Chapter 8 - Aggregate Planning in a Supply Chain

Supply Chain
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Chapter 8 - Aggregate Planning in a Supply Chain
Answer 1
Aggregate planning is the process of developing, maintaining and analyzing a preliminary schedule of all of the operations of a company. This plan typically consists of varying sales forecasts, customer backlogs, and different inventory and production levels. It plays an integral role in achieving both short-term and long-term goals and objectives of a company. After going through this chapter, I have learned that three of the most important aggregate planning strategies are Chase Strategy, Flexibility Strategy and Level Strategy (Chopra & Meindl, 2016).
Chase Strategy
Chase strategy is the strategy that is used to chase the demand of the target market. In this type, certain standards have to be maintained and it is ensured that production matches demand. Not only this but also production should not carry a leftover product. It can be regarded as a lean production strategy that helps save a lot on costs. Those who make sports equipment and apparels opt for this strategy. For instance, if 50,000 leather jackets have to be produced in the winter season, then up to 150 employees will be needed for this work. However, in the summer season, the output requirements go down to 4,000 jackets, and this means that the number of employees will also be reduced.
Flexibility Strategy
Flexibility strategy is all about creating a balance between the workforce level and machine capability. In this type, inventories are carried over from a high demand period to a low demand period. It is primarily used by Japanese automobile manufacturers, who invest heavily in designing new parts, which are combined with existing parts and sold in the world’s markets with confidence. Another idea is that these new parts replace the existing parts that are performing poorly.
Level Strategy
The level strategy helps maintain a good production level and steady employment level. This means when the demand is low, then the production can also be reduced, and when the demand is high, then the production is increased. This type of strategy is used by companies in which union representatives have a strong influence. It benefits employees to an extent and is also good to be used when the demand is more than the production capacity of an organization. Costco is a good example.
Answer 2
Linear programming is a tool that we use during the decision-making process. It is primarily used in conditions of uncertainty and has an objective function of minimization or maximization of the variable. In simple words, we can say that linear programming is a comprehensive method used to achieve the most suitable and best outcomes in a mathematical model whose requirements are represented by linear relationships (Chopra & Meindl, 2016). It cannot be used in situations when uncertainty is not present. It’s safe to say that linear programming can be used to solve an aggregate planning problem. Aggregate planning is all about developing and analyzing an approximate schedule and is concerned with the determination of production, workforce and inventory levels. In case of an issue, the involvement of linear programming is considered must as it helps set the organizational pr...