Aggregate planning production units

Production planning coordinates manufacturing/operations with the firm s business plan. It develops an aggregate plan that may be stated in dollars or aggregate units of products. For example, it may be stated in one firm in terms of cars to be sold and in another in terms of tons of fabric to be sold. This is not a detailed plan. All the products of the firm are often grouped into families. This is the planned production of the family groups that will meet the expected demand. 

We illnstrate aggregate planning methodologies using Red Tomato Tools. Red Tomato s products are sold through retailers in the United States. Red Tomato s operations consist of the assembly of purchased parts into a multipnrpose gardening tool. Because of the limited equipment and space required for its assembly operations. Red Tomato s capacity is determined mainly by the... 

There are no limits on subcontracting, inventories, and stockouts. All stockouts are back-logged and supplied from the following month s production. Inventory costs are incurred on the ending inventory in each month. The companies goal is to obtain the optimal aggregate plan that leaves at least 500 units of inventory at the end of June (i.e., no stockouts at the end of June and at least 500 units in inventory). The base demand forecast is shown in cells J5 J10 of Figure 9-1. 

Commodity production planning requires to aggregate the process-internal units such as reactors, dryers or tanks into a an aggregate asset planned as a whole with dedicated interfaces of raw material input and production output as shown in the left and right part of the process example. 

Based on Wallace (2004), Sales and Operations Planning (S OP) is a business process that helps companies keep demand and supply in balance. It does that by focusing on aggregate volumes (e.g., product families or product groups), so that, mix issues (individual products and customer orders) can be handled more readily. It occurs on a monthly cycle and displays information in both units and dollars, thus it integrates operational and financial planning. 

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