Aggregate Planning

Aggregate Planning for Effective Production

A good production aggregate planning involves activities that are required to ensure the satisfaction of planned amount of sales while being able to achieve the a firms set objective in terms of profits, lead times and productivity while meeting the needs of the customers(Nahmias & Olsen, 2015). The labour cost analysis indicates that the In-line Industries should use the level scheduling strategy in production process. Writers who offer financial accounting assignment help at Edudorm essay writing service notes that the cost involved in this plan is lower than that of chase strategy. The analysis shows that the total cost incurred during level strategy is $207,000 while the cost in chase scheduling is $229,200. Though the overtime cost that would be required in level strategy is higher at $3120 in order to meet the expected production level, as compared to $1540 for the chase strategy, that cost is offset by the overall cost which is greatly reduced.

Benefits of Using Aggregate Planning

This strategy does not require overtime cost because it can apply other strategies in order to ensure that the production cost is kept at minimum while at the same time ensuring that the level of production in terms of meeting the expected demands is achieved. Even though the company’s products do not have consistency in demand, it can use the level scheduling as the best method of aggregate planning. This strategy sets production at a certain fixed rate to meet average demand. In order to maximise on production the plan would require that the level is maintained at high level throughout the period such that in time of low demand, the company takes advantage and produces as much as possible and the only cost that it would have to incur is inventory holding cost. In order to attain the unmet demand after the workers have utilised their maximum capacity, the company can subcontracting the production of the remaining units required to meet to demand level a supplier who offers favourable price. However, adopting the chase aggregate planning is costly in terms of the investing extra workers and the machines will have to remain idle during the times of low demands. Experts who offer accounting assignment help at Edudorm essay writing service indicates that the company may not manage to maintain highly experienced employees especially when competition is high since they will be acquired by competitors who prefer to keep a competent workers at all times. However, level aggregate planning has benefits to employees who know the amount of working time they have and what is expected of them. Also it does not require the bringing in of temps or the use of much overtime. Use of overtime can strain the workers and it is quite costly. If it becomes the culture of the company any, it will make the employees to expect overtime and include it in their salaries and they attempt to stretch their work to reach overtime and thus get the extra pay (Nahmias & Olsen, 2015). The company may also face resistance when trying to eliminate or have the overtime reduced. They may fight back because their salary payments will reduce.  

Maintain a Stable of Level of Workforce

A level strategy will allow the firm to have an aggregate plan by which it will maintain a stable rate of producing skates and /or stable employment level. So as to satisfy customer demands that keep changing, this firm should use this strategy to raise or lower the stock levels as they anticipate an increase or decrease in the level of demand as forecast. The strategy will also allow the firm to maintain a stable of level of workforce and stable level of production especially when demand is low in the learning periods. The firm will due to this manage to establish higher level of stock in than those needed currently. As the demand for skate is increasing especially on holiday season, Inline Industries will be able to continue with the steady level of producing skates and a steady level of employment, and at the same helping the surplus in stock to absorb the increasing demand. Thus the strength in this strategy is that it allows the firm to keep the level of output constant and still satisfy the customers demand for skates. The overtime cost would be incurred when chase aggregate plan is being applied especially when demand is very high. The other plan that the company would apply to reduce the cost is a hybrid method that combines the level aggregate plan and the chase aggregate plan. Authors who offer business accounting assignment help at Edudorm essay writing service points that this strategy is to use level scheduling plan when the demand is consistent and chase scheduling is used when the demand is fluctuating. This mixed plan employs workers enough to keep the production level that will meet demand in the lowest period, and will stretch to meet demand when it’s at the peak. Some of the techniques that the firm can use include limiting non-productive hours that are off-line, the overtime that may arise, extending the hours that part-time employees would work, or it can also hire temporary employees (Mahadevan, 2010). Where the cost element of materials is not that big, the company can employ a few more people to produce extra skates stock in low season, and then that inventory is held until peak season.

References

Nahmias S., Olsen T. (2015). Production and Operations Analysis: Waveland Press. 7. 140-143

Mahadevan, B. (2010). Operations management: Theory and practice. Upper Saddle River: Pearson. 440-488

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