COMM 225 Chapter 13: Supplement 2: Advanced Sales and Operations Planning (Production and Operations Management - Second Custom Ed for Concordia)
9 Dec 2016
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Chapter 13) supplement 2: advanced sales and operations planning. Limited to cases where there are linear relationships in input data. Using forecasts of demand and factors relating to employment, productivity, overtime, and inventory levels, series of what-if analysis helps formulate production plans and evaluate alternative scenarios. Level and chase strategies are developed to bracket options. Objective to (cid:222)nd lowest-cost plan, consider when to hire and (cid:222)re, how much inventory to hold, when to use overtime/undertime while always meeting sales forecast. Few real-world aggregate production planning decisions appear to be compatible with linear assumptions. Some plans require discrete steps such as adding second shift. For many companies, unit cost of hiring/(cid:222)ring large numbers of employees is much larger than that associated with small labor force changes. Relatively homogenous product lines or portions of lines allow for closer match between model and reality.
