Blog 3

In week 3 of MIS 373 lectures, the instructor talked about two main topics. One is the statistical process control (SPC). SPC is a tool used to help people control a process and evaluate its output. In this part, the instructor also discussed normal distribution, sample distribution, two types of errors, and control chart. The other main topic discussed was aggregate planning. Aggregate planning is an intermediate-range capacity planning used by organizations to satisfy overall demand. By utilizing aggregate planning, organizations could implement plans, help synchronize flow throughout the supply chain, and also connect to the budgeting process. Instructor introduced some aggregate planning strategies, and master scheduling that organizations could use in their business.

After leaning aggregate planning, I realized this concept is widely used in real business. In an article entitled “Aggregate Planning for a Large Food Manufacturer with High Seasonal Demand”, the authors discussed using aggregate planning and master scheduling to improve the demand forecasting processes and achieve reduction of inventory level. A Brazilian food company has a high seasonal demand but poor inventory management performance. By analyzing the company’s current situation, the authors recognized that to improve the inventory management, they should improve the demand forecasting and production planning process first. Therefore, the company developed an aggregate production planning model based on liner programming. They also used a sample disaggregating method and a detailed master production schedule for a shorter horizon of three months to the solve problems they are facing.

From this article, I realized that aggregate planning can help a company or an organization utilizes resources to satisfy demand and manage inventory more effectively. Aggregate planning can determine company’s monthly production rate, and inventory level of finished products. In addition, disaggregating method could searches equal run out times, translates aggregate plans into master production schedule for a short time. Companies can use this knowledge to balance the consumption of resources, inventory levels, and customer demand. Aggregate planning helps to reduce the cost of buying raw materials and storing final products and also make the whole process under their control.

Reference:

• PowerPoin Slide Chapter10, 11
• Takey, Flávia M., and Marco A. Mesquita. "Aggregate Planning for a Large Food Manufacturer with High Seasonal Demand." Brazilian Journal of Operations & Production Management 1 Nov. 2010: 05-20. Print.