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Chapter
10 Operations Planning and Scheduling
1. What is Operations Planning and Scheduling?
2. Requires managerial inputs from all of the firm’s functions
3. How is each function affected by the plan?
4. Types of plans with operations planning and scheduling
a. Sales and operations plan (S&OP):
b. Aggregate plan:
c. Production plan:
d. Staffing plan:
e. Resource plan:
f. Schedule:
1. Levels in Operations Planning and Scheduling
1. Level 1: Sales and Operations Planning
a. Types of aggregation
•
•
•
b. Information inputs
c. The relationship of operations plans and schedules to other plans
• A business plan
• An annual plan or financial plan
2. Level 2: Resource Planning
a. Resource planning for manufacturing firms
b. Resource planning for services
3. Level 3: Scheduling
2. S&OP Supply Options
There are six options that can be used singly or in combination to arrive at a plan
• Anticipation Inventory
• Workforce Adjustment
• Workforce Utilization
o Overtime:
o Undertime:
• Part-Time Workers:
• Subcontractors:
• Vacation Schedules:
3. S&OP Strategies
1. Planning strategies
a. Chase strategy
b. Level strategy
c. Mixed strategy
2. Constraints and costs
a. Constraints
•
•
b. Types of costs
•
•
•
•
•
3. Sales and operations planning as a process
a. Step 1:
b. Step 2:
c. Step 3:
d. Step 4:
e. Step 5:
f. Step 6:
4. Spreadsheets for Sales and Operations Planning
1. For a manufacturer where most options are used
• Input values:
• Derived values
2. For a Service Provider
3. Data for Applications 10.1-10.3 for comparing strategies
The Barberton Municipal Division of Road Maintenance is charged with road repair in the
city of Barberton and surrounding area. Cindy Kramer, road maintenance director, must
submit a staffing plan for the next year based on a set schedule for repairs and on the city
budget. Kramer estimates that the labor hours required for the next four quarters are 6,000,
12,000, 19,000, and 9,000, respectively. Each of the 11 workers on the workforce can
contribute 520 hours per quarter. Overtime is limited to 20 percent of the regular-time
capacity in any quarter. Subcontracting is not permitted.
Payroll costs are $6,240 in wages per worker for regular time worked up to 520 hours,
with an overtime pay rate of $18 for each overtime hour. Although unused overtime capacity
has no cost, unused regular time is paid at $12 per hour. The cost of hiring a worker is
$3,000, and the layoff cost of a worker is $2,000.
a. Application 10.1: Chase Strategy
Use a chase strategy for the Barberton Municipal Division that varies the workforce level
without using overtime. Undertime should be minimized, except for the minimal amount
mandated because the quarterly requirements are not integer multiples of 520 hours.
Quarter
1
2
3
4
Total
Forecasted demand (hrs)
6,000
12,000
19,000
9,000
46,000
Workforce level (workers)
12
91
Undertime (hours)
240
1,320
Overtime (hours)
0
0
Utilized time (hours)
6,000
46,000
Hires (workers)
1
26
Layoffs (workers)
0
19
What is the total cost of this plan?
Costs
Utilized time
$72,000
$552,000
Undertime
2,880
15,840
Overtime
0
0
Hires
3,000
78,000
Layoffs
0
38,000
Total Cost =
$683,840
b. Application 10.2: Level Strategy
Find a level workforce plan for the Barberton Municipal Division that allows no delay in road
repair and minimizes undertime. Overtime can be used to its limits in any quarter. Because
the peak demand is in quarter 3:
1.20w =
520
= _____ employee-period equivalents
w = ____ employees
Quarter
1
2
3
4
Total
Forecasted demand (hrs)
6,000
12,000
19,000
9,000
46,000
Workforce level (workers)
Undertime (hours)
10,120
Overtime (hours)
0
Utilized time (hours)
6,000
Hires (workers)
20
Layoffs (workers)
0
What is the cost of your level-utilization workforce plan?
Costs
Utilized time
$72,000
$517,440
Undertime
121,440
256,320
Overtime
0
51,840
Hires
60,000
60,000
Layoffs
0
0
Total Cost =
$885,600
c. Application 10.3: Mixed Strategy
Now propose a plan of your own for the Barberton Municipal Division. Use the chase
strategy as a base, but find a way to decrease the cost of hiring and layoffs by selectively
using some overtime.
Quarter
1
2
3
4
Total
Forecasted demand (hrs)
6,000
12,000
19,000
9,000
46,000
Workforce level (workers)
Undertime (hours)
Overtime (hours)
Utilized time (hours)
Hires (workers)
Layoffs (workers)
Several solutions are possible. The key ideas in creating this one are:
What is the cost of your mixed strategy plan?
Costs
Utilized time
$72,000
$144,000
$193,440
$108,000
$517,440
Undertime
Overtime
Hires
Layoffs
Total Cost =
5. Scheduling
What is scheduling?
1. Job and Facility scheduling
a. Progress Gantt chart
b. Gantt Workstation chart
2. Workforce Scheduling
a. Constraints
• Rotating schedules
• Fixed schedule
b. Developing a workforce schedule
• Step 1:
• Step 2:
• Step 3:
• Step 4:
3. Sequencing jobs at a workstation
a. Priority sequencing rules
b. Performance measures
c. Application 10.4
A consulting company has five jobs in its backlog. A schedule was created using the
FCFS rule and the average days of past due was 3.4 days and the average flow time was
60.2 days. Create a new schedule using the EDD rule, calculating the average days past
due and flow time. In this case, does EDD outperform the FCFS rule?
Customer
Time Since Order
Arrived (days ago)
Processing
Time (days)
Due Date
(days from now)
A
15
25
29
B
12
16
27
C
5
14
68
D
10
10
48
E
0
12
80
Solution
Customer
Sequence
Start
Time
(days)
Processing
Time
(days)
Finish
Time
(days)
Due
Date
Days
Past
Due
Days
Ago
Since
Order
Arrived
Flow
Time
(days)
+
=
+
=
+
=
+
=
+
=
The days past due and average flow time performance for the EDD schedule are:
Average days past due =
++++
= _______ days
Average flow time =
++++
=_________ days
Conclusion:
4. Software support
a. Computerized scheduling systems:
b. Software for sequencing jobs at workstations:
• Advance planning and scheduling (APS) systems
