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# METHODS FOR AGGREGATE

PLANNING
Graphical and Charting Methods
► techniques that work with a few variables of a time to allow planners to
compare projected demand with existing capacity.

## 2. Determine capacity for regular time, overtime,

and subcontracting each period.

## 3. Find labor costs, hiring and layoffs costs, and

inventory holding costs.

## 4. Consider company policy that may apply to

the workers or to stocks levels.

## 5. Develop alternative plans and examine

their total assets.
Transportation Method of Linear Programming
► This is not trial and error approach like charting that rather produces an
optimal plan for minimizing costs.

LP(Linear Programming)
► a mathematical methods that is used to determine

## the best outcome or solution from a given sets

of parameters or list of requirements.

## E.H Bowman (1956) ► originally formulated the transportation methods of linear

programing.
Management coefficient Model
► a formal planning model built around a managers experience and
performance. This model is simple, easy to implement, tries to mimic managers
decision process uses regression.

Others Models:
Linear Decision Rule(LDR)
► attempts to specify an optimum
production rate and workforce level
over specific period.
Scheduling by Simulation
► this uses a search procedure to look for the minimum cost
combination of values for workforce size and production rate.

## The idea behind simulation is threefold.

● to imitate a real world situation mathematically
● to study its properties and operating characteristics, and
● finally to draw conclusions and make action decisions base on the
results of the simulation.
AGGREGATE PLANNING SERVICES
1. Close scheduling of labors hours to assure quick response to customers
demand.
2. Some form of on-call labor resource that can be added or deleted to
meet unexpected demand.
3. Flexibility of individual worker skills that permits reallocation of available
labor.
4. Individual worker flexibility in rate output or hours of work to met expanded
demand.
YIELD MANAGEMENT (REVENUE)

## ► this is aggregate planning process of allocating resources to customers

at prices that maximize yield revenue.
The following shared characteristics that make yield
management as interest:

## 1. Service of product can be sold in advance of

consumption.
2. Demand fluctuates.
3. Capacity is relatively fixed.
4. Demand can be segmented.
5. Variable cost are low and fixed costs are high.

## To make yield management work, the company needs to manage

three issues:
1. Multiple pricing structures must be feasible and appear
logical(preferably fare)to the customers.
2. Forecast of the use and duration of the use.
3. Change in demand.