Three Methods of Aggregate Planning
||Level Strategy - Constant
Work Force, and as demand changes Vary Only Inventory & Stockouts|
||Chase Strategy - as demand changes, hire and layoff to produce the units required.
Some inventory also has to be accounted for, because of rounding errors|
We shouldn't stop yet. There are a number ofother
Pure Strategies ( changing only one variable at a time) we could determine. For
example, use subcontracting to satisfy additional demand. And we haven't talked yet about overtime.
We do not need to do all the work required to
determine Level and Chase Strategies or subcontracting and overtime strategies. The Mixed Strategy
in the long run is a lot less work.
As demand changes these are the things
management can change to meet the changing demand. These variables include:
||Number of workers
- More or less workers by hiring and layoff changes the number of units you can produce|
- If you have additional capacity now, produce extra units and store them in inventory to satisfy increasing demand
in the future|
- This is negative inventory. If demand is more than you can produce, use a stockout and satisfy demand in the
future when your capacity exceeds demand.
cannot occur in the last period of any aggregate plan. In order to fairly compare one aggregate plan to
an other, each must produce the same number of units. A stockout does not produce a unit, it just delays consumption.|
- Pay some other business to produce extra units you need.|
- Ask you employees to produce more units by working more than the normal eight hours/day or 40 hours/week.|
There are others that could be added to this
list and that are discussed in our text. These are the ones we need to complete our aggregate plans