Aggregate Planning at Crown Mirrors

Aggregate Planning at Crown Mirrors

Michigan-based Crown Mirrors (Crown) was a well-known company engaged in manufacturing decorative lamps.

Crown was setup by Felix Steve (Felix) who was basically an electrical engineer. He acquired adequate knowledge in manufacturing electrical components in his stints at various electrical manufacturing companies across the US. After gaining prolific work experience and holding long deliberations with family and friends, Felix decided to setup own business. Borrowing money from his well-wishers, Felix started Crown Mirrors in 2005. Initially, he provided lot of promotional offers to his customers. Over a period of time, the demand for decorative lamps increased.

Though he followed traditional method to forecast, due to irregular demand pattern, from 2010 Felix started following a contemporary forecasting system that used data from past years to find seasonal factors and long-term trends. The contemporary forecasting system also used data from past weeks to find recent trends................

Assignment Questions

I. What is Aggregate Planning?

II. Find the production schedule Crown should  follow under the various assumptions and policies, and detail the differences among these schedules.

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Exhibit

Exhibit I: Forecast Demand of Lamps (For 2015 on a monthly basis)

Aggregate Planning at Crown Mirrors

Prerequisite Conceptual Understanding

• • Jay Heizer, et al., “Chapter 12: Aggregate Planning”, Operations Management, 9th Edition, Pearson Education, 2008

Synopsis

This caselet enables a discussion on the concept of Aggregate Planning in Operations Management. Crown Mirrors (Crown) located in Michigan was a successful manufacturer of decorative lamps. Due to increased fluctuations in demand, Felix Steve (Felix), the founder of Crown started following sophisticated forecasting system. He suggested his production in charge to take into account of all the seasonal and trend patterns while doing production planning. Felix estimated the costs of hiring or firing workers; using overtime; subcontracting; and holding inventory or running out of the product. Felix was not able to determine whether demands not met in the current month could be met later or whether the incomplete orders would be lost.

Expected Learning Outcomes

• • Basics of Aggregate Planning
• • Computing Production schedule for Crown

Assignment Questions

• I. What is Aggregate Planning?
• II. Find the production schedule Crown should follow under the various assumptions and policies, and detail the differences among these schedules.

Teaching Plan

The Teaching Note follows the specific Teaching Plan [Annexure (TN)-I]...............

Exhibits

Exhibit (TN)-I: Optional Strategies for Aggregate Planning

Exhibit (TN)-II: Computation of Average Requirement

Exhibit (TN)-III: Graphic Representation of the Level of Production

Exhibit (TN)-IV: Costs Information

Exhibit (TN)-V: Costs Information

Exhibit (TN)-VI: Costs Calculations

Exhibit (TN)-VII: impact of Cumulative Level Production using Average Monthly Forecast

Exhibit (TN)-VIII: Computation of Minimum Requirement

Exhibit (TN)-IX: Graphical Representation of the Level of Production

Exhibit (TN)-X: Costs Information

Exhibit (TN)-XI: Costs Information

Exhibit (TN)-XII: Computation of Requirement

Exhibit (TN)-XIII: Graphical Representation of the Level of Production

Exhibit (TN)-XIV: Costs Information

Exhibit (TN)-XV: Costs Calculation

Exhibit (TN)-XVI: Comparisons of Three Options