Aggrigate Planning in TATA Motors

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GROUP MEMBERS

NAME ROLL NO.

Sneha Adivarekar 01

Prathamesh Deo 11Mayur Gharat 21

Shrutika Madan 31

Tanuj PaTidar 41Nayantara Sable 51


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Theoretical Aspectsof

Aggregate planning


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INTRODUCTION

Process ofdeveloping, analyzing, andmaintaining a preliminary, approximateschedule of the overall operations of anorganization.

In simple terms, It is an attempt to balancecapacity and demand in such a way thatcosts are minimized.

The term "aggregate" is used because

planning at this level includes all resources "inthe aggregate.

Aggregate planning is considered to beintermediate-term (as opposed to long- or

short-term) in nature that is 3-18 months.


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AGGREGATE PLANNING


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Long-range plans(over one year)Research and DevelopmentNew product plansCapital investmentsFacility location/expansion

Intermediate-range plans

(3 to 18 months)Sales planningProduction planning and budgetingSetting employment, inventory,

subcontracting levelsAnalyzing operating plans

Short-range plans

(up to 3 months)Job assignmentsOrderingJob schedulingDispatchingOvertimePart-time help

Topexecutives

Operationsmanagers

Operationsmanagers,supervisors,foremen

Responsibility Planning tasks and horizon

The Planning Process


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OBJECTIVES

Minimize Costs/Maximize Profits

Maximize Customer Service

Minimize Inventory Investment Minimize Changes in Production Rates

(Setup cost)

Minimize Changes in Workforce Levels Maximize Utilization of Plant and Equipment


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IMPORTANCE

Achieving financial goals by reducing overallvariable cost and improving the bottom line.

Maximum utilization of the available production

facility. Provide customer delight by matching demand

and reducing wait time for customers.

Reduce investment in inventory stocking.

Able to meet scheduling goals there by creatinga happy and satisfied work force.


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Option Advantages DisadvantagesChanging Inventory levels Changes in Human resources are

gradual or none; no abrupt production

changes.Inventory holding cost may increase.

Shortages may result inLost sales.

Varying Workforce size by hiring or

layoffsAvoids the use otheralternatives .

Hiring, layoff, and training costs.

Using part-timeworkers

Less costly and more flexible than

full-timeworkers

High turnover/trainingcosts; quality suffers;scheduling difficult

Influencing demand Tries to use excess capacity.Discounts draw new customers.

Uncertainty in demand. Hard to match

demand to supply exactly

Uncertainty indemand. Hard tomatch demand tosupply exactly

May avoidovertime. Keepscapacity constant

Customer must be willing to wait, butgoodwill is lost.

Counter seasonal products and

service mixingFully utilizes resources; allows stable

workforce.May require skills orEquipment outside a firm's areas of

expertise.

ADVANTAGES AND DISADVANTAGES OF AP


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AGGREGATE PLANNING STRATEGIES

LEVEL STRATEGY CHASE STRATEGY

Daily production is uniform.

Use inventory or idle time

as buffer. Stable production leads to

better quality and

productivity.

Match output rates to

demand forecast for each

period.

Vary workforce levels or

vary production rates.

Favored my many service

organizations.


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COSTS INVOLVED IN A.P

Procurement Cost

Regular-Time Costs (production Cost)

Overtime CostHiring and Layoff Costs

Inventory Holding Cost

Backorder and Stock out Costs Production rate changing cost


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STEPS IN AP

Determine demand for each period.

Determine capacity for each period.

Identify company, departmental, or union

policies that are pertinent. Determine unit costs for units produced.

Develop alternative plans and compute the cost

for each. If satisfactory plans emerge, select the one that

best satisfies objectives.


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SITUATIONS IN WHICH DEMAND NEEDS TO BE

INCREASED IN ORDER TO MATCH CAPACITY

Pricing

Promotion

Back ordering

New demand creation


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OPTIONS WHICH CAN BE USED TO INCREASE OR

DECREASE CAPACITY TO MATCH CURRENT

DEMAND

Lay off

Overtime

Part-time or casual labor Inventory

Subcontracting

Cross trainingOther methods


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PRACTICAL IMPLICATIONS

OFAGGREGATE PLANNING


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GENERAL EXAMPLE TO UNDERSTAND THE

CONCEPT


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VARIOUS COST ASSOCIATED


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SOLUTION OF PLAN-1 (CONSTANT WORK

FORCE)


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PLAN-2 SUBCONTRACTING


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PLAN-3 HIRING & FIRING


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SELECTION OF THE BEST PLAN


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CASE OF TATA VOLTAS

VOLTAS- Manufactures of Window air conditioners.

Models- 0.75, 1, 1.5, 2 tons.

In 2009- expected sales in units 1 lacs and succeeded.

In 2009- They produced above units in 2 shifts with 300workers in each shift.

In 2010- co. expected to sell 1.5 lacs depending uponthe success of 2009

Institutional orders- Aggregate 10000 units to be

produced in 2010 Total Expected Production- aggregate 160000 units that

is 60000 additional units with existing productioncapacity(machine/ labor force)


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CONTI..

Management option to meet the Fluctuating Demand

(Capacity Adjustment):-

Build inventories in slack period in anticipation of higher

demand in future.

Carried backorders/lost sales during peak period.

Overtime in peak period:- (utilization of part time labors)

used subcontracting technique


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COMPANY PROFILE- TATA MOTORS

Indian multinationalautomotive manufacturing companyheadquartered in Mumbai, Maharashtra.

Products- cars, trucks, vans, coaches, buses and militaryvehicles.

world's eighteenth-largest motor vehicle manufacturing company.

Founded in 1945 as a, the co manufacturer oflocomotivescompany manufactured its first commercial vehicle in 1954 in acollaboration with Daimler-Benz AG, which ended in 1969.

Tata Motors has auto manufacturing and assembly plantsin Jamshedpur, Pantnagar, Lucknow, Sanand, Dharwad and Pune (India), and in Argentina, South Africa, Thailand and the UnitedKingdom.

Tata Motors acquired the South Korean truck manufacturerDaewoo Commercial Vehicles Company in 2004 and the Britishpremium car makerJaguar Land Roverin 2008
http://en.wikipedia.org/wiki/Multinational_corporationhttp://en.wikipedia.org/wiki/Automotive_industryhttp://en.wikipedia.org/wiki/Mumbai,_Maharashtrahttp://en.wikipedia.org/wiki/Automotive_industryhttp://en.wikipedia.org/wiki/Locomotiveshttp://en.wikipedia.org/wiki/Daimler-Benzhttp://en.wikipedia.org/wiki/Jamshedpurhttp://en.wikipedia.org/wiki/Pantnagarhttp://en.wikipedia.org/wiki/Lucknowhttp://en.wikipedia.org/wiki/Sanandhttp://en.wikipedia.org/wiki/Dharwadhttp://en.wikipedia.org/wiki/Punehttp://en.wikipedia.org/wiki/Punehttp://en.wikipedia.org/wiki/Jaguar_Land_Roverhttp://en.wikipedia.org/wiki/Jaguar_Land_Roverhttp://en.wikipedia.org/wiki/Punehttp://en.wikipedia.org/wiki/Punehttp://en.wikipedia.org/wiki/Dharwadhttp://en.wikipedia.org/wiki/Sanandhttp://en.wikipedia.org/wiki/Lucknowhttp://en.wikipedia.org/wiki/Pantnagarhttp://en.wikipedia.org/wiki/Jamshedpurhttp://en.wikipedia.org/wiki/Daimler-Benzhttp://en.wikipedia.org/wiki/Daimler-Benzhttp://en.wikipedia.org/wiki/Daimler-Benzhttp://en.wikipedia.org/wiki/Locomotiveshttp://en.wikipedia.org/wiki/Automotive_industryhttp://en.wikipedia.org/wiki/Automotive_industryhttp://en.wikipedia.org/wiki/Automotive_industryhttp://en.wikipedia.org/wiki/Mumbai,_Maharashtrahttp://en.wikipedia.org/wiki/Automotive_industryhttp://en.wikipedia.org/wiki/Multinational_corporation


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JAN FEB MAR APR MAY JUN

No. of working days 25 23 24 20 25 24

Inventory carrying cost Rs 2.00 per unit/monthStock out cost Rs 5.00 per unit/monthCost of subcontracting Rs 60.00 per unitCost of hiring and traning Rs 400.00 per workerLaying off cost Rs 500.00 per workerTime required for 1 unit 7 labour hours.Regular time wage Rs 15.00 per hourOvertime wage Rs 10.00 per hourStarting inventory 500 unitsSafey stock 25% of monthly demandPresent workforce 100Overtime per worker not 4 hours per dayto exceedThe cost of material can be ignored as it is common to every unitthat is produced.Target production for 6 months =1000 cars ( TATA ARIA)

TATA ARIAS AGGREGATE PLANNING


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Jan Feb Mar Apr May Jun cost

Startinginventory

400 240 -135 347 499 739

No. od

days

25 25 24 20 25 24

No. of hr

per worker

200 186 192 170 200 192

Total hrs 8000 7440 7680 6800 8000 7680

Labour

employed

40 40 40 40 40 40

Actual

production

175 174 168 140 175 168

Inventory 240 -135 347 499 739 321

Regular

wages

120000 111600 1152

00

10200

0

120000 111600 680400

Inventory

cost

480 694 998 1478 624 4274

SOLUTION


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Aggrigate Planning in TATA Motors

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