Aggregate planning assumes that facilities can only be changed over the _______
range.
A wait-and-see facility approach uses a _______ capacity cushion.
A single Ford plant builds a family of pickup trucks to serve the global market.
This is an example of a _______.
Respond to the following based on your reading.
Assume you've been assigned the task of identifying a chase strategy aggregate
production plan for the coming year. You've been informed that beginning inventory
is 500 units, your plan should provide an ending inventory for the year equal to
200 units, and you've been provided the following forecasts of aggregate demand.
Knowing that the typical objective of chase plans is to avoid carrying inventory,
what should you choose as the planned rate of production for the first quarter?
Quarter
Forecast
1
6,000
2
5,500
3
5,000
4
6,500
If a facility has a utilization rate of 80 percent, and current output levels
require 3,328 hours annually, what's the facility's annual capacity?
Describe the types of short-range, medium-range, and long-range capacity decisions.
Describe the most important questions to be answered concerning facilities
decisions. Apply the questions to a fast-food restaurant chain with expanding
demand.
long
small
product-focused facility
6,000 – 500 = 5,500. The planned rate of production would be 5,500 units.
3,328 ÷ 0.8 = 4,160. The facility's annual capacity would be 4,160 hours.
Short-range: Decisions are constrained by aggregate planning and facility
decisions. Allocate the available capacity by assigning it to specific activities.
Medium-range: Determine the workforce level and production output level within the
facility capacity available.
Long-range: Obtain the physical capacity that must be planned, developed, and
constructed before its intended use.
How much capacity is needed? In a fast-food restaurant chain, determine the
forecast demand and strategically decide the capacity cushion: large, medium, or
small.
How large should each facility be? In a fast-food restaurant chain, balance
economies of scale with diseconomies of scale and determine the appropriate size.
When is the capacity needed? In a fast-food restaurant chain, the timing may use
one of two strategies: preempt the competition, or wait and see. A preempt-the-
competition strategy is more likely in this example because the demand is already
known to be expanding.
Where should the facilities be located? In a fast-food restaurant chain, as with
most front-office services, the facilities must be located near customers. The firm
should also consider quantitative factors such as ROI, NPV, transportation issues,
taxes, and so on. The firm should also consider qualitative factors such as
language and norms, worker attitudes and availability, customer attitudes,
proximity to customers and suppliers, and competitors.
What types of facilities/capacity are needed? In a fast-food restaurant chain, this
will most likely result in a market-focused facility because the service must be
near its customers, within the market that it serves.
