When producing an aggregate plan for a firm, managers have several strategies that they can use. In general, there are three groups of plans: one that attempts to alter capacity, another that attempts to smooth out demand patterns, and the last one that varies output by using variable work hours. Picking the right one is an art, not science. Many variables must be considered to find the right fit for your operation.
Find an example of a company’s aggregate planning strategy.You can use the strategy from the firm where you currently work or where you have worked in the past; you can conduct an Internet search or use the Hunt Library resources.
Analyze the company’s aggregate planning strategy and then provide the following in your paper.
·Background on the company processes
·Outline their aggregate planning strategy, relating the strategy to the textbook
·Your opinion on whether the company is using the best aggregate planning strategy
·An alternative strategy that might also work for the company
·Advantages or disadvantages to the current and alternative strategies
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Let’s consider a fictional manufacturing company called “ABC Manufacturing” to illustrate the analysis you’re seeking:
Background on the company processes:
ABC Manufacturing specializes in producing consumer electronics such as smartphones and tablets. The company operates multiple production facilities and faces fluctuating demand due to seasonal trends and market dynamics.
Aggregate planning strategy:
ABC Manufacturing utilizes a capacity-altering strategy for their aggregate planning. They make adjustments to their production capacity based on forecasted demand changes. For instance, during periods of high demand, they may increase production capacity by hiring temporary workers or utilizing overtime. Conversely, during periods of low demand, they may scale back production capacity by offering employees time off or reducing shifts.
Analysis of the strategy:
The capacity-altering strategy employed by ABC Manufacturing aligns with the textbook’s concept of altering capacity to match demand fluctuations. By flexibly adjusting their workforce and production hours, the company aims to balance supply and demand while minimizing costs and maintaining customer satisfaction.
Opinion on the company’s strategy:
From my perspective, ABC Manufacturing’s capacity-altering strategy seems suitable for their industry and market conditions. It allows them to respond to changing demand patterns effectively and maintain production efficiency. However, the best strategy ultimately depends on various factors, such as the company’s specific goals, cost structure, market competition, and overall industry dynamics.
Alternative strategy:
An alternative strategy that could complement ABC Manufacturing’s current approach is demand smoothing. Instead of altering capacity, the company could focus on influencing customer demand patterns. They could achieve this by implementing pricing incentives, marketing campaigns, or product bundling to encourage consistent demand throughout the year. This approach aims to reduce demand fluctuations, enabling more stable production levels.
Advantages and disadvantages:
Advantages of ABC Manufacturing’s current capacity-altering strategy include flexibility in adjusting production levels to match demand, minimizing excessive costs during low-demand periods, and avoiding stockouts during high-demand periods. However, this strategy may lead to increased labor costs, potential overtime expenses, and challenges in maintaining a consistent workforce.
Implementing a demand smoothing strategy offers advantages such as more predictable production levels, improved resource planning, and potentially reduced labor costs. However, it may require additional marketing efforts and potentially lower profit margins during periods of high demand.
Ultimately, the suitability of the current and alternative strategies depends on ABC Manufacturing’s specific circumstances, market conditions, and long-term objectives. Conducting a thorough analysis of these factors would be crucial in determining the most appropriate aggregate planning strategy for the company.
