Chapter 14

Operations Planning
and Scheduling

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Across the Organization

 Operations planning and scheduling is the

process of making sure that demand and
supply plans are in balance at all levels
 Sales and operations planning and
scheduling
 Requires managerial inputs from all of the
firm’s functions
 Each function is affected by the plan

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Sales and Operations Plans
Operations Distribution and marketing
Current machine capacities Customer needs
Plans for future capacities Demand forecasts
Workforce capacities Competition behavior
Current staffing level

Materials Accounting and finance

Supplier capabilities Aggregate Cost data
Storage capacity plan Financial condition
Materials availability of firm

Engineering Human resources

New products Labor-market conditions
Product design changes Training capacity
Machine standards

Figure 14.2 – Managerial Inputs from Functional Areas to Sales

and Operations Plans
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Managing Demand

TABLE 14.2 | DEMAND AND SUPPLY OPTIONS FOR

| OPERATIONS PLANNING AND SCHEDULING
Demand Options Supply Options
Complementary Anticipation inventory
products
Promotional pricing Workforce adjustment (hiring or layoffs)
Prescheduled Workforce utilization (overtime and
appointments undertime)
Reservations Part-time workers and subcontractors
Revenue management Vacation schedules
Backlogs Workforce schedules
Backorders Job and customer sequence
Stockouts Expediting

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Sales and Operations Plans
 Planning strategies
 Chase strategy
 Level strategy
 Mixed strategy

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Scheduling

 Takes operations and scheduling process

from planning to execution and requires
gathering data from sources such as
demand forecasts, resource availability
from the sales and operations plan, and
specific constraints from employees and
customers. Generates a work schedule for
employees or sequences of jobs or
customers at workstations.

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Gantt Charts

 The job or activity progress chart

 The workstation chart
Current date

Job 4/17 4/18 4/19 4/20 4/21 4/22 4/23 4/24 4/25 4/26
Start activity

Ford Finish activity

Scheduled
activity time
Nissan Actual progress
Nonproductive
time
Pontiac

Figure 14.7 – Gantt Progress Chart for an Auto Parts Company

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Gantt Charts

Time
12
Workstation 7am 8am 9am 10am 11am pm 1pm 2pm 3pm 4pm 5pm 6pm

Dr. Jon
Operating Adams Dr. Aubrey Brothers Dr. Alaina Bright
Room A

Dr. Jeff
Operating Dr. Gary Case Dow Dr. Madeline Easton
Room B

Operating Dr. Jordanne Flowers Dr. Dan Gillespie

Room C

Figure 14.8 – Gantt Workstation Chart for Operating Rooms at a Hospital

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Scheduling Employees

 Translate the staffing plan into specific

schedules of work for each employee
 Constraints
 Technical constraints
 Legal and behavioral considerations
 Psychological needs of workers

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Developing a Workforce Schedule
EXAMPLE 14.2
The Amalgamated Parcel Service is open seven days a week.
The schedule of requirements is

Day M T W Th F S Su
Required number of employees 6 4 8 9 10 3 2

The manager needs a workforce schedule that provides two

consecutive days off and minimizes the amount of total slack
capacity. To break ties in the selection of off days, the
scheduler gives preference to Saturday and Sunday if it is
one of the tied pairs. If not, she selects one of the tied pairs
arbitrarily.

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Developing a Workforce Schedule
SOLUTION
Friday contains the maximum requirements, and the pair S – Su
has the lowest total requirements. Therefore, Employee 1 is
scheduled to work Monday through Friday.
Note that Friday still has the maximum requirements and that
the requirements for the S – Su pair are carried forward
because these are Employee 1’s days off. These updated
requirements are the ones the scheduler uses for the next
employee.
The day-off assignments for the employees are shown in the
pdf of the Excel file.

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Developing a Workforce Schedule

Workforce schedule

Week starting on Workers Mon Tue Wed Thu Fri Sat Sun
Monday 4 4 4 4 4 4
Tuesday 0 0 0 0 0 0
Wednesday 4 4 4 4 4 4
Thursday 2 2 2 2 2 2
Friday 0 0 0 0 0 0
Saturday 0 0 0 0 0 0
Sunday 0 0 0 0 0     0

No. of workers shceduled 6 4 8 10 10 6 6

>= >= >= >= >= >= >=
No. of workers needed 6 4 8 9 10 3 2

No. of workers hired 10

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Sequencing Jobs at a Workstation

 Priority sequencing rules

 First-come, first-served (FCFS)
 Earliest due date (EDD)
 Smallest Processing Time (SPT)

 Performance measures
 Flow time

Flow time = Finish time

+ Time since job arrived at workstation
 Past due (also referred to as tardiness)

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Using the FCFS Rule
EXAMPLE 14.3
Currently a consulting company has five jobs in its backlog.
The time since the order was placed, processing time, and
promised due dates are given in the following table. Determine
the schedule by using the FCFS rule, and calculate the average
days past due and flow time. How can the schedule be
improved, if average flow time is the most critical?

Time Since Order Processing Time Due Date

Customer
Arrived (days ago) (days) (days from now)
A 15 25 29
B 12 16 27
C 5 14 68
D 10 10 48
E 0 12 80

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Using the FCFS Rule
SOLUTION
a. The FCFS rule states that Customer A should be the first
one in the sequence, because that order arrived earliest—15
days ago. Customer E’s order arrived today, so it is
processed last. The sequence is shown in the following
table, along with the days past due and flow times.

Customer Start Processing Finish Due Days Days Ago Flow

Sequence Time Time (days) Time Date Past Since Order Time
(days) (days) Due Arrived (days)

A
B
C
D
E

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Using the FCFS Rule
SOLUTION
a. The FCFS rule states that Customer A should be the first
one in the sequence, because that order arrived earliest—15
days ago. Customer E’s order arrived today, so it is
processed last. The sequence is shown in the following
table, along with the days past due and flow times.

Customer Start Processing Finish Due Days Days Ago Flow

Sequence Time Time (days) Time Date Past Since Order Time
(days) (days) Due Arrived (days)

A 0 + 25 = 25 29 0 15 40
B 25 + 16 = 41 27 14 12 53
C 41 + 10 = 51 48 3 10 61
D 51 + 14 = 65 68 0 5 70
E 65 + 12 = 77 80 0 0 77

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Using the FCFS Rule
The finish time for a job is its start time plus the processing
time. Its finish time becomes the start time for the next job in
the sequence, assuming that the next job is available for
immediate processing. The days past due for a job is zero (0) if
its due date is equal to or exceeds the finish time. Otherwise it
equals the shortfall. The flow time for each job equals its finish
time plus the number of days ago since the order first arrived at
the workstation. The days past due and average flow time
performance measures for the FCFS schedule are

0 + 14 + 3 + 0 + 0
Average days past due = = 3.4 days
5

40 + 53 + 61 + 70 + 77
Average flow time = = 60.2 days
5

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Using the FCFS Rule
b. The average flow time can be reduced. One possibility is the
sequence shown in the following table.
Customer Start Processing Finish Due Days Days Ago Flow
Sequence Time Time (days) Time Date Past Since Order Time
(days) (days) Due Arrived (days)

D
E
C
B
A

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Using the SPT Rule
b. The average flow time can be reduced. One possibility is the
sequence shown in the following table.
Customer Start Processing Finish Due Days Days Ago Flow
Sequence Time Time (days) Time Date Past Since Order Time
(days) (days) Due Arrived (days)

D 0 + 10 = 10 48 0 10 20
E 10 + 12 = 22 80 0 0 22
C 22 + 14 = 36 68 0 5 41
B 36 + 16 = 52 27 25 12 64
A 52 + 25 = 77 29 48 15 92

0 + 0 + 0 + 25 + 48
Average days past due = = 14.6 days
5
20 + 22 + 41 + 64 + 92
Average flow time = = 47.8 days
5
This schedule reduces the average flow time from to 60.2 to
47.8 days—a 21 percent improvement. However, the past
due times for jobs A and B have increased.
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Application 14.4
Revisit Example 14.3, where the consulting company has five
jobs in its backlog. Create a schedule using the EDD rule,
calculating the average days past due and flow time. In this
case, does EDD outperform the FCFS rule?

SOLUTION

Customer Start Processing Finish Due Days Days Ago Flow

Sequence Time Time (days) Time Date Past Since Order Time
(days) (days) Due Arrived (days)

B 0 + 16 = 16 27 0 12 28
A 16 + 25 = 41 29 12 15 56
D 41 + 10 = 51 48 3 10 61
C 51 + 14 = 65 68 0 5 70
E 65 + 12 = 77 80 0 0 77

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Application 14.4
Customer Start Processing Finish Due Days Days Ago Flow
Sequence Time Time (days) Time Date Past Since Order Time
(days) (days) Due Arrived (days)

B 0 + 16 = 16 27 0 12 28
A 16 + 25 = 41 29 12 15 56
D 41 + 10 = 51 48 3 10 61
C 51 + 14 = 65 68 0 5 70
E 65 + 12 = 77 80 0 0 77

The days past due and average flow time performance

measures for the EDD schedule are
0 + 12 + 3 + 0 + 0
Average days past due = = 3.0 days
5
28 + 56 + 61 + 70 + 71
Average flow time = = 58.4 days
5
By both measures, EDD outperforms the FCFS. However,
the solution found in part (b) of Example 14.3 still has the
best average flow time of only 47.8 days.
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Solved Problem 1
The Cranston Telephone Company employs workers who lay
telephone cables and perform various other construction tasks.
The company prides itself on good service and strives to
complete all service orders within the planning period in which
they are received.
Each worker puts in 600 hours of regular time per planning
period and can work as many as an additional 100 hours of
overtime. The operations department has estimated the
following workforce requirements for such services over the
next four planning periods:

Planning Period 1 2 3 4

Demand (hours) 21,000 18,000 30,000 12,000

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Solved Problem 1
Cranston pays regular-time wages of $6,000 per employee per
period for any time worked up to 600 hours (including
undertime). The overtime pay rate is $15 per hour over 600
hours. Hiring, training, and outfitting a new employee costs
$8,000. Layoff costs are $2,000 per employee. Currently, 40
employees work for Cranston in this capacity. No delays in
service, or backorders, are allowed. Use the spreadsheet
approach to answer the following questions:
a. Prepare a chase strategy using only hiring and layoffs. What
are the total numbers of employees hired and laid off?
b. Develop a workforce plan that uses the level strategy,
relaying only on overtime and undertime. Maximize the use
of overtime during the peak period so as to minimize the
workforce level and amount of undertime.
c. Propose an effective mixed-strategy plan.
d. Compare the total costs of the three plans.
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Solved Problem 1
a. The chase strategy workforce is calculated by dividing the
demand for each period by 600 hours, or the amount or
regular-time work for one employee during one period. This
strategy calls for a total of 20 workers to be hired and 40 to
be laid off during the four-period plan. Figure 14.9 shows the
“chase strategy” solution that OM Explorer’s Sales and
Operations Planning with Spreadsheets solver produces. We
simply hide any unneeded columns and rows in this general-
purpose solver.

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Solved Problem 1

Figure 14.9 – Spreadsheet for Chase Strategy

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Solved Problem 1
b. The peak demand is 30,000 hours in period 3. As each
employee can work 700 hours per period (600 on regular
time and 100 on overtime), the workforce level of the level
strategy that minimizes undertime is 30,000/700 = 42.86, or
43 employees. This strategy calls for three employees to be
hired in the first quarter and for none to be laid off. To
convert the demand requirements into employee-period
equivalents, divide the demand in hours by 600. For
example, the demand of 21,000 hours in period 1 translates
into 35 employee-period equivalents (21,000/600) and
demand in period 3 translates into 50 employee-period
equivalents (30,000/600). Figure 14.10 shows OM Explorer’s
spreadsheet for this level strategy that minimizes undertime.

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Solved Problem 1

Figure 14.10 – Spreadsheet for Level Strategy

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Solved Problem 1
c. The mixed-strategy plan that we propose uses a
combination of hires, layoffs, and overtime to reduce total
costs. The workforce is reduced by 5 at the beginning of the
first period, increased by 8 in the third period, and reduced
by 13 in the fourth period. Figure 14.11 shows the results.

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Solved Problem 1

Figure 14.11 – Spreadsheet for Mixed Strategy

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Solved Problem 1

d. The total cost of the chase strategy is $1,050,000.

The level strategy results in a total cost of
$1,119,000. The mixed-strategy plan was
developed by trial and error and results in a total
cost of $1,021,000. Further improvements are
possible.

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