Chapter 5

CAPACITY PLANNING AND AGGREGATE PRODUCTION PLANNING

5.1 Capacity Planning
5.2 Rough Cut Capacity Planning
5. Capacity R!"ui#!$!nt Planning
5.% Input & Output Cont#ol
5.5 Agg#!gat! P#o'uction Planning
5.( Agg#!gat! Planning )o# *!#+ic!,
Hierarchical Planning Process
-y '!t!#$ining a ,t#at!gy )o# $!!ting an' $anaging '!$an'. agg#!gat! planning
p#o+i'!, a )#a$!/o#0 /ithin /hich ,ho#t!#1t!#$ p#o'uction an' capacity '!ci,ion, can
2! $a'!. In p#o'uction planning. th! n!3t l!+!l o) '!tail i, a master production schedule,
in /hich /!!0ly 4not $onthly o# "ua#t!#ly5 p#o'uction plan, a#! ,p!ci)i!' 2y in'i+i'ual
)inal p#o'uct 4not p#o'uct lin!5. At anoth!# l!+!l o) '!tail. material requirements
planning '!al, /ith th! p#o'uction o) th! co$pon!nt, that go into th! )inal p#o'uct,.
Shop floor scheduling ,ch!'ul!, th! $anu)actu#ing op!#ation, #!"ui#!' to $a0! !ach
co$pon!nt.
In capacity planning. /! $ight '!+!lop a resource requirements plan, to +!#i)y that an
agg#!gat! p#o'uction plan i, 'oa2l!. an' a rough-cut capacity plan a, a "uic0 ch!c0 to
,!! i) th! $a,t!# p#o'uction ,ch!'ul! i, )!a,i2l!. On! l!+!l 'o/n. a $uch $o#! '!tail!'
capacity requirements plan that $atch!, th! )acto#y6, $achin! an' la2o# #!,ou#c!, to th!
$at!#ial #!"ui#!$!nt, plan i, '!+!lop!'. 7inally. th! input/output control i, u,!' to
$onito# th! p#o'uction that ta0!, plac! at in'i+i'ual $achin!, o# /o#0 c!nt!#,. At !ach
l!+!l. '!ci,ion, a#! $a'! /ithin th! pa#a$!t!#, ,!t 2y th! high!#1l!+!l '!ci,ion,. Th!
p#oc!,, o) $o+ing )#o$ th! agg#!gat! plan to th! n!3t l!+!l 'o/n i, call!'
disaggregation. Each l!+!l o) p#o'uction an' capacity planning i, ,ho/n in )igu#! 5.1.
Th! )i+! l!+!l, o) capacity planning acti+iti!, #ang! )#o$ la#g! agg#!gation, o) capacity
)o# long ti$! p!#io', to +!#y '!tail!' $achin! ,ch!'uling. )o# an hou# o# ,ho#t!# ti$!
int!#+al.
8o,t o) th! chapt!# 'i,cu,,ion /ill )ocu, on #ough cut capacity planning p#oc!'u#!, 4)o#
$!'iu$ #ang! capacity planning5 an' on th! t!chni"u! call!' capacity #!"ui#!$!nt,
planning 4,ho#t #ang! capacity #!"ui#!$!nt, '!t!#$in!' )o# in'i+i'ual /o#0 c!nt!#,5.
7igu#! 5.1
5.1 Capacity Planning
Capacity planning i, a long1t!#$ ,t#at!gic '!ci,ion that !,ta2li,h!, a )i#$6, o+!#all l!+!l
o) #!,ou#c!,. It !3t!n', o+!# a ti$! ho#i9on long !nough to o2tain tho,! #!,ou#c!,11
u,ually a y!a# o# $o#! )o# 2uil'ing n!/ )aciliti!, o# ac"ui#ing n!/ 2u,in!,,!,. Capacity
'!ci,ion, a))!ct p#o'uct l!a' ti$!,. cu,to$!# #!,pon,i+!n!,,. op!#ating co,t,. an' a )i#$6,
a2ility to co$p!t!. Ina'!"uat! capacity can l!a' to lo,, o) cu,to$!#,. !,calating /o#0 in
p#oc!,,. li$it g#o/th an' )#u,t#at!' $anu)actu#ing p!#,onn!l /ho /ill "uic0ly tu#n 2ac0
to th! in)o#$al ,y,t!$ to ,ol+! p#o2l!$,. E3c!,, capacity can '#ain a co$pany6,
#!,ou#c!, an' p#!+!nt in+!,t$!nt, in $o#! luc#ati+! +!ntu#!,. When to inc#!a,! capacity
an' how much to inc#!a,! capacity a#! c#itical '!ci,ion,.
Th! co$$on capacity !3pan,ion ,t#at!gi!, a#! na$!ly capacity l!a' ,t#at!gy. capacity
lag ,t#at!gy. a+!#ag! capacity ,t#at!gy an' inc#!$!ntal on! ,t!p !3pan,ion ,t#at!gy.
7igu#! 5.2
7igu#! 5.2 4a5. 425. an' 4c5 ,ho/ th#!! 2a,ic ,t#at!gi!, )o# th! ti$ing o) capacity
!3pan,ion in #!lation to a ,t!a'y g#o/th in '!$an'.
Capacity lead strategy. Capacity i, !3pan'!' in anticipation o) '!$an' g#o/th.
Thi, agg#!,,i+! ,t#at!gy i, u,!' to lu#! cu,to$!#, )#o$ co$p!tito#, /ho a#!
capacity con,t#ain!' o# to gain a )oothol' in a #api'ly !3pan'ing $a#0!t.
Capacity lag strategy. Capacity i, inc#!a,!' a)t!# an inc#!a,! in '!$an' ha, 2!!n
'ocu$!nt!'. Thi, con,!#+ati+! ,t#at!gy p#o'uc!, a high!# #!tu#n on in+!,t$!nt
2ut $ay lo,! cu,to$!#, in th! p#oc!,,. It i, u,!' in in'u,t#i!, /ith ,tan'a#'
p#o'uct, an' co,t12a,!' o# /!a0 co$p!tition. Th! ,t#at!gy a,,u$!, that lo,t
cu,to$!#, /ill #!tu#n )#o$ co$p!tito#, a)t!# capacity ha, !3pan'!'.
Average capacity strategy. Capacity i, !3pan'!' to coinci'! /ith a+!#ag!
!3p!ct!' '!$an'. Thi, i, a $o'!#at! ,t#at!gy in /hich $anag!#, a#! c!#tain th!y
/ill 2! a2l! to ,!ll at l!a,t ,o$! po#tion o) th! a''itional output.
Con,i'!# high!# !'ucation6, ,t#at!gy in p#!pa#ing )o# a t#ipling o) th! ,tat!6, coll!g!1
2oun' population in th! n!3t '!ca'!. An !,ta2li,h!' uni+!#,ity. gua#ant!!' applicant,
!+!n in l!an y!a#,. $ay )ollo/ a capacity lag ,t#at!gy. A young uni+!#,ity $ight l!a'
capacity !3pan,ion in hop!, o) captu#ing tho,! ,tu'!nt, not a'$itt!' to th! $o#!
!,ta2li,h!' uni+!#,iti!,. A co$$unity coll!g! $ay choo,! th! a+!#ag! capacity ,t#at!gy
to )ul)ill it, $i,,ion o) !'ucating th! ,tat!6, youth 2ut /ith littl! #i,0.
:o/ $uch to inc#!a,! capacity '!p!n', on 415 th! +olu$! an' c!#tainty o) anticipat!'
demand; 425 strategic o!ectives in t!#$, o) g#o/th. cu,to$!# ,!#+ic!. an' co$p!tition;
an' 45 th! costs o) !3pan,ion an' op!#ation.
Capacity can 2! inc#!a,!' inc#!$!ntally o# in on! la#g! ,t!p a, ,ho/n in 7igu#! 5.24'5.
Inc#!$!ntal !3pan,ion i, l!,, #i,0y 2ut $o#! co,tly. An att#acti+! alt!#nati+! to !3pan'ing
capacity i, outsourcing, in /hich ,uppli!#, a2,o#2 th! #i,0 o) '!$an' unc!#tainty.
Th! best operating level )o# a )acility i, th! p!#c!nt o) capacity utili9ation that $ini$i9!,
a+!#ag! unit co,t. Ra#!ly i, th! 2!,t op!#ating l!+!l at 1<< p!#c!nt o) capacity11at high!#
l!+!l, o) utili9ation. p#o'ucti+ity ,lo/, an' thing, ,ta#t to go /#ong. A+!#ag! capacity
utili9ation 'i))!#, 2y in'u,t#y. An in'u,t#y /ith an =< p!#c!nt a+!#ag! utili9ation /oul'
ha+! a 2< p!#c!nt capacity cushion )o# un!3p!ct!' ,u#g!, in '!$an' o# t!$po#a#y /o#0
,toppag!,. La#g! capacity cu,hion, a#! co$$on in in'u,t#i!, /h!#! '!$an' i, highly
+a#ia2l!. #!,ou#c! )l!3i2ility i, lo/. an' cu,to$!# ,!#+ic! i, i$po#tant. Utiliti!,. )o#
!3a$pl!. $aintain a 2< p!#c!nt capacity cu,hion. Capital1int!n,i+! in'u,t#i!, /ith l!,,
)l!3i2ility an' high!# co,t, $aintain cu,hion, un'!# 1< p!#c!nt. Ai#lin!, $aintain a
n!gati+! cu,hion11o+!#2oo0ing i, a co$$on p#actic!>
7igu#! 5.
7igu#! 5. ,ho/, th! 2!,t op!#ating l!+!l11in thi, ca,!. th! opti$al occupancy #at!11)o#
th#!! 'i))!#!nt ,i9! hot!l,. O) th! th#!! alt!#nati+!,. th! 5<<1#oo$ hot!l ha, th! lo/!,t
a+!#ag! unit co,t. Thi, i, th! point /h!#! th! economies of scale ha+! #!ach!' th!i# p!a0
an' th! diseconomies of scale ha+! not y!t 2!gun.
:igh l!+!l, o) output t!n' to co,t l!,, p!# unit. Call!' economies of scale, thi, hol', t#u!
/h!n?
7i3!' co,t, can 2! ,p#!a' o+!# a la#g!# nu$2!# o) unit,.
P#o'uction co,t, 'o not inc#!a,! lin!a#ly /ith output l!+!l,.
@uantity 'i,count, a#! a+aila2l! )o# $at!#ial pu#cha,!,. an'
P#o'uction !))ici!ncy inc#!a,!, a, /o#0!#, gain !3p!#i!nc!.
Th! !l!ct#onic, in'u,t#y p#o+i'!, a goo' ca,! !3a$pl! o) !cono$i!, o) ,cal!. Th!
a+!#ag! co,t p!# chip plac!$!nt )o# p#int!' ci#cuit12oa#' a,,!$2ly i, 2 c!nt, in )acto#i!,
/ith a +olu$! o) 25 $illion plac!$!nt,. 15 c!nt, in )acto#i!, /ith 2<< $illion
plac!$!nt,. an' only 1< c!nt, in )acto#i!, /ith =<< $illion plac!$!nt,.
Econo$i!, o) ,cal! 'o not continu! in'!)init!ly. A2o+! a c!#tain l!+!l o) output.
diseconomies of scale can occu#. O+!#ta3!' $achin!, an' $at!#ial han'ling !"uip$!nt
2#!a0 'o/n. ,!#+ic! ti$! ,lo/,. "uality ,u))!#, #!"ui#ing $o#! #!/o#0. la2o# co,t,
inc#!a,! /ith o+!#ti$!. an' coo#'ination an' $anag!$!nt acti+iti!, 2!co$! 'i))icult. In
a''ition. i) cu,to$!# p#!)!#!nc!, ,u''!nly chang!. high1+olu$! p#o'uction can l!a+! a
)i#$ /ith unu,a2l! in+!nto#y an' !3c!,, capacity.
Long1t!#$ capacity '!ci,ion, conc!#ning th! nu$2!# o) )aciliti!, an' )acility ,i9! p#o+i'!
th! )#a$!/o#0 )o# $a0ing $o#! int!#$!'iat!1t!#$ capacity '!ci,ion,11,uch a, in+!nto#y
polici!,. p#o'uction #at!,. an' ,ta))ing l!+!l,. Th!,! '!ci,ion, a#! coll!cti+!ly 0no/n a,
aggregate production planning o# Au,t plain aggregate planning.
5.2 Rough1Cut Capacity Planning
Rough1cut capacity planning ch!c0, /h!th!# c#itical #!,ou#c!, a#! a+aila2l! to ,uppo#t
th! p#!li$ina#y $a,t!# ,ch!'ul!. A resource bill ,ho/, th! ti$! #!"ui#!' )o# in'i+i'ual
it!$, on a c#itical #!,ou#c!. Onc! th! p#!li$ina#y 8P*, a#! $a'!. th!y $u,t 2! ch!c0!'
again,t th! a+aila2l! capacity. Thi, p#oc!,, i, call!' #ough1cut capacity planning; it,
pu#po,! i, to ch!c0 /h!th!# c#itical #!,ou#c!, a#! a+aila2l! to ,uppo#t th! $a,t!#
p#o'uction ,ch!'ul!.
A 0!y conc!#n in ou# a2ility to $!!t th! $a,t!# ,ch!'ul! i, th! !3i,t!nc! o) bottlenecks.
You $ay not 0no/ /h!#! you# 2ottl!n!c0 /o#0 c!nt!#, a#!. 2ut you can 2! ,u#! you ha+!
th!$. *uppo,! you ha+! in+!nto#y pil!' up at !ach /o#0 c!nt!#. *o$!thing i, '!)init!ly
/#ong. At you# 2ottl!n!c0 /o#0 c!nt!#. you /ant to ha+! a 2ac0log o) /o#0 ,o that itB,
n!+!# out o) $at!#ial. 2ut !+!#ything up,t#!a$ o) th! 2ottl!n!c0 c!nt!# ,houl'nBt ha+!
2ac0log; th!y ,houl' 2! #unning /ith !3c!,, capacity. It $ay 2! n!c!,,a#y to ta0! /o#0
o#'!#, o)) th! ,hop )loo# an' #!$o+! CIP )#o$ th! /o#0 c!nt!#,.
I) thatB, th! ca,!. you n!!' to 'o a #ough1cut capacity ch!c0. Ch!c0 tho,! 0!y /o#0
c!nt!#, an' ch!c0 you# #!,ou#c! 2ill. 8a0! ,u#! you can 2uil' /hat you n!!' to. YouBll
p#o2a2ly )in' that you# '!$an' an' you# #!,ou#c!, a#! out o) 2alanc!. Onc! you )in' out
that th!y a#! out o) 2alanc!. th! n!3t thing youB#! going to ha+! to 'o i, chang!
,o$!thing.
YouB#! going to ha+! to inc#!a,! capacity i) you n!!' $o#! capacity; youB#! going to
ha+! to g!t $o#! $at!#ial i) you n!!' $o#! $at!#ial; youB#! going to ha+! to ,hi)t ,0ill, i)
thatB, /hat you n!!'. You $ay al,o ha+! to chang! th! $a,t!# ,ch!'ul!. ChatD Chang!
th! $a,t!# ,ch!'ul!D O) cou#,!> Th! $a,t!# ,ch!'ul! i, ,i$ply a tool.
5. Capacity R!"ui#!$!nt, Planning 4CRP5
Capacity requirements planning (CP! i, a co$put!#i9!' ,y,t!$ that p#oA!ct, th! loa'
)#o$ a gi+!n $at!#ial plan onto th! capacity o) a ,y,t!$ an' i'!nti)i!, un'!# loa', an'
o+!#loa',. It i, th!n up to th! 8RP plann!# to level the load11,$ooth out th! #!,ou#c!
#!"ui#!$!nt, ,o that capacity con,t#aint, a#! not +iolat!'. Thi, can 2! acco$pli,h!' 2y
,hi)ting #!"ui#!$!nt,. #!'ucing #!"ui#!$!nt,. o# t!$po#a#ily !3pan'ing capacity.
Th!#! a#! th#!! $aAo# input, to CRP. a, ,ho/n in )igu#! 5.%
7igu#! 5.%
Th! planned order releases )#o$ th! 8RP p#oc!,,;
A routing file, /hich ,p!ci)i!, /hich $achin!, a#! #!"ui#!' to co$pl!t! an o#'!#
)#o$ th! 8RP plan. in /hat o#'!# th! op!#ation, a#! to 2! con'uct!'. an' th!
l!ngth o) ti$! !ach op!#ation ,houl' ta0!; an'
An open orders file, /hich contain, in)o#$ation on th! ,tatu, o) Ao2, that ha+!
al#!a'y 2!!n #!l!a,!' to th! ,hop 2ut ha+! not y!t 2!!n co$pl!t!'.
Cith thi, in)o#$ation. CRP can p#o'uc! a load profile )o# !ach $achin! o# /o#0 c!nt!#
in th! ,hop. Th! loa' p#o)il! co$pa#!, #!l!a,!' o#'!#, an' plann!' o#'!#, /ith /o#0
c!nt!# capacity.
Capacity, u,ually !3p#!,,!' a, ,tan'a#' $achin! hou#, o# la2o# hou#,. i, calculat!' a,
)ollo/,?
Capacity E 4no. $achin!, o# /o#0!#,5 F 4no. ,hi)t,5 F 4utili9ation5 F 4!))ici!ncy5
"tili#ation #!)!#, to th! p!#c!ntag! o) a+aila2l! /o#0ing ti$! that a /o#0!# actually
/o#0, o# a $achin! actually #un,. *ch!'ul!' $aint!nanc!. lunch 2#!a0,. an' ,!tup ti$!
a#! !3a$pl!, o) acti+iti!, that #!'uc! actual /o#0ing ti$!. $fficiency #!)!#, to ho/ /!ll
a $achin! o# /o#0!# p!#)o#$, co$pa#!' to a ,tan'a#' output l!+!l. *tan'a#', can 2!
2a,!' on pa,t #!co#', o) p!#)o#$anc! o# can 2! '!+!lop!' )#o$ th! /o#01$!a,u#!$!nt
t!chni"u!,. An !))ici!ncy o) 1<< p!#c!nt i, con,i'!#!' no#$al o# ,tan'a#' p!#)o#$anc!.
125 p!#c!nt i, a2o+! no#$al. an' G< p!#c!nt i, 2!lo/ no#$al. E))ici!ncy i, al,o
'!p!n'!nt on p#o'uct $i3. *o$! o#'!#, o2+iou,ly /ill ta0! long!# than oth!#, to p#oc!,,.
an' ,o$! $achin!, o# /o#0!#, $ay 2! 2!tt!# at p#oc!,,ing c!#tain typ!, o) o#'!#,.
%oad i, th! ,tan'a#' hou#, o) /o#0 4o# !"ui+al!nt unit, o) p#o'uction5 a,,ign!' to a
p#o'uction )acility. A)t!# loa' an' capacity ha+! 2!!n '!t!#$in!'. a load percent can 2!
calculat!' a,
C!nt!#, loa'!' a2o+! 1<< p!#c!nt /ill not 2! a2l! to co$pl!t! th! ,ch!'ul!' /o#0
/ithout ,o$! a'Au,t$!nt in capacity o# #!'uction in loa'.
EXAMPLE
5.1
Determining
Loads and
Capacities
Copy Courier is a fledging copy center in downtown Richmond run by two college
students. Currently, the equipment consists of two high-speed copiers that can be
operated by one operator. If the students work alone, it is conceivable that two shifts
per day can be staffed. The students each work 8 hours a day, 5 days a week. They do
not take breaks during the day, but they do allow themselves 30 minutes for lunch or
dinner. In addition, they service the machines for about 30 minutes at the beginning of
each shift. The time required to set up for each order varies by the type of paper, use
of color, number of copies, and so on. Estimates of setup time are kept with each
order. Since the machines are new, their efficiency is estimated at 100 percent.
Due to extensive advertising and new customer incentives, orders have been pouring
in. The students need help determining the capacity of their operation and the current
load on their facility. Use the following information to calculate the normal daily
capacity of Copy Courier and to project next Monday's load profile and load percent:
SOLUTION:
The machines and/or operators at Copy Courier are out of service for 1 hour each shift
for maintenance and lunch. Utilization is, thus, 7/8, or 87.5 percent. Daily copy shop
capacity is
2 machines F 2 shifts F8 hours/shift F100% efficiency F 87.5% utilization
= 28 hours or 1,680 minutes
The projected load for Monday of next week is as follows:
Copy Courier is loaded 42 percent over capacity next Monday.
Increasing utilization (even to 100 percent) would not be sufficient to get the work
done. To complete the customer orders on time, another shift could be added (i.e.,
another person hired). With this adjustment, the copy shop's daily capacity would
increase to
2 machines F 3 shifts F 8 hours/shift F 100% efficiency F 87.5% utilization
= 42 hours or 2,520 minutes
The revised load percent is:
In the future, Copy Courier should determine if it has enough capacity to complete a
job by the customer's requested due date before the job is accepted.
Loa' p#o)il!, can 2! 'i,play!' g#aphically. a, ,ho/n in )igu#! 5.5. Th! no#$al capacity
o) $achin! 2A i, %< hou#, p!# /!!0. C! can ,!! that th! $achin! i, underloaded in
p!#io', 1. 5. an' (. an' overloaded in p!#io', 2. . an' %.
Figure 5.5: Load profile for machine 32A
Under-loaded conditions can be leveled by:
1. Ac"ui#ing $o#! /o#0;
2. "ulling wor# ahead that i, ,ch!'ul!' )o# lat!# p!#io',; o#
. R!'ucing no#$al capacity.
A''itional /o#0 can 2! ac"ui#!' 2y t#an,)!##ing ,i$ila# /o#0 )#o$ oth!# $achin!, in th!
,a$! ,hop that a#! n!a# o# o+!# capacity. 2y $a0ing co$pon!nt, in1hou,! that a#!
no#$ally pu#cha,!' )#o$ out,i'! ,uppli!#,. o# 2y ,!!0ing /o#0 )#o$ out,i'! ,ou#c!,.
Pulling /o#0 ah!a' ,!!$, li0! a "uic0 an' !a,y alt!#nati+! to all!+iat! 2oth un'!#1loa',
an' o+!#loa',. :o/!+!#. /! $u,t #!$!$2!# that th! 8RP plan /a, '!+i,!' 2a,!' on an
int!##!lat!' p#o'uct ,t#uctu#!. ,o th! )!a,i2ility o) ,ch!'uling /o#0 in an !a#li!# ti$!
p!#io' i, conting!nt on th! a+aila2ility o) #!"ui#!' $at!#ial, o# co$pon!nt,. In a''ition.
/o#0 co$pl!t!' p#io# to it, 'u! 'at! $u,t 2! ,to#!' in in+!nto#y an' thu, incu#, a hol'ing
co,t. Ch!n /o#0 i, ,hi)t!' to oth!# ti$! p!#io',. th! 8RP plan ,houl' 2! #!#un to ch!c0
th! )!a,i2ility o) th! p#opo,!' ,ch!'ul!.
I) an un'!# loa'!' con'ition continu!, )o# ,o$! ti$!. #!'ucing th! ,i9! o) th! /o#0)o#c!
$ay 2! n!c!,,a#y. *$all!# un'!# loa', can 2! han'l!' 2y #!'ucing th! l!ngth o) th!
/o#0ing 'ay o# /o#0/!!0. 2y ,ch!'uling i'l!' /o#0!#, )o# t#aining ,!,,ion, o# +acation,.
o# 2y t#an,)!##ing /o#0!#, to oth!# po,ition, at $achin! c!nt!#, o# '!pa#t$!nt, /h!#!
o+!#loa', a#! occu##ing.
O+!#loa'!' con'ition, a#! th! p#i$a#y conc!#n o) th! 8RP plann!# 2!cau,! an
o+!#loa'!' ,ch!'ul! l!)t unch!c0!' cannot po,,i2ly 2! co$pl!t!' a, plann!'. O+!#loa',
can 2! #!'uc!' 2y?
1. Eli$inating unn!c!,,a#y #!"ui#!$!nt,;
2. R!#outing Ao2, to alt!#nati+! $achin!, o# /o#0 c!nt!#,;
. *plitting lot, 2!t/!!n t/o o# $o#! $achin!,;
%. Inc#!a,ing no#$al capacity;
5. *u2cont#acting;
(. Inc#!a,ing th! !))ici!ncy o) th! op!#ation;
H. Pu,hing /o#0 2ac0 to lat!# ti$! p!#io',; o#
=. R!+i,ing th! $a,t!# ,ch!'ul!.
*o$! capacity p#o2l!$, a#! g!n!#at!' )#o$ an 8RP plan that inclu'!, lot ,i9!,. ,a)!ty
,toc0. o# un,u2,tantiat!' #!"ui#!$!nt, )o# ,!#+ic! pa#t, o# )o#!ca,t!' '!$an'. To +!#i)y
that a capacity o+!#loa' i, cau,!' 2y I#!alI n!!'. th! plann!# $ight !3a$in! th! 8RP
$at#ic!, o) th! it!$, p#oc!,,!' th#ough a $achin! c!nt!# 'u#ing an o+!#loa'!' p!#io' a,
/!ll a, th! $at#ic!, o) th! pa#!nt, o) tho,! it!$, p#oc!,,!'. all th! /ay up th! p#o'uct
,t#uctu#! to th! $a,t!# ,ch!'ul!. O#. th! 8RP ,y,t!$ coul' 2! #!#un /ith lot ,i9!,
t!$po#a#ily ,!t to on! an' ,a)!ty ,toc0 to 9!#o to ,!! i) th! capacity p#o2l!$ i,
!li$inat!'.
8RP ,y,t!$, a,,u$! that an !nti#! lot o) goo', i, p#oc!,,!' at on! $achin!. Gi+!n th!
Ao2 ,hop !n+i#on$!nt in /hich $o,t 8RP ,y,t!$, a#! in,tall!'. th!#! a#! u,ually ,!+!#al
$achin!, that can p!#)o#$ th! ,a$! Ao2 4although p!#hap, not a, !))ici!ntly5. Cith CRP.
loa' p#o)il!, a#! '!t!#$in!' /ith Ao2, a,,ign!' to th! p#!)!##!' $achin! )i#,t. 2ut /h!n
capacity p#o2l!$, occu#. Ao2, can c!#tainly 2! #!a,,ign!' to alt!#nat! $achin!,. In
a''ition. i) t/o o# $o#! ,i$ila# $achin!, a#! a+aila2l! at th! ,a$! ti$!. it $ay 2!
po,,i2l! to split a 2atch11that i,. a,,ign pa#t o) an o#'!# to on! $achin! an' th! #!$ain'!#
to anoth!# $achin!.
EXAMPLE
5.2
Splitting Orders
Duffy's Machine Shop has a shortage of lathes. Next week's schedule loaded the lathe
department 125 percent. Management's usual response is to schedule overtime, but the
company is in a tight financial bind and wants to evaluate other options. The shop
supervisor, who has been reading about methods for reducing processing time, suggests
something called order splitting.
It turns out that some of the lathe work can actually be performed on a milling machine,
but it is rarely done that way because the process takes longer and the setup is more
involved. Setup time for lathes averages 30 minutes, whereas setup for milling machines
averages 45 minutes. Processing time per piece is 5 minutes on the lathe, compared to 10
minutes on the milling machine. Management is wondering what the effect would be of
producing an entire order of 100 pieces on the lathe or splitting the order in half between
the lathe and milling machine. Further, if the objective is to complete the order as soon
as possible, is there an optimum split between the two types of machines?
SOLUTION:
If the order were processed on lathe alone, it would take
If the order were equally split between lathe and milling machine, the processing time at
each machine would be:
Assuming that the lathe and milling machine are run simultaneously, the completion
time for the entire order of 100 units is calculated by determining the completion time at
each machine and taking the largest number, in this case, 545 minutes. Thus, if the order
were equally split between the two machines, it would actually take longer to complete.
Determining the optimal split between machines requires algebra. We want the
machines to finish processing at the same time, so we need to equate the processing-time
equations for each machine and solve for the optimum number of units processed. If we
let x represent the number of units processed on the lathe, then (100 x) is the number
of units processed on the milling machine.
Thus, the optimal split would process 68 units on the lathe and 32 units on the milling
machine. Completion time for the optimal split is calculated as follows:
By splitting the order, it can be completed in 370 minutes, versus the 530 minutes on the
lathe alone. That is a 39 percent reduction in processing time. Applied to the weekly
demand, the 25 percent overload could be alleviated by splitting orders.
No#$al capacity can 2! inc#!a,!' 2y a''ing !3t#a hou#, to th! /o#0'ay. !3t#a 'ay, to th!
/o#0/!!0. o# !3t#a ,hi)t,. T!$po#a#y o+!#loa', a#! u,ually han'l!' /ith o+!#ti$!. 8o#!
!3t!n,i+! o+!#loa', $ay #!"ui#! hi#ing a''itional /o#0!#,. Co#0 can al,o 2! out,ou#c!'.
I$p#o+ing th! !))ici!ncy o) an op!#ation inc#!a,!, it, capacity. A,,igning th! $o,t
!))ici!nt /o#0!#, to an o+!#loa'!' $achin!. i$p#o+ing th! op!#ating p#oc!'u#!, o# tool,.
o# '!c#!a,ing th! p!#c!ntag! o) it!$, that n!!' to 2! #!/o#0!' o# ,c#app!' inc#!a,!,
!))ici!ncy an' allo/, $o#! it!$, to 2! p#oc!,,!' in th! ,a$! a$ount o) ti$!. -!cau,!
output inc#!a,!, /ith th! ,a$! a$ount o) input. productivity inc#!a,!,. Thi, i, !,p!cially
u,!)ul )o# all!+iating ch#onic o+!#loa', at 2ottl!n!c0 op!#ation,. 2ut it 'o!, ta0! ti$! to
put into !))!ct.
I) lat!# ti$! p!#io', a#! un'!# loa'!'. it $ay 2! po,,i2l! to pu,h /o#0 2ac0 to tho,!
p!#io',. ,o that th! /o#0 i, co$pl!t!' 2ut lat!# than o#iginally ,ch!'ul!'. Th!#! a#! t/o
p#o2l!$, /ith thi, app#oach. 7i#,t. po,tponing ,o$! Ao2, coul' th#o/ th! !nti#! ,ch!'ul!
o)). $!aning cu,to$!#, /ill not #!c!i+! th! goo', /h!n p#o$i,!'. Thi, coul' in+ol+! a
p!nalty )o# lat! '!li+!#y. lo,, o) an o#'!#. o# lo,, o) a cu,to$!#. *!con'. )illing up th!
lat!# ti$! p!#io', $ay p#!clu'! acc!pting n!/ o#'!#, in tho,! p!#io',. It i, no#$al )o#
ti$! p!#io', )u#th!# in th! )utu#! to 2! un'!# loa'!'. A, th!,! p!#io', '#a/ n!a#!#.
cu,to$!# o#'!#, acc!l!#at! an' 2!gin ta0ing up $o#! o) th! ,y,t!$6, capacity.
I) all th! p#!c!'ing app#oach!, to #!$!'ying o+!#loa', ha+! 2!!n t#i!'. 2ut an o+!#loa'
,till !3i,t,. th! only option i, to #!+i,! th! $a,t!# ,ch!'ul!. That $!an, ,o$! cu,to$!#
/ill not #!c!i+! goo', a, p#!+iou,ly p#o$i,!'. Th! plann!#. in conAunction /ith ,o$!on!
)#o$ $a#0!ting. ,houl' '!t!#$in! /hich cu,to$!# ha, th! lo/!,t p#io#ity an' /h!th!# it,
o#'!# ,houl' 2! po,tpon!' o# canc!l!'.
Th!#! a#! co,t con,!"u!nc!, a,,ociat!' /ith !ach o) th!,! alt!#nati+!,. 2ut th!#! i,
u,ually no att!$pt to '!#i+! an opti$u$ ,olution. 8o#! than li0!ly. th! 8RP plann!# /ill
u,! th! option, that p#o'uc! a )!a,i2l! ,olution "uic0ly. In $any $anu)actu#ing
!n+i#on$!nt,. n!/ cu,to$!# o#'!#, a##i+! 'aily. an' )!a,i2l! 8RP plan, can 2!co$!
in)!a,i2l! o+!#night.
7igu#! 5.(
7igu#! 5.( ,ho/, on! po,,i2l! #!$!'y )o# th! o+!#loa', ,ho/n in 7igu#! 5.5. T!n hou#,
o) /o#0 a#! pull!' ah!a' )#o$ p!#io' 2 to p!#io' 1. T!n hou#, o) o+!#ti$! a#! a,,ign!' in
p!#io' 2. An !nti#! %<1hou# ,hi)t i, a''!' in p!#io' . T!n hou#, o) /o#0 )#o$ p!#io' %
a#! pu,h!' 2ac0 to p!#io' 5. an' 2< hou#, a#! pu,h!' 2ac0 to p!#io' (.
CRP identifies capacity p#o2l!$,. 2ut th! plann!# solves th! p#o2l!$,. Cith !3p!#i!nc!.
th! ta,0 o) ,hi)ting /o#0 an' l!+!ling loa', i, not a, )o#$i'a2l! a, it app!a#,. :o/!+!#. it
i, h!lp)ul i) th! initial loa' p#o)il! i, a, accu#at! a, po,,i2l! an' i) p#!+iou, planning
,tag!, 4i.!. agg#!gat! p#o'uction planning an' $a,t!# p#o'uction ,ch!'uling5 ha+!
con,i'!#!' capacity con,t#aint,. *o$! co$pani!, )o#$ali9! capacity planning at !ach
,tag! o) p#o'uction planning. $esource requirements planning i, a,,ociat!' /ith an
agg#!gat! p#o'uction plan. an' rough-cut capacity planning i, p!#)o#$!' p#io# to th!
app#o+al o) a $a,t!# ,ch!'ul!. Capacity #!"ui#!$!nt, planning $ay ,till 2! p!#)o#$!' on
th! $at!#ial #!"ui#!$!nt, plan. 2ut it, #ol! i, to )in!1tun! !3i,ting #!,ou#c!,. #ath!# than
to )in' o# '!+!lop n!/ #!,ou#c!,.
Onc! th! )!a,i2ility o) an 8RP plan ha, 2!!n +!#i)i!' 2y CRP. th! plan can 2! !3!cut!'
2y #!l!a,ing o#'!#, in th! ti$! p!#io', in'icat!'. Ea#ly 8RP ,y,t!$, ha' no $!chani,$
)o# $onito#ing th! ,ucc!,, o) th!i# plan,. To'ay6, 8RP ,y,t!$, inclu'! !la2o#at!
capacity an' #!po#ting $o'ul!, )o# ,ch!'uling an' $onito#ing 'aily /o#0 #!"ui#!$!nt,.
5.% Input & Output Cont#ol
&nput'output (&'(! control $onito#, th! input to an' output )#o$ !ach /o#0 c!nt!#. P#io#
to ,uch analy,i,. it /a, co$$on to !3a$in! only th! output )#o$ a /o#0 c!nt!# an' to
co$pa#! th! actual output /ith th! output plann!' in th! ,hop ,ch!'ul!. U,ing that
app#oach in a Ao2 ,hop !n+i#on$!nt in /hich th! p!#)o#$anc! o) 'i))!#!nt /o#0 c!nt!#, i,
int!##!lat!' $ay #!,ult in !##on!ou, conclu,ion, a2out th! ,ou#c! o) a p#o2l!$. R!'uc!'
output at on! point in th! p#o'uction p#oc!,, $ay 2! cau,!' 2y p#o2l!$, at th! cu##!nt
/o#0 c!nt!#. 2ut it $ay al,o 2! cau,!' 2y p#o2l!$, at p#!+iou, /o#0 c!nt!#, that feed th!
cu##!nt /o#0 c!nt!#. Thu,. to i'!nti)y $o#! cl!a#ly th! ,ou#c! o) a p#o2l!$. th! input to a
/o#0 c!nt!# $u,t 2! co$pa#!' /ith th! planned input, an' th! output $u,t 2! co$pa#!'
/ith th! planned output. D!+iation, 2!t/!!n plann!' an' actual +alu!, a#! calculat!'.
an' th!i# cu$ulati+! !))!ct, a#! o2,!#+!'. Th! #!,ulting 2ac0log o# "u!u! ,i9! i,
$onito#!' to !n,u#! that it ,tay, /ithin a $anag!a2l! #ang!.
Th! input #at! to a /o#0 c!nt!# can 2! cont#oll!' only )o# th! initial op!#ation, o) a Ao2.
Th!,! )i#,t /o#0 c!nt!#, a#! o)t!n call!' gateway /o#0 c!nt!#,. 2!cau,! th! $aAo#ity o)
Ao2, $u,t pa,, th#ough th!$ 2!)o#! ,u2,!"u!nt op!#ation, a#! p!#)o#$!'. Input to lat!#
op!#ation,. p!#)o#$!' at downstream /o#0 c!nt!#,. i, 'i))icult to cont#ol 2!cau,! it i, a
)unction o) ho/ /!ll th! #!,t o) th! ,hop i, op!#ating11that i,. /h!#! "u!u!, a#! )o#$ing
an' ho/ ,$oothly Ao2, a#! p#og#!,,ing th#ough th! ,y,t!$. Th! '!+iation o) plann!' to
actual input )o# 'o/n,t#!a$ /o#0 c!nt!#, can 2! $ini$i9!' 2y cont#olling th! output
#at!, o) )!!'ing /o#0 c!nt!#,. Th! u,! o) input&output #!po#t, can 2!,t 2! illu,t#at!' /ith
an !3a$pl!.
EXAMPLE
8.4
Input/Output
Control
The following information has been compiled in an input/output report for work center
5. Complete the report and interpret the results.
SOLUTION:
The input/output report has planned a level production of 75 units per period for work
center 5. This is to be accomplished by working off the backlog of work and steadily
increasing the input of work.
The report is completed by calculating the deviation of (actual-planned) for both inputs
and outputs and then summing the values in the respective planned, actual, and
deviation rows. The initial backlog (at the beginning of period 1) is 30 units.
Subsequent backlogs are calculated by subtracting each period's actual output from the
sum of its actual input and previous backlog.
The completed input/output report shows that work center 5 did not process all the jobs
that were available during the four periods; therefore, the desired output rate was not
achieved. This can be attributed to a lower-than-expected input of work from feeding
work centers. The I/O reports from those work centers need to be examined to locate
the source of the problem.
Input&output cont#ol p#o+i'!, th! in)o#$ation n!c!,,a#y to #!gulat! th! )lo/ o) /o#0 to
an' )#o$ a n!t/o#0 o) /o#0 c!nt!#,. Inc#!a,ing th! capacity o) a /o#0 c!nt!# that i,
p#oc!,,ing all th! /o#0 a+aila2l! to it /ill not inc#!a,! output. Th! ,ou#c! o) th! p#o2l!$
n!!', to 2! i'!nti)i!'. E3c!,,i+! "u!u!,. o# ac#logs, a#! on! in'ication that ottlenec#s
!3i,t. To all!+iat! 2ottl!n!c0 /o#0 c!nt!#,. th! p#o2l!$ cau,ing th! 2ac0log can 2!
/o#0!' on. th! capacity o) th! /o#0 c!nt!# can 2! a'Au,t!'. o# input to th! /o#0 c!nt!#
can 2! #!'uc!'. Inc#!a,ing th! input to a 2ottl!n!c0 /o#0 c!nt!# /ill not inc#!a,! th!
c!nt!#6, output. It /ill $!#!ly clog th! ,y,t!$ )u#th!# an' c#!at! long!# "u!u!, o) /o#01
in1p#oc!,,.
5.5 Agg#!gat! P#o'uction Planning
Agg#!gat! p#o'uction planning 4APP5 '!t!#$in!, th! #!,ou#c! capacity a )i#$ /ill n!!'
to $!!t it, '!$an' o+!# an int!#$!'iat! ti$! ho#i9on11,i3 to t/!l+! $onth, in th! )utu#!.
Cithin thi, ti$! )#a$!. it i, u,ually not )!a,i2l! to inc#!a,! capacity 2y 2uil'ing n!/
)aciliti!, o# pu#cha,ing n!/ !"uip$!nt; ho/!+!#. it is )!a,i2l! to hi#! o# lay o)) /o#0!#,.
inc#!a,! o# #!'uc! th! /o#0 /!!0. a'' an !3t#a ,hi)t. ,u2cont#act out /o#0. u,! o+!#ti$!.
o# 2uil' up an' '!pl!t! in+!nto#y l!+!l,.
C! u,! th! t!#$ aggregate 2!cau,! th! plan, a#! '!+!lop!' )o# p#o'uct lin!, o# p#o'uct
)a$ili!,. #ath!# than in'i+i'ual p#o'uct,. An agg#!gat! p#o'uction plan $ight ,p!ci)y
ho/ $any 2icycl!, a#! to 2! p#o'uc!' 2ut /oul' not i'!nti)y th!$ 2y colo#. ,i9!. ti#!,. o#
typ! o) 2#a0!,. R!,ou#c! capacity i, al,o !3p#!,,!' in agg#!gat! t!#$,. typically a, la2o#
o# $achin! hou#,. La2o# hou#, /oul' not 2! ,p!ci)i!' 2y typ! o) la2o#. no# $achin!
hou#, 2y typ! o) $achin!. An' th!y $ay 2! gi+!n only )o# c#itical /o#0 c!nt!#,.
7o# ,!#+ic!,. capacity i, o)t!n li$it!' 2y space--nu$2!# o) ai#lin! ,!at,. nu$2!# o) hot!l
#oo$,. nu$2!# o) 2!', in a co##!ctional )acility. %ime can al,o a))!ct capacity. Th!
nu$2!# o) cu,to$!#, /ho can 2! ,!#+!' lunch in a #!,tau#ant i, li$it!' 2y th! nu$2!# o)
,!at,. a, /!ll a, th! nu$2!# o) hou#, lunch i, ,!#+!'. In o+!#c#o/'!' ,chool,. lunch
2!gin, at 1<?<< a.$. ,o that all ,tu'!nt, can 2! ,!#+!' 2y 2?<< p.$.>
Th!#! a#! t/o o2A!cti+!, to agg#!gat! planning?
To !,ta2li,h a co$pany1/i'! ga$! plan 4p#o'uction plan5 )o# allocating
#!,ou#c!,. an'
To '!+!lop an !cono$ic ,t#at!gy )o# $!!ting '!$an'.
Th! )i#,t o2A!cti+! #!)!#, to th! long1,tan'ing 2attl! 2!t/!!n th! $a#0!ting an'
p#o'uction )unction, /ithin a )i#$. 8a#0!ting p!#,onn!l11/ho a#! !+aluat!' ,ol!ly on
,al!, +olu$!11ha+! th! t!n'!ncy to $a0! un#!ali,tic ,al!, co$$it$!nt, 4!ith!# in t!#$,
o) "uantity o# ti$ing5 that p#o'uction i, !3p!ct!' to $!!t. ,o$!ti$!, at an !3o#2itant
p#ic!. P#o'uction p!#,onn!l11/ho a#! !+aluat!' on 0!!ping $anu)actu#ing co,t, 'o/n11
$ay #!)u,! to acc!pt o#'!#, that #!"ui#! a''itional )inancial #!,ou#c!, 4,uch a, o+!#ti$!
/ag! #at!,5 o# ha#'1to1$!!t co$pl!tion 'at!,. Th! Ao2 o) p#o'uction planning i, to $atch
)o#!ca,t!' '!$an' /ith a+aila2l! capacity. I) capacity i, ina'!"uat!. it can u,ually 2!
!3pan'!'. 2ut at a co,t. Th! co$pany n!!', to '!t!#$in! i) th! !3t#a co,t i, /o#th th!
inc#!a,!' #!+!nu! )#o$ th! ,al!. an' i) th! ,al! i, con,i,t!nt /ith th! ,t#at!gy o) th! )i#$.
Thu,. th! agg#!gat! p#o'uction plan ,houl' not 2! '!t!#$in!' 2y $anu)actu#ing
p!#,onn!l alon!; #ath!#. it ,houl' 2! ag#!!' upon 2y top $anag!$!nt )#o$ all th!
)unctional a#!a, o) th! )i#$11$anu)actu#ing. $a#0!ting. an' )inanc!. 7u#th!#$o#!. it
,houl' #!)l!ct company policy 4,uch a, a+oi'ing layo)),. li$iting in+!nto#y l!+!l,. o#
$aintaining a ,p!ci)i!' cu,to$!# ,!#+ic! l!+!l5 an' strategic ob)ectives 4,uch a,
captu#ing a c!#tain ,ha#! o) th! $a#0!t o# achi!+ing ta#g!t!' l!+!l, o) "uality o# p#o)it5.
-!cau,! o) th! +a#iou, )acto#, an' +i!/point, that a#! con,i'!#!'. th! p#o'uction plan i,
o)t!n #!)!##!' to a, th! co$pany6, game plan )o# th! co$ing y!a#. an' '!+iation, )#o$
th! plan a#! ca#!)ully $onito#!'.
Th! ,!con' o2A!cti+! #!)!#, to '!+!loping an !cono$ic ,t#at!gy )o# $!!ting '!$an'.
D!$an' can 2! $!t 2y ad!usting capacity o# managing demand.
7igu#! 5.H
7igu#! 5.H ,ho/, th! input, to an' output, )#o$ agg#!gat! p#o'uction planning. Th!
input, a#! '!$an' )o#!ca,t,. capacity con,t#aint,. ,t#at!gic o2A!cti+!,. co$pany polici!,.
an' )inancial con,t#aint,. Th! output, inclu'! ,i9! o) th! /o#0)o#c!. p#o'uction !3p#!,,!'
a, !ith!# unit, o# ,al!, 'olla#,. in+!nto#y l!+!l, that ,uppo#t th! p#o'uction plan. an' th!
nu$2!# o) unit, o# 'olla#, ,u2cont#act!'. 2ac0o#'!#!'. o# lo,t.
5.( Agg#!gat! Planning )o# *!#+ic!,
Th! agg#!gat! planning p#oc!,, i, 'i))!#!nt )o# ,!#+ic!, in th! )ollo/ing /ay,?
1. &ost services cannot e inventoried. It i, i$po,,i2l! to ,to#! an ai#lin! ,!at. hot!l
#oo$. o# hai# appoint$!nt )o# u,! lat!# /h!n '!$an' $ay 2! high!#. Ch!n th! goo',
that acco$pany a ,!#+ic! can 2! in+!nto#i!'. th!y typically ha+! a +!#y ,ho#t li)!.
N!/,pap!#, a#! goo' )o# only a 'ay; )lo/!#,. at $o,t a /!!0; an' coo0!'
ha$2u#g!#,. only t!n $inut!,.
2. 'emand for services is difficult to predict. D!$an' +a#iation, occu# )#!"u!ntly an'
a#! o)t!n ,!+!#!. Th! !3pon!ntial 'i,t#i2ution i, co$$only u,!' to ,i$ulat! th!
!##atic '!$an' )o# ,!#+ic!,11high1'!$an' p!a0, o+!# ,ho#t p!#io', o) ti$! /ith long
p!#io', o) lo/ '!$an' in 2!t/!!n. Customer service levels !,ta2li,h!' 2y
$anag!$!nt !3p#!,, th! p!#c!ntag! o) '!$an' that $u,t 2! $!t an'. ,o$!ti$!,. ho/
"uic0ly '!$an' $u,t 2! $!t. Thi, i, an i$po#tant input to agg#!gat! planning )o#
,!#+ic!,.
. Capacity is also difficult to predict. Th! +a#i!ty o) ,!#+ic!, o))!#!' an' th!
in'i+i'uali9!' natu#! o) ,!#+ic!, $a0! capacity 'i))icult to p#!'ict. Th! IcapacityI o)
a 2an0 t!ll!# '!p!n', on th! nu$2!# an' typ! o) t#an,action, #!"u!,t!' 2y th!
cu,to$!#. Unit, o) capacity can al,o +a#y. *houl' a ho,pital '!)in! capacity in t!#$,
o) nu$2!# o) 2!',. nu$2!# o) pati!nt,. ,i9! o) th! nu#,ing o# $!'ical ,ta)). o# nu$2!#
o) pati!nt hou#,D
%. Service capacity must e provided at the appropriate place and time. 8any ,!#+ic!,
ha+! 2#anch!, o# outl!t, /i'!ly 'i,p!#,!' o+!# a g!og#aphic #!gion. D!t!#$ining th!
#ang! o) ,!#+ic!, an' ,ta)) l!+!l, at !ach location i, pa#t o) agg#!gat! planning.
5. (aor is usually the most constraining resource for services. Thi, i, an a'+antag! in
agg#!gat! planning 2!cau,! la2o# i, +!#y )l!3i2l!. Ja#iation, in '!$an' can 2!
han'l!' 2y hi#ing t!$po#a#y /o#0!#,. u,ing pa#t1ti$! /o#0!#,. o# u,ing o+!#ti$!.
*u$$!# #!c#!ation p#og#a$, an' th!$! pa#0, hi#! t!!nag!#, out o) ,chool )o# th!
,u$$!#. 7!'!#al E3p#!,, ,ta)), it, p!a0 hou#, o) $i'night to 2 a.$. /ith a#!a coll!g!
,tu'!nt,. 8cDonal'6,. Cal18a#t. an' oth!# #!tail !,ta2li,h$!nt, /oo ,!nio# citi9!n,
a, #!lia2l! pa#t1ti$! /o#0!#,.
Co#0!#, can al,o 2! c#o,,1t#ain!' to p!#)o#$ a +a#i!ty o) Ao2, an' can 2! call!' upon a,
n!!'!'. A co$$on !3a$pl! i, th! ,al!, cl!#0 /ho al,o ,toc0, in+!nto#y. L!,, co$$on
a#! th! polic! o))ic!#, in a ,u2u#2 /ho a#! c#o,,1t#ain!' a, )i#!)ight!#, an' pa#a$!'ic,.
Th!#! a#! ,!+!#al ,!#+ic!, that ha+! uni"u! agg#!gat! planning p#o2l!$,. Docto#,.
la/y!#,. an' oth!# p#o)!,,ional, ha+! !$!#g!ncy o# p#io#ity call, )o# th!i# ,!#+ic! that
$u,t 2! $!,h!' /ith #!gula# appoint$!nt,. :ot!l, an' ai#lin!, #outin!ly overoo# th!i#
capacity in anticipation o) cu,to$!#, /ho 'o not ,ho/ up. Th! p#icing ,t#uctu#! )o#
'i))!#!nt cla,,!, o) cu,to$!#, a'', an !3t#a )acto# to th! agg#!gat! planning '!ci,ion.
P#icing ,t#uctu#!, )o# ai#lin!, a#! !,p!cially co$pl!3. A, pa#t o) th! agg#!gat! planning
p#oc!,,. plann!#, $u,t '!t!#$in! th! p!#c!ntag! o) ,!at, o# #oo$, to 2! allocat!' to
'i))!#!nt )a#! cla,,!, in o#'!# to $a3i$i9! p#o)it o# yi!l'. Thi, p#oc!,, i, call!' yi!l'
$anag!$!nt.