Aggregate Planning Operations Management Assignment Help

Aggregate Planning

Each year, Janet Cramer, the plant manager at Polaroid's Integral Film Assembly Operation in Waltham, Massachusetts, struggles to identify  the most efficient way to meet the forecasted sales for film. Janet's plant is the only film assembly operation in the United States. (There is only one other Polaroid film assembly operation in the world, located in The Netherlands.) Historically, annual sales of Polaroid" film has followed a seasonal pattern, with the maximum sales per month taking place just before  Christmas time when retail operations stock their shelves in anticipation of hole ay sales.  There is also another peak, although somewhat smaller, Ln late spring and early summer, when customers purchase film for graduations, weddings,  and summer vacations. . Four different types of film are assembled at the Waltham plant. The assembly of film into the cartridges for the Polaroid cameras is a highly capital intensive process with very high fixed  costs and relatively low variable costs. As a result, Polaroid's operation in Waltham, which includes approximately 470 hourly employees, runs on three shifts, 24 hours-a day, five days a week. In addition, the workforce primarily consists of highly skilled individuals who would be difficult to replace.Even within this highly constrained environment, Janet has several alternatives available  to her for scheduling production. The first alternative is to work overtime on Saturdays at premium pay of 50 percent for all shifts. With this approach, inventory will be carried at an es- .timated cost of 20 to 25 percent per annum until the peak demand month is reached. The second alternative is to work both Saturdays and Sundays in the months just prior to the peak in order to minimize inventory carrying costs. Working on Sunday pays a premium of double time ..  However, with this approach there is the concern that worker fatigue (from working seven days a  week) will have a negative impact on quality and productivity and, even, on employee morale. The issues confronting Janet Cramer in selecting an aggregate planning alternative for her operation are typical of those that operations managers face when demand for their products  is cyclical. There is often none right answer, but rather a compromise that takes into consideration all of the various factors that can affect quality, productivity, cost, and employee morale.

Long-range strategic plans need to be translated into daily operational work schedules for the shop floor. To accomplish this, a series of steps, often referred to as hierarchical production planning, is required. In this process, units  of production go from very broad definitions or p.roductgroups to specific items and models. For example, in the auto road industry, GM_may look out five years and estimate the total number of "cars" it expects to sell. As the time horizon becomes closer, the number of cars are broken down into the number of Cadillacs, Buicks, Pontiacs,
and so forth. In the short term, specific models within each car type are identified, such as the Cadillac DeVille or the
Pontiac Aztek. Aggregate planning, as an intermediate-range planning tool for management, provides the link between the long-range strategic plan and the short-range operational plan. It develops gross requirements for up to 12 to 18  months into the future, primarily for material and labor. As such, it presents a fairly broad perspective of the operation, addressing such issues as the number of workers needed in total, rather than the number of workers needed to do specific jobs. The objective in developing an aggregate plan for a given time horizon is to match the demand for the firm's products with its ability to supply these products, and to do so at minimum cost. As part of the aggregate planning  process, the operation manager identifies alternative method for supplying the product, all of which are evaluated.  Marketing management also plays a key role in this matching process, in terms of how it controls the demand for the product using such marketing tools as pricing, advertising, and promotions. Both tho marketing and operations functions need to work together to develop an aggregate plan that is both effective and efficient.

Posted by: anderson


Share This