Read, evaluate and respond in no less than 150 words in two peer responses
42847Peer 1:
There are some differences between aggregate planning for manufacturing and service. Subsequently, one of the largest differences stems from manufacturing dealing with tangibility and servicing dealing with intangibility. Thus, there is no inventory regarding services and any empty flight or hotel room is considered wasted or perishable in the service industry. Conversely, manufacturing deals with inventory, resources, and time. An important aspect of planning in manufacturing requires balancing the approximate number of resources needed for different manufacturing processes. Ultimately, the goal is to decrease cost and time. This is achieved in manufacturing through chase and level strategies. According to (Heizer, Render, & Munson, 2018) “A chase strategy typically attempts to achieve output rates for each period that match the demand forecast for that period.” Consequently, this can be attained in several ways. Examples involve changing workforce numbers through hiring and firing employees as well as varying outputs by way of overtime, part-time, and subcontracting to name a few. Additionally, a level strategy consists of uniform production which equates to stability from period to period. So, the advantage of the chase strategy is that inventory levels are very low which generates large savings. Furthermore, the challenge of service planning is trying to estimate and establish a solid measure of capacity.
References
Heizer, J., Render, B., & Munson, C. (2017). Principles of Operations Management Tenth Edition. Retrieved from https://etext.pearson.com/eplayer/book/BAID3DO016V/page
Peer 2:
The differences between aggregate planning for manufacturing and services are very different. There is the analyzing, developing and maintaining of the operations schedule. With aggregate planning a company is organizing their business this will include, production levels, sales forecasts, customer backlogs and inventory levels. When aggregate planning is effectively carried out the effects of the daily scheduling that may be short-sighted are minimized. Demand and capacity are balanced to where it minimizes the costs of the aggregate resources include hours of equipment, machine time, number of workers or the raw materials.
In manufacturing, aggregate planning involves the allocation of the correct amount of resources for each process of manufacturing so that when there is idle time the time and costs are minimized. When manufacturing implements aggregate planning, they use either the Level strategy or the Chase strategy. With the Level strategy the employment rate and production rates are maintained. When this occurs, the company can raise or lower their inventory levels based on the forecasted demand levels. With the Chase strategy the demand and capacity are matched period by period. With this strategy the company could do more hiring or firing, they could have more inventory costs, labor union problems and the plant and equipment utilization costs could go up. But the advantage of using the Chase strategy is that the company saves money by keeping their inventory at the lowest level possible.
In the service industry, companies do not keep inventory so when there are times of low demand companies sometimes suffer from the low demand. Services are considered perishable because they are not being used and are considered wasted. Services such as the airline industry, restaurants, hospitals, small service firms, and miscellaneous services all use aggregate planning, but they all have to implement it differently.
With airlines, they have to planning according to the number of flights in and out of each hub that they fly out of, the number of flights on these routes, how many passengers will be on each flight, how much personnel will they need on the ground and in the air at each airport and hub.
Aggregate planning in the service industry is different than that with manufacturing because services cannot be inventoried unlike manufacturing where they have the ability to hold, produce and sell their inventory as needed.
References
Jay Heizer, B. R. (2017). Aggregate Planning in Services. In Principles of Operations Management (p. 546). Pearson Education.
Stall, E. (2019). Difference Between Aggregate Planning in Manufacturing & Aggregate Planning in Services. Retrieved from smallbusiness.chron.com: https://smallbusiness.chron.com/difference-between-aggregate-planning-manufacturing-aggregate-planning-services-20855.html
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