What is the major difference between aggregate planning in manufacturing and aggregate planning in services ?

What is the major difference between aggregate planning in manufacturing and aggregate planning in services ?


Manufacturing planning strategies: there are essentially three production planning strategies. These strategies involve trade- offs among the workforce size, work hours, inventory and backlogs.
1 Chase strategy: Match the production rate to the order rate by hiring and laying off employees as the order rate varies. The success of this strategy depends on having a pool of easily trained applicants to draw on as order volumes increase. There are obvious motivational impacts. When order backlogs are low, employees may feel compelled to slow down out of fear of being laid off as soon as existing orders are completed.
2 Stable workforce- variable work hours. Vary the output by varying the number of hours worked through flexible work schedules or overtime. By varying the number of work hours, you can match production quantities to orders. This strategy provides workforce continuity and avoids many of the emotional and tangible costs of hiring and firing associated with the chase strategy.
3 Level strategy, Maintain a stable workforce working at a constant output rate. Shortages and surpluses are absorbed by fluctuating inventory levels, order backlogs, and lost sales. Employee's benefit from stable work hours at the costs of potentially decreased customer service levels and increased inventory costs. Another concern is the possibility of inventoried products becoming obsolete.
Relevant costs
Four costs are relevant to the aggregate production plan . These relate to the production cost itself as well as the cost to hold inventory and to have unfilled orders. More specifically, these are
1.basic production costs. These are the fixed and variable costs incurred in producing given product type in a given time period. Included are direct and indirect labour costs and regular as well as overtime compensation.
2.Costs associated with changes in the production rate. Typical costs in this category are those involved in hiring, training, and lying off personnel. Hiring temporary helped is a way of avoiding these costs. See the box titled " Paying the price" that details the impact on labor productivity of high labor turnover rates.






4 Inventory holding cost. Usually components are very hard to measure and include costs of expediting, loss of customer good will, and loss of sales revenue resulting from backordering.
Aggregate planning applied to services: Tucson parks and recreation department
Charting and graphic techniques are also useful for aggregate planning in service applications. The following example shows how a city's parks and recreation department could use the alternatives full - time employees, part - time employees, and subcontracting to meet its commitment to provide a service to the city. Tucson parks and Recreation Department has an operation and maintenance budget of$ 9,760,OOO.The department is responsible for developing and maintaining open space , all public recreational programs, adult sports leagues, golf courses , tennis courts, pools ,and so forth , there are 336 full- time equivalent employees. Of these, 216 are full - time permanent personnel who provides the administration and year- round maintenance to all areas. The remaining 120 FTE positions are stuffed with part timers; about three quarters cf them are used during the summer and the remaining quarter in the fall , winter, and spring seasons. The three- fourth show up as approximately 800 part- time summer jobs came from 90 FTEs because many last only for a month or two, while the FTEs are a year long. Currently, the only parks and recreation work subcontracted amounts to less than $ 100,OOO.This is for the golf and tennis pros and for grounds maintenance at the libraries and veterans' cemetery. Because of the nature of city employment, the probable bad public image, and civil service rules, the option to hire and fire help daily or weekly to meet seasonal demand is out of the question. However, temporary part- time help is authorized and traditional. Also, it is virtually impossible to have regular staff for all the summer jobs. During the summer months, the approximately 800 part- time employees are staffing many programs that occur simultaneously, prohibiting level scheduling over a normal 40- hour week. A wider variety of skills are required (such as umpires, coaches, lifeguards, and teachers of ceramics, guitar, karate, belly dancing, and yoga) than can be expected from full- time employees.
Three options are open to the department in its aggregate planning:
1 The present method, which is to maintain a medium- level full- time staff schedule work during off-seasons (such as rebuilding base ball fields during the winter months) and to m use part-time help during peak demands.
2 Maintain a lower level of staff over the year and subcontract all additional work presently done by full - time staff ( still using part-time help ).
3 Maintain an administrative staff only and subcontract all work, including part-time help(this would entail contracts to landscaping firms and pool maintenance companies as well as to newly created private firms to employ and supply part- time help.