastmonthly !orecast

demand demand

4orecast demand 4orecast demand


32/59

13 – 32














33/59

13 – 33













#n0house production = 38 units per day * 124 days

= 4,712 units

%ubcontract units = 6,200 - 4,712= 1,488 units


34/59

13 – 34













#n0house production = 38 units per day * 124 days

= 4,712 units

%ubcontract units = 6,200 - 4,712= 1,488 units

Costs Calculations

/egular0time labor $37,696 (= 7.6 -or,ers x $40 per day x 124 days)

%ubcontracting 14,880 (= 1,488 units x $10 perunit )

+otal cost $52,576


35/59

13 – 35

/oo!ing %upplier B*ample $/oo!ing %upplier B*ample $




computed2computed2

7an7an 900900 2222 4141

4eb4eb 700700 1818 3939

9ar 9ar 800800 2121 3838

Apr Apr 1,2001,200 2121 5757

9ay 9ay 1,5001,500 2222 6868

7une7une 1,1001,100 2020 5555

6,2006,200 124124

Production B*pected emand Production B*pected emand

Plan 3 E hirin

g and ! iring

Plan 3 E hirin

g and ! iring


36/59

13 – 36


DD E

FF E

&& E

$$ E

33 E

E







4orecast demand and4orecast demand and

monthly productionmonthly production


37/59

13 – 37














38/59

13 – 38













9onth4orecast(units)

ailyProd/ate

;asicProduction

Cost(demand *

1.6 hrs5unit *$5 5hr )

B*tra Cost o!#ncreasingProduction(hiring cost )

B*tra Cost o!ecreasingProduction(layo!! cost ) +otal Cost

7an 900 41 $ 7,200 $ 7,200

4eb 700 39 5,600 $1,200(= 2 x $600)

6,800

9ar 800 38 6,400 $600

(= 1 x $600)7,000

Apr 1,200 57 9,600$5,700

(= 19 x $300) 15,300

9ay 1,500 68 12,000 $3,300(= 11 x $300) 15,300

7une 1,100 55 8,800 $7,800

(= 13 x $600)16,600

$49,600 $9,000 $9,600 $68,200



39/59

13 – 39

Comparison o! +hree PlansComparison o! +hree Plans


Cost Cost Plan 1Plan 1 Plan " Plan " Plan 3Plan 3

#nventory carrying #nventory carrying $ 9,250$ 9,250 $ 0$ 0 $ 0$ 0

/egular labor /egular labor 49,60049,600 37,69637,696 49,60049,600

Overtime labor Overtime labor 00 00 00

?iring ?iring 00 00 9,0009,000

Layo!!sLayo!!s 00 00 9,6009,600

%ubcontracting %ubcontracting 00 14,88014,880 00+otal cost +otal cost $58,850$58,850 $52,576$52,576 $68,200$68,200

Plan " is the lo-est cost optionPlan " is the lo-est cost option


40/59

13 – 40

9athematical Approaches9athematical Approaches

'se!ul !or generating strategies'se!ul !or generating strategies

+ransportation 9ethod o! Linear+ransportation 9ethod o! LinearProgramming Programming

Produces an optimal planProduces an optimal plan

9anagement Coe!!icients 9odel 9anagement Coe!!icients 9odel

9odel built around manager


41/59

13 – 41

+ransportation 9ethod +ransportation 9ethod


CostsCosts/egular time/egular time $40$40 per tire per tire

OvertimeOvertime $50$50 per tire per tire

%ubcontracting %ubcontracting $70$70 per tire per tire

Carrying Carrying $ 2$ 2 per tire per month per tire per month

%ales Period %ales Period 9ar 9ar Apr Apr 9ay 9ay

emand emand 800800 1,0001,000 750750

Capacity:Capacity:

/egular /egular 700700 700700 700700 OvertimeOvertime 5050 5050 5050

%ubcontracting %ubcontracting 150150 150150 130130

;eginning inventory ;eginning inventory 100100 tirestires


42/59

13 – 42

+ransportation B*ample+ransportation B*ample

#mportant points#mportant points

1.1. Carrying costs areCarrying costs are $2$2 5tire5month. #! 5tire5month. #!goods are made in one period and heldgoods are made in one period and held

over to the ne*t( holding costs areover to the ne*t( holding costs areincurred incurred

".". %upply must eual demand( so a%upply must eual demand( so adummy column called Gunuseddummy column called Gunused

capacityH is added capacityH is added

3.3. ;ecause bac, ordering is not viable in;ecause bac, ordering is not viable inthis e*ample( cells that might be used tothis e*ample( cells that might be used to

satis!y earlier demand are not availablesatis!y earlier demand are not available


43/59

13 – 43

+ransportation B*ample+ransportation B*ample

#mportant points#mportant points

$.$. 8uantities in each column designate the8uantities in each column designate thelevels o! inventory needed to meetlevels o! inventory needed to meet

demand reuirementsdemand reuirements&.&. #n general( production should be#n general( production should be

allocated to the lo-est cost cellallocated to the lo-est cost cellavailable -ithout e*ceeding unusedavailable -ithout e*ceeding unused

capacity in the ro- or demand in thecapacity in the ro- or demand in thecolumncolumn


44/59

13 – 44

+ransportation+ransportation

B*ampleB*ample



45/59

13 – 45

9anagement Coe!!icients9anagement Coe!!icients

9odel 9odel ;uilds a model based on manager


46/59

13 – 46

Other 9odelsOther 9odels

Linear ecision /uleLinear ecision /ule

9inimi)es costs using uadratic cost curves9inimi)es costs using uadratic cost curves

Operates over a particular time period Operates over a particular time period

%imulation%imulation

'ses a search procedure to try di!!erent'ses a search procedure to try di!!erent

combinations o! variablescombinations o! variables evelops !easible but not necessarily optimalevelops !easible but not necessarily optimal

solutionssolutions


47/59

13 – 47

%ummary o! Aggregate%ummary o! AggregatePlanning 9ethodsPlanning 9ethods

+echniues+echniues%olution%olution

Approaches Approaches #mportant Aspects#mportant Aspects

@raphical @raphical

methodsmethods

+rial and+rial and

error error

%imple to understand and%imple to understand and

easy to use. 9anyeasy to use. 9anysolutions= one chosensolutions= one chosenmay not be optimal.may not be optimal.

+ransportation+ransportationmethod o! linearmethod o! linear

programming programming

Optimi)ationOptimi)ation LP so!t-are available=LP so!t-are available= permits sensitivity permits sensitivity

analysis and ne-analysis and ne-constraints= linearconstraints= linear!unctions may not be!unctions may not berealistic.realistic.



48/59

13 – 48

%ummary o! Aggregate%ummary o! AggregatePlanning 9ethodsPlanning 9ethods

+echniues+echniues%olution%olution

Approaches Approaches #mportant Aspects#mportant Aspects

9anagement9anagement

coe!!icientscoe!!icientsmodel model

?euristic ?euristic %imple( easy to implement=%imple( easy to implement=

tries to mimic manager


49/59

13 – 49

Aggregate Planning in Aggregate Planning in

%ervices%ervicesControlling the cost o! labor is critical Controlling the cost o! labor is critical

1.1. Accurate scheduling o! labor0hours to Accurate scheduling o! labor0hours toassure uic, response to customerassure uic, response to customerdemand demand

".". An on0call labor resource to cover An on0call labor resource to cover

une*pected demand une*pected demand 3.3. 4le*ibility o! individual -or,er s,ills4le*ibility o! individual -or,er s,ills

$.$. 4le*ibility in rate o! output or hours o!4le*ibility in rate o! output or hours o!-or, -or,


50/59

13 – 50

4ive %ervice %cenarios4ive %ervice %cenarios

/estaurants/estaurants

%moothing the production%moothing the production process process

etermining the optimaletermining the optimal-or,!orce si)e-or,!orce si)e

?ospitals?ospitals/esponding to patient demand /esponding to patient demand


51/59

13 – 51


ational Chains o! %mall %erviceational Chains o! %mall %ervice4irms4irms

Planning done at national levelPlanning done at national leveland at local level and at local level

9iscellaneous %ervices9iscellaneous %ervices

Plan human resourcePlan human resourcereuirementsreuirements

9anage demand 9anage demand


52/59

13 – 52

La- 4irm B*ampleLa- 4irm B*ample


Labor0?ours /euired Labor0?ours /euired Capacity Constraints Capacity Constraints

"2"2 3232 $2$2 &2&2 F2F2

1212 4orecasts4orecasts 9a*imum9a*imum umber o! umber o!

Category o! Category o! ;est;est Li,ely Li,ely Worst Worst emand inemand in 8uali!ied 8uali!ied

Legal ;usinessLegal ;usiness hours2hours2 hours2hours2 hours2hours2 PeoplePeople Personnel Personnel

+rial -or, +rial -or, 1,8001,800 1,5001,500 1,2001,200 3.63.6 44

Legal researchLegal research 4,5004,500 4,0004,000 3,5003,500 9.09.0 3232

Corporate la- Corporate la- 8,0008,000 7,0007,000 6,5006,500 16.016.0 1515

/eal estate la- /eal estate la- 1,7001,700 1,5001,500 1,3001,300 3.43.4 66

Criminal la- Criminal la- 3,5003,500 3,0003,000 2,5002,500 7.07.0 1212

+otal hours+otal hours 19,50019,500 17,00017,000 15,00015,000La-yers needed La-yers needed 3939 3434 3030


53/59

13 – 53


Airline industry Airline industry

B*tremely comple* planningB*tremely comple* planning problem problem

#nvolves number o! !lights(#nvolves number o! !lights(number o! passengers( air andnumber o! passengers( air and

ground personnel( allocation o!ground personnel( allocation o!seats to !are classesseats to !are classes

/esources spread through the/esources spread through theentire systementire system


54/59

13 – 54

Iield 9anagement Iield 9anagement

Allocating resources to customers at Allocating resources to customers at prices that -ill ma*imi)e yield or prices that -ill ma*imi)e yield orrevenuerevenue

1.1. %ervice or product can be sold in%ervice or product can be sold inadvance o! consumptionadvance o! consumption

".". emand !luctuatesemand !luctuates

3.3. Capacity is relatively !i*ed Capacity is relatively !i*ed $.$. emand can be segmented emand can be segmented

&.&. >ariable costs are lo- and !i*ed costs>ariable costs are lo- and !i*ed costs

are highare high


55/59

13 – 55

emandemandCurveCurve

Iield 9anagement B*ampleIield 9anagement B*ample


Passed0upcontribution

9oney le!ton the table

Potential customers e*ist -hoPotential customers e*ist -hoare -illing to pay more than theare -illing to pay more than the$15$15 variable cost o! the roomvariable cost o! the room

%ome customers -ho paid%ome customers -ho paid$150$150 -ere actually -illing-ere actually -illingto pay more !or the roomto pay more !or the room+otal +otal

$$ contributioncontribution == ((PricePrice)) * *

(50(50roomsrooms))== ($150 -($150 -$15)$15)

* * (50)(50)== $6,750$6,750 PricePrice

/oom sales/oom sales

1 1

& &

$150$150Price chargedPrice charged

!or room!or room

$15$15>ariable cost >ariable cost

o! roomo! room


56/59

13 – 56

+otal J contribution +otal J contribution (1(1st pricest price) x 30) x 30 roomsrooms + (2+ (2nd nd !ri"e) x 30 r##% =!ri"e) x 30 r##% =

($100 - $15) x 30 + ($200 - $15) x 30 =($100 - $15) x 30 + ($200 - $15) x 30 =$2,550 + $5,550 = $8,100$2,550 + $5,550 = $8,100

emandemandCurveCurve

Iield 9anagement B*ampleIield 9anagement B*ample


PricePrice

/oom sales/oom sales

1 1

F F

3 3

$100$100Price 1Price 1

!or room!or room

$200$200Price " Price "

!or room!or room

$15$15>ariable cost >ariable cost

o! roomo! room


57/59

13 – 57

Iield 9anagement 9atri* Iield 9anagement 9atri*

u r a t i o n o ! u s e

' n p r e d i c t

a b l e

P r e d i c t a b l e

Price

+end to be !i*ed +end to be variable

8uadrant 1: 8uadrant ":

9ovies ?otels

%tadiums5arenas AirlinesConvention centers /ental cars?otel meeting space Cruise lines

8uadrant 3: 8uadrant $:

/estaurants Continuing care@ol! courses hospitals#nternet service

providers



58/59

13 – 58

9a,ing Iield 9anagement9a,ing Iield 9anagement

Wor, Wor, 1.1. 9ultiple pricing structures must9ultiple pricing structures must

be !easible and appear logical tobe !easible and appear logical tothe customer the customer

".". 4orecasts o! the use and duration4orecasts o! the use and durationo! useo! use

3.3. Changes in demand Changes in demand


59/59

+han, Iou +han, Iou

Heizer 13 Aggregate Planning 2016

Documents

Transcript of Heizer 13 Aggregate Planning 2016