1. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Alternatives Quarter 1 2 3 4 Total Capaci ty Unuse d Capaci ty Requirements Quarter Subcontract Overtime Regular time Subcontract Overtime Regular time Subcontract Overtime Regular time Subcontract Overtime Regular time Beginning inventory 1 2 3 4 Aggregate Planning Chapter 14

2. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Planning Relationships Figure 14.1 Business or annual plan

3. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Planning Relationships Figure 14.1 Business or annual plan Production or staffing plan

4. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Planning Relationships Figure 14.1 MPS or workforce scheduleBusiness or annual plan Production or staffing plan

5. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Planning Relationships Figure 14.1 MPS or workforce schedule Business or annual plan Production or staffing plan

6. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Planning Relationships Figure 14.1 MPS or workforce schedule Business or annual plan Production or staffing plan

7. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Managerial Inputs Figure 14.2 Aggregate plan

8. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Managerial Inputs Aggregate plan Customer needs Demand forecasts Competition behavior Distribution and marketing Figure 14.2

9. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Managerial Inputs Cost data Financial condition of firm Accounting and finance Aggregate plan Customer needs Demand forecasts Competition behavior Distribution and marketing Figure 14.2

10. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Managerial Inputs Labor-market conditions Training capacity Human resources Cost data Financial condition of firm Accounting and finance Aggregate plan Customer needs Demand forecasts Competition behavior Distribution and marketing Figure 14.2

11. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Managerial Inputs New products Product design changes Machine standards Engineering Labor-market conditions Training capacity Human resources Cost data Financial condition of firm Accounting and finance Aggregate plan Customer needs Demand forecasts Competition behavior Distribution and marketing Figure 14.2

12. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Managerial Inputs Supplier capabilities Storage capacity Materials availability Materials New products Product design changes Machine standards Engineering Labor-market conditions Training capacity Human resources Cost data Financial condition of firm Accounting and finance Aggregate plan Customer needs Demand forecasts Competition behavior Distribution and marketing Figure 14.2

13. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Managerial Inputs Supplier capabilities Storage capacity Materials availability Materials Current machine capacities Plans for future capacities Workforce capacities Current staffing level Operations New products Product design changes Machine standards Engineering Labor-market conditions Training capacity Human resources Cost data Financial condition of firm Accounting and finance Aggregate plan Customer needs Demand forecasts Competition behavior Distribution and marketing Figure 14.2

14. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Aggregate Planning Objectives  Minimize Costs/Maximize Profits  Maximize Customer Service  Minimize Inventory Investment  Minimize Changes in Production Rates  Minimize Changes in Workforce Levels  Maximize Utilization of Plant and Equipment

15. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Aggregate Planning Strategies TABLE 14.1PLANNING STRATEGIES FOR AGGREGATE PLANSPossible Alternatives Strategyduring Slack Seasonduring Peak Season 4.Level #2: constantLayoffs, building antici-Hiring, depleting antici- output rate pation inventory, pation inventory, over- undertime, vacations time, subcontracting, backorders, stockouts 1.Chase #1: vary workforceLayoffsHiring level to match demand 2.Chase #2: vary output Layoffs, undertime,Hiring, overtime, rate to match demand vacations subcontracting 3.Level #1: constant No layoffs, buildingNo hiring, depleting workforce level anticipation inventory, anticipation inventory, undertime, vacations overtime, subcontracting, backorders, stockouts

16. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Aggregate Planning Process Figure 14.3 Determine requirements for planning horizon

17. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Aggregate Planning Process Determine requirements for planning horizon Identify alternatives, constraints, and costs Figure 14.3

18. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Aggregate Planning Process Determine requirements for planning horizon Identify alternatives, constraints, and costs Prepare prospective plan for planning horizon Figure 14.3

19. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Aggregate Planning Process Determine requirements for planning horizon Identify alternatives, constraints, and costs Prepare prospective plan for planning horizon Is the plan acceptable? Figure 14.3

20. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Aggregate Planning Process Determine requirements for planning horizon Identify alternatives, constraints, and costs Prepare prospective plan for planning horizon Is the plan acceptable? No Figure 14.3

21. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Aggregate Planning Process Determine requirements for planning horizon Identify alternatives, constraints, and costs Prepare prospective plan for planning horizon Implement and update the plan Is the plan acceptable? No Yes Figure 14.3

22. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Aggregate Planning Process Determine requirements for planning horizon Identify alternatives, constraints, and costs Prepare prospective plan for planning horizon Move ahead to next planning session Implement and update the plan Is the plan acceptable? No Yes Figure 14.3

23. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Aggregate Planning Costs  Regular-Time Costs  Overtime Costs  Hiring and Layoff Costs  Inventory Holding Costs  Backorder and Stockout Costs

24. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Level Strategy for Services DockAisle

25. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Level Strategy for Services DockAisle Example 14.1 TIME PERIOD 123456Total Requirement*6121815131478 Current employment = 10 part-time clerks * Number of part-time employees

26. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Level Strategy for Services DockAisle TIME PERIOD 123456Total Requirement*6121815131478 Current employment = 10 part-time clerks 1.No more than 10 new hires in any period 2.No backorders are permitted 3.Overtime can not exceed 20% of regular-time capacity 4.The following costs can be assigned: Regular-time wage$2,000/period at 20 hours/week Overtime wages150% of regular-time Hiring$1,000/person Layoffs$500/person * Number of part-time employees Example 14.1

27. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Level Strategy for Services DockAisle TIME PERIOD 123456Total Requirement*6121815131478 Current employment = 10 part-time clerks 1.No more than 10 new hires in any period 2.No backorders are permitted 3.Overtime can not exceed 20% of regular-time capacity 4.The following costs can be assigned: Regular-time wage$2,000/period at 20 hours/week Overtime wages150% of regular-time Hiring$1,000/person Layoffs$500/person Peak Requirement Example 14.1

28. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Level Strategy for Services DockAisle TIME PERIOD 123456Total Requirement*6121815131478 Current employment = 10 part-time clerks 1.No more than 10 new hires in any period 2.No backorders are permitted 3.Overtime can not exceed 20% of regular-time capacity 4.The following costs can be assigned: Regular-time wage$2,000/period at 20 hours/week Overtime wages150% of regular-time Hiring$1,000/person Layoffs$500/person Peak Requirement 1.20 w = 18 employees in peak period Example 14.1

29. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Level Strategy for Services DockAisle TIME PERIOD 123456Total Requirement*6121815131478 Current employment = 10 part-time clerks 1.No more than 10 new hires in any period 2.No backorders are permitted 3.Overtime can not exceed 20% of regular-time capacity 4.The following costs can be assigned: Regular-time wage$2,000/period at 20 hours/week Overtime wages150% of regular-time Hiring$1,000/person Layoffs$500/person Peak Requirement 1.20 w = 18 employees in peak period w = = 15 employees 18 1.20 Example 14.1

30. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Level Strategy for Services DockAisle Figure 14.4 TIME PERIOD 123456Total Requirement*6121815131478 Current employment = 10 part-time clerks 1.No more than 10 new hires in any period 2.No backorders are permitted 3.Overtime can not exceed 20% of regular-time capacity 4.The following costs can be assigned: Regular-time wage$2,000/period at 20 hours/week Overtime wages150% of regular-time Hiring$1,000/person Layoffs$500/person Peak Requirement 1.20 w = 18 employees in peak period w = = 15 employees 18 1.20

31. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Chase Strategy for Services DockAisle TIME PERIOD 123456Total Requirement*6121815131478 Current employment = 10 part-time clerks Figure 14.5

32. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Mixed Strategies in Manufacturing Figure 14.6

33. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Production Planning Tableau Figure 14.7 Alternatives Quarter 1 234 Total Capacity Unused Capacity Requirements Quarter Subcontract Overtime Regular time Subcontract Overtime Regular time Subcontract Overtime Regular time Subcontract Overtime Regular time Beginning inventory 1 2 3 4 0h2h3h4h0h2h3h4h rr+hr+2hr+3hu cc+hc+2hc+3h0 ss+hs+2hs+3h0 r+brr+hr+2hu c+bcc+hc+2h0 s+bss+hs+2h0 r+2br+brr+hu c+2bc+bcc+h0 s+2bs+bss+h0 r+3br+2br+bru c+3bc+2bc+bc0 s+3bs+2bs+bs0 D 1 D 2 D 3 D 4 + I 4 U I0R1O1S1R2O2S2R3O3S3R4O4S4I0R1O1S1R2O2S2R3O3S3R4O4S4

34. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Production Planning TableauTru-RainbowCompany Example 14.3 Alternatives Quarter 1 234 Total Capacity Unused Capacity Requirements Quarter Subcontract Overtime Regular time Subcontract Overtime Regular time Subcontract Overtime Regular time Subcontract Overtime Regular time Beginning inventory 1 2 3 4 0h2h3h4h0h2h3h4h rr+hr+2hr+3hu cc+hc+2hc+3h0 ss+hs+2hs+3h0 r+brr+hr+2hu c+bcc+hc+2h0 s+bss+hs+2h0 r+2br+brr+hu c+2bc+bcc+h0 s+2bs+bss+h0 r+3br+2br+bru c+3bc+2bc+bc0 s+3bs+2bs+bs0 D 1 D 2 D 3 D 4 + I 4 U I0R1O1S1R2O2S2R3O3S3R4O4S4I0R1O1S1R2O2S2R3O3S3R4O4S4

35. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Production Planning TableauTru-RainbowCompany Alternatives Quarter 1 234 Total Capacity Unused Capacity Requirements Quarter Subcontract Overtime Regular time Subcontract Overtime Regular time Subcontract Overtime Regular time Subcontract Overtime Regular time Beginning inventory 1 2 3 4 0h2h3h4h0h2h3h4h rr+hr+2hr+3hu cc+hc+2hc+3h0 ss+hs+2hs+3h0 r+brr+hr+2hu c+bcc+hc+2h0 s+bss+hs+2h0 r+2br+brr+hu c+2bc+bcc+h0 s+2bs+bss+h0 r+3br+2br+bru c+3bc+2bc+bc0 s+3bs+2bs+bs0 D 1 D 2 D 3 D 4 + I 4 U I0R1O1S1R2O2S2R3O3S3R4O4S4I0R1O1S1R2O2S2R3O3S3R4O4S4 Quarter 1 2 3 4 Total Demand30085015003503000 Capacities Regular time4504507504502100 Overtime909015090420 Subcontracting200200200200800 Current inventory = 250,000 Ending inventory = 300,000 Regular time = $1.00/unit Overtime = $1.50/unit Subcontracting = $1.90/unit Inventory holding cost = $0.30/gallon/quarter Maximum overtime = 20% of regular time Maximum subcontract = 200,000 No back orders or stockouts Example 14.3

36. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Production Plan Tru-RainbowCompany 1500 1500 — 1250 1250 — 1000 1000 — 750 750 — 500 500 — 250 250 — 0 0 — ||||12341234||||12341234 Quarter Paint (thousands of gallons) Requirements Figure 14.8

37. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Production Plan Tru-RainbowCompany 1500 1500 — 1250 1250 — 1000 1000 — 750 750 — 500 500 — 250 250 — 0 0 — ||||12341234||||12341234 Quarter Paint (thousands of gallons) Production plan Requirements Figure 14.8

38. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Production Plan Tru-RainbowCompany 1500 1500 — 1250 1250 — 1000 1000 — 750 750 — 500 500 — 250 250 — 0 0 — ||||12341234||||12341234 Quarter Paint (thousands of gallons) 510 300 Production plan RequirementsInventoryaccumulation Figure 14.8

39. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Production Plan Tru-RainbowCompany 110 400 1500 1500 — 1250 1250 — 1000 1000 — 750 750 — 500 500 — 250 250 — 0 0 — ||||12341234||||12341234 Quarter Paint (thousands of gallons) 510 300 Inventoryconsumption Production plan RequirementsInventoryaccumulation Figure 14.8

40. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Production Plan Tru-RainbowCompany 110 400 1500 1500 — 1250 1250 — 1000 1000 — 750 750 — 500 500 — 250 250 — 0 0 — ||||12341234||||12341234 Quarter Paint (thousands of gallons) 510 300 Inventoryconsumption Production plan RequirementsInventoryaccumulation Figure 14.8

41. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Production Planning TableauTru-RainbowCompany Figure 14.9

42. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Example 14.3 Production Planning TableauTru-RainbowCompany Total Cost QuarterCost

43. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Example 14.3 Production Planning TableauTru-RainbowCompany Total Cost QuarterCost 1250($0) + 30($1.00) + 20($1.90) =$68

44. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Example 14.3 Production Planning TableauTru-RainbowCompany Total Cost QuarterCost 1250($0) + 30($1.00) + 20($1.90) =$68 2420($1.30) + 90($1.80) + 340($1.00) =1,048

45. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Example 14.3 Production Planning TableauTru-RainbowCompany Total Cost QuarterCost 1250($0) + 30($1.00) + 20($1.90) =$68 2420($1.30) + 90($1.80) + 340($1.00) =1,048 3110($1.30) + 90($1.80) + 200($2.20) + 750($1.00) + 150($1.50) =2,100

46. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Example 14.3 Production Planning TableauTru-RainbowCompany Total Cost QuarterCost 1250($0) + 30($1.00) + 20($1.90) =$68 2420($1.30) + 90($1.80) + 340($1.00) =1,048 3110($1.30) + 90($1.80) + 200($2.20) + 750($1.00) + 150($1.50) =2,100 4450($1.00) + 90($1.50) + 110($1.90) =794 Total$4,010

47. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Example 14.3 Regular-Time Overtime Subcon- QuarterProductionProduction tracting Total Anticipation Inventory QuarterQuantity

48. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Example 14.3 14509020560 245090200740 37501502001,100 445090110650 Totals2,1004205303,050 Regular-Time Overtime Subcon- QuarterProductionProduction tracting Total Anticipation Inventory QuarterQuantity

49. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Example 14.3 14509020560 245090200740 37501502001,100 445090110650 Totals2,1004205303,050 Regular-Time Overtime Subcon- QuarterProductionProduction tracting Total Anticipation Inventory QuarterQuantity 1250 + 560 – 300 =510 2510 + 740 – 850 =400 3400 + 1,100 – 1,500 =0 40 + 650 – 350 =300

50. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Solved Problem 1 Figure 14.10

51. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Solved Problem 1 Figure 14.11

52. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Solved Problem 1 Figure 14.12

53. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Solved Problem 2 Figure 14.13