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Unit 3 Operations Planning & Control

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35 views13 pages

Unit 3 Operations Planning & Control

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ayushi.singh.2412
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Unit 3

MBA/BBA/PGDBM/UGC Net

By
Dr. Anand Vyas
Aggregate Planning meaning
• Aggregate planning is the process of developing, analyzing, and
maintaining a preliminary, approximate schedule of the overall operations
of an organization. The aggregate plan generally contains targeted sales
forecasts, production levels, inventory levels, and customer backlogs. This
schedule is intended to satisfy the demand forecast at a minimum cost.
Properly done, aggregate planning should minimize the effects of
shortsighted, day-to-day scheduling, in which small amounts of material
may be ordered one week, with an accompanying layoff of workers,
followed by ordering larger amounts and rehiring workers the next week.
This longer-term perspective on resource use can help minimize short-
term requirements changes with a resulting cost savings.
• In simple terms, aggregate planning is an attempt to balance capacity and
demand in such a way that costs are minimized. The term “aggregate” is
used because planning at this level includes all resources “in the
aggregate;” for example, as a product line or family.
Aggregate Planning Strategies
There are three types of aggregate planning strategies available for organization to choose from.
They are as follows.
• Level Strategy
As the name suggests, level strategy looks to maintain a steady production rate and workforce
level. In this strategy, organization requires a robust forecast demand as to increase or decrease
production in anticipation of lower or higher customer demand. Advantage of level strategy is
steady workforce. Disadvantage of level strategy is high inventory and increase back logs.
• Chase Strategy
As the name suggests, chase strategy looks to dynamically match demand with production.
Advantage of chase strategy is lower inventory levels and back logs. Disadvantage is lower
productivity, quality and depressed work force.
• Hybrid Strategy
As the name suggests, hybrid strategy looks to balance between level strategy and chase strategy.
 Long-Term Decisions
 Intermediate Decisions
 Short Term Decisions
Capital Intensive
• Prof. Harvey Leibenstein, Paul Baran, Rostow, Hirschamn Maurice Dobb
and Mahalanobis are the chief advocators of capital intensive technique.
They consider that this technique is indispensable for accelerating the
process of growth. Prof. Paul Baran has the strong opinion about the
necessity of using the capital intensive in less developed countries.

• He observed that such countries should make use of their ability to draw
upon the scientific and technological advancement of the more developed
countries if they want to industrialize at a faster rate. Capital intensive
technique refers to that technique in which larger amount of capital is
comparatively used. In such a technique the amount of capital used per
unit of output is larger than what it is in case of labour intensive
technique.
Labor Intensive
• In simple words labour intensive technique is that which uses
comparatively larger amount of labour and small doses of capital. It
is that technique by which more of labour and less of capital is
required for the process of production. However, it can be defined
as one in which a large amount of labour is combined with a smaller
amount of capital. According to Prof. Myint, “labour intensive
methods of production are those that require a large quantity of
labour with a given unit of capital.” With this method of production,
it is possible to raise output by using the same amount of capital
but greater amount of labour.
•
Fashion Industries
• The selection of merchandise is a critical part of retail
management. Assortment planning aims to ensure that
an appropriate mix and quantity of retail inventory is
stocked to meet customer demand

• Strategic business objectives (SBO) play a key role in


assortment planning. SBOs are the specific, measurable
goals and objectives set by a business. This is
developed at various levels within an organization and
is generally tied to a clearly discernible target market.
Materials Requirements Planning (MRP I)
In manufacturing, developing a plan for your resources is vital to your operation. Without resource planning,
your operation will have a much more challenging time managing various areas within your supply chain such
as inventory, production, and output. This is why utilizing a materials requirement planning (MRP) system can
efficiently manage materials within production, making it much easier for project managers to order and
organize materials waiting to be assembled.

Material Requirement Planning (MRP) Functions


Inventory Management: Arguably the main objective of an MRP system, the feature is to ensure that materials
are available at a moment’s notice. This eliminates the need for manual-entered data and is able to carry out
material orders with ease. It also is able to alert the facility when products are ready to be delivered.
Cost Reduction: In correlation with inventory management, cost is reduced significantly. Through ensuring a
steady flow of inventory, holding and untimely-delivery cost are reduced, ultimately bringing more revenue
into the operation.
Production Optimization: Although the main goal of MRP is to oversee and manage materials, it benefits the
rest of the system as well. As materials are flowing throughout the supply chain, equipment and employees are
able to work at a much faster and efficient rate as well.
Manufacturing Resource Planning
(MRP II)
• Manufacturing resource planning (MRP II) is a
comprehensive type of planning for manufacturing
companies. It is a sort of extension to the original
material requirements planning (MRP) concept. It
emerged in the 1980s to help companies deal with
dynamic processes. Both of these, MRP and MRP II, are
related to the enterprise resource planning (ERP)
system, which is a top-level business information
system that helps companies to plan better and work
more efficiently.
Master production Scheduling
• A Master Production Schedule is a Schedule of the completions of the end items
and these completions are very much planned in nature. Master production
schedule acts as a very distinct and important linkage between the planning
processes. With the help of this schedule, one can know the requirements for the
individual end items by date and quantity. In companies, MPS are generally
produced in order to know the number of each product that is to be made over
some planning horizon. This schedule forms a very unique part of the company’s
sales program which deals with the planned response to the demands of the
market.

• A master production schedule is also in management language referred to as the


master of all the schedules as this schedule provides the production, planning,
purchasing & top management, the most needed information required for
planning and control of the whole manufacturing process or the operation.
Objectives of Master Production
Schedule (MPS)
• Keeping the inventories at the desired level by making perfect
use of the resources that are available with the company.
• Setting up due dates for the availability of the end items and
also providing the required information regarding resources
and also the materials – which act as the supporting pillars of
the aggregate planning.
• Maintaining properly, the desired level of customer service.
• Setting particular schedules for the production of the parts
and the components that are used as the inputs to materials
requirements planning, in the end items.
Enterprise Resource Planning (ERP)
and Global Practices
• Enterprise resource planning (ERP) is a process used by
companies to manage and integrate the important parts of
their businesses. Many ERP software applications exist to
help companies implement resource planning by
integrating all of the processes it needs to run a company
with a single system. An ERP software system can integrate
planning, purchasing inventory, sales, marketing, finance,
human resources, and more.
•
Enterprise Resource Planning (ERP)
and Global Practices
ERP Solutions Providers
Some familiar names are leaders in ERP software. Oracle Corp. (ORCL) originally
supplied a relational database that integrated with ERP software developed by SAP
(SAP) before entering the broader enterprise market in a big way in the early 2000’s.
Microsoft (MSFT) has long been an industry leader, with many customers using
multiple software applications from the company.

As cloud-based solutions have grown in popularity in recent years, the traditional ERP
industry leaders have seen challenges from upstarts such as Bizowie and WorkWise.

ERP software can integrate all of the processes needed to run a company.
ERP solutions have evolved over the years, and many are now typically web-based
applications that users can access remotely.
An ERP system can be ineffective if a company doesn’t implement it carefully.

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