AGGREGATE /CAPACITY

PLANNING
SUBMITTED BY
ANNU ANNA SEBASTIAN
ROLL NO: 13
 AGGREGATE PLANNING

• Process of developing, analysing, and maintaining a preliminary, approximate schedule of the

overall operations of an organization.
• In simple terms, it is an attempt to balance capacity and demand in such a way that costs are
minimized .
• The term "aggregate " is used because planning at this level includes all resources "in the
aggregate”.
 OBJECTIVES

• Minimize costs/maximize profits

• Maximize customer service
• Minimize inventory investment
• Minimize changes in workforce levels
• Maximize utilization of plant and equipment
 COSTS INVOLVED IN A.P

• Procurement cost
• Regular-time costs (production cost)
• Overtime cost
• Hiring and layoff costs
• Inventory holding cost
• Backorder and stock out costs
• Production rate changing cost
 SITUATIONS IN WHICH DEMAND NEEDS TO BE
INCREASED IN ORDER TO MATCH CAPACITY
• Pricing
• Promotion
• Back ordering
• New demand creation
 OPTIONS WHICH CAN BE USED TO INCREASE OR
DECREASE CAPACITY TO MATCH CURRENT
DEMAND
• Lay off
• Overtime
• Part-time or casual labour
• Inventory
• Subcontracting
• Cross training
• Other methods
 COMPANY PROFILE- TATA MOTORS

• Indian multinational automotive manufacturing company headquartered in Mumbai, Maharashtra.

• Products- cars, trucks, vans, coaches, buses and military vehicles.
• World's eight tenth-largest motor vehicle manufacturing company.
• Tata motors acquired the south Korean truck manufacturer Daewoo commercial vehicles company
in 2004 and the British premium car maker jaguar land rover in 2008.
 AGGREGATE PLANNING IN TATA MOTORS

• Tata motors uses the forecasting technique of linear regression using a functional relationship
between two or more correlated variables.
• The relationship is usually developed from observable data and plotted in a graph the two
variables regress to form a straight line.
• The linear regression line is of the form y= a+ b x, where y is the value of the dependent variable
that we are solving for a is the y intercept, b is the slope, and x is the independent variable( in the
time series analysis, x is the units of time)this method is useful for long-term forecasting of major
occurrences and aggregate planning.
• The linear regression model is based on the relative increase in consumer sales, which is then
translated with a separate retailer model into the sell-out sales forecast of Tata motors.
 AGGREGATE PLANNING IN TATA MOTORS

• The restrictions with this method is that past data and future projections are assumed to fall about
a straight liner.
• Linear regression is used for time series forecasting and for casual relationship forecasting.
• Tata motors sales and operations planning process is primarily focused on maintaining and
improving forecast accuracy also including tactical market planning, customer order management,
master scheduling and detailed weekly planning. S &OP were implemented at CCM when the
plant was started .
• This typically involves a five-step monthly process comprised of data gathering and review,
DEMAND PLANNING , SUPPLY PLANNING AND MEETING WITH PARTNERS AND EXECUTIVES.
 TATA ARIA’S AGGREGATE PLANNING

JAN FEB MAR APR MAY JUN

No of Working days 25 23 24 20 25 24
SOLUTION

JAN FEB MAR APR MAY JUN COST

Starting 400 240 -135 347 499 379
inventory
No of 25 25 20 24 25 24
days
No of per 200 186 192 170 200 192
hr woker
2567
Total hrs 8000 7440 7680 5637 4737
Labour
Employed 40 40 40 40 40 40

Actual
175 174 168 122 231 455
production
inventory 240 -135 53 56 56 34
Regular 12000 111600 115 345 344
346
wages