Aggregate planning

1. It has been said that aggregate planning is related to personnel planning, budgeting, and market planning. Describe the nature of the relationship among these types of planning.
2. Every firm has multiple objectives such as good labor relations, low operating costs, high inventory turnover, and good customer service. What are the pros and cons of treating these objectives separately in an aggregate planning problem versus combining them all into a single measure of cost?
3. What factors are important in choosing the length of the planning horizon for aggregate planning?
4. A barbershop has been using a level workforce of barbers five days per week, Tuesday through Saturday. The barbers have considerable idle time on Tuesday through Friday, with certain peak periods during the lunch hours and after 4 p.m. each day. On Friday afternoon and all-day Saturday, all the barbers are very busy, with customers waiting a substantial amount of time and some customers being turned away. What options should this barbershop consider for aggregate planning? How would you analyze these options? What data should be collected, and how should the options be compared?

Sample Solution

Aggregate planning is related to personnel planning, budgeting, and market planning.

Aggregate planning is related to personnel planning, budgeting, and market planning. These types of planning are interrelated because they all contribute to the overall success of the organization. Personnel planning is important because it helps to ensure that the right people are in the right place at the right time. Budgeting is important because it helps to ensure that the organization has enough resources to meet its goals. Market planning is important because it helps to ensure that the organization is meeting the needs of its customers¹.
Treating objectives separately in an aggregate planning problem can have both pros and cons. The pros include being able to meet demand on time, producing quality outputs, and decreasing production costs as laborers may not take unnecessary sick leaves². The cons include increased complexity in decision-making and difficulty in balancing competing objectives ³.
Factors that are important in choosing the length of the planning horizon for aggregate planning include demand variability, production capacity, and lead time⁴.
The barbershop should consider several options for aggregate planning. One option is to hire additional barbers during peak periods on Friday afternoon and all-day Saturday. Another option is to reduce the number of barbers during non-peak periods on Tuesday through Friday. A third option is to offer incentives for customers who come in during non-peak periods ⁵. To analyze these options, data should be collected on customer demand during different periods and on the availability of barbers during different periods. The options should be compared based on their ability to meet customer demand while minimizing costs ⁵.

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