Operations Management Case Essay Example | Topics and Well Written Essays - 1250 words

Operations Management Case - Essay ExampleAggregate planning, a medium-range qualification planning system that typically covers a time horizon of anywhere from 3 to 18 months, has as its goal that of achieving a production plan that effectively utilizes the firms resources to satisfy expected demand.Decisions cause to be made on output rates, employment and inventory take aims and changes, back orders, and subcontracting, in effect ascertain not only the output levels planned but also the appropriate resource input undulate to be used. Before we tackle the solution, we summarize the basic assumptions for our calculations.Basic AssumptionsTable 1 contains the 12-month demand picture and our assumptions. Aside from the total output, number of workers, cost assumptions, and labor force parameters addicted in the problem, we would like to sidle up some key assumptions not indicated in the statement of the problem but which have an effect on the solution.The first is the facult y cushion, which determines how much excess inventory we would like to have at the end of the month to act as a buffer for potential variations in demand. A high cushion level would entail inventory costs, while a low level would entail stock-out costs that were neither given. The given initial inventory level of 200 units is equivalent to 22 pct of maximum demand (900 units in October) and 29 percent of year-end demand (600 units). Working on the principles of zero stock-outs and the maximization of resources, we calculated the stock deviation in monthly demand as plus or minus 20 percent and made the convenient assumption to keep the capacity cushion at this level of production capacity or roughly 100 units per month.