Professional Documents
Culture Documents
Whirlpool Corporation ( www.whirlpoolcorp.com ) Is a leading producer of room air conditioners. The demand for its units is highly seasonal and also depends on variations in the weather.
Typically Whirlpool begins production of room air conditioners in the fall and holds them as inventory until they are shipped in the spring.
Building inventory in the slack season. When Summers are hotter than usual , demand increases dramatically and stock outs can occur.
If Whirlpool increases output and the summer is hot , it stands to increase its sales and market share. But if the summer is cool , the company is stuck with expensive inventories of unsold machines.
Whirlpools increasingly global Operations , its aggregate demand smoothes out regional variations in demand.
Aggregate Plan
Aggregate Plan: A statement of a
companys production rates, workforce levels, and inventory holding based on estimates of customer requirements and capacity limitations
Service Industry
Staffing Plan Regarding staffs and labor related factors
Manufacturing Industry
Production Plan Regarding production rates and inventory
Aggregate Planning
Production planning in the intermediate range of time is termed as aggregate planning.
Labor-A company can aggregate the workforce in various ways , depending on workforce flexibility. For exp , if workers at the bicycle manufacturer are trained to work on either mountain bikes or road bikes, for planning purposes management can consider its workforce to be a single aggregate group , even though the skills of individual workers may differ.
Objectives
Minimize costs/Maximize profits. Maximize Customer service. Minimize Inventory Investment. Minimize Changes in Production rates. Minimize Changes in workforce levels. Maximize utilization of Plant and Equipment.
Reactive Alternatives.
To Cope with demand requirements
Aggressive Alternatives.
To Modify the demand
Reactive Alternatives
Workforce Adjustment : Hiring or Laying off employees. Suitable when Labor pool is large , when workers are semiskilled or unskilled. Anticipation Inventory :
Workforce Utilization : Overtime , Under time. Vacation Schedules. Subcontractors. Backlogs and Stock outs.
Backlog : An accumulation of customer orders that have been promised for delivery at some future date. Backorder : A customer order that cannot be filled immediately but is filled as soon as possible.
Aggressive Alternatives
Complementary Products : Services and products that have similar resource requirements but different demand cycles.
For Exp- A city parks and recreation department can counterbalance seasonal staffing requirements for summer activities by offering ice skating , or indoor activities during the winter months.
Creative Pricing : Reduction sale during March-April , Reduced Air fare during off seasons.
Operations
Current Machine Capacity Workforce Capacity
Materials
* Supplier capability
Aggregate Plan
Engineering
New Products Product design changes
Human Resources
Labor market conditions Training Capacity
Planning Strategies
Chase Strategy : A strategy that matches demand during the planning horizon by varying either the workforce level or the output rate. Level Strategy : A strategy that maintains a constant workforce level or constant output rate during the planning horizon.
Strategy
Chase 1: Vary workforce
Possible Possible Alternatives During Alternatives During slack season Peak season
Layoffs Hiring
Yes
Move ahead to the next Planning session
Implement and update the plan