Tag: aggregate planning

OM in the News: Aggregate Planning Using Seasonal Workers

Every year, hundreds of thousands of U.S. workers take on seasonal jobs during the holidays. This is one of the most popular aggregate planning strategies that firms use to deal with capacity, as is noted in Chapter 13 of your Heizer/Render/Munson text.

Holiday shoppers crowded a Kohl’s store in Wisconsin last year.

The retail and transportation-and-warehousing sectors typically rush to hire as they staff up for the holidays and let those workers go once the season is over. In the final three months of last year, the two sectors added 912,000 jobs. They then shed 858,000 jobs over January and February.

While the jobs are temporary, they provide an important source of income for low-wage workers, many of whom move from job to job over the rest of the year, writes The Wall Street Journal (Nov. 12, 2025).

This year, some of the companies that do the most holiday hiring have broken from their usual practice of advertising how many holiday workers they plan to hire. United Parcel Service, for example, said last year that it would hire 125,000 workers in its “holiday hiring spree.” This year, it hasn’t made an announcement. Also holding off: Macy’s, which said in 2024 that it would hire more than 31,500 seasonal workers, and Target, which said last year that it would add 100,000 seasonal jobs. (Both UPS and Target have laid off regular employees this year.)

Through October this year large companies have announced plans to hire 372,520 seasonal workers. That compares with 660,150 at the same point last year.

 But Portugalia Marketplace in Fall River, Mass., which nets about 30% of its annual business in November and December, calls for “all hands on deck”—as it wrote in a recent seasonal hiring posting for its warehouse that fills online orders. The grocer’s staff typically grows from 50 people to 60 near year-end as families shop for holiday groceries and the store hosts more events to attract visitors.

Classroom discussion questions:

  1. What other capacity options do firms have?
  2. Why is seasonal hiring slowing this year? Is it an AI issue?

Guest Post: The Supply Chains Behind a Strong Holiday Shopping Season

Temple U. Professor Misty Blessley shares her insights today, on Black Friday.

The holiday shopping season is in full swing, and companies are optimistic about their year-end financial performance. Operations and supply chain managers have a crucial role. Chapter 1 of your Heizer/Render/Munson textbook explores how marketing and operations management strategies can drive bottom-line results.

Customer spending is expected to be strong this holiday season. The National Retail Federation is forecasting winter holiday sales to rise by 2.5% to 3.5% over last year. Meeting this demand requires retailers to fulfill orders when, where and how customers want. Companies are strategically using both brick-and-mortar stores and e-commerce platforms to appeal to their customers.

Supply chains have stabilized after years of disruption. Thus, core products have been efficiently moved from warehouses to retail locations to ensure availability for traditional retail customers. Additionally, e-commerce channels are poised to efficiently fulfill customer orders. Many retailers are adopting cost-effective delivery strategies tailored to peak shopping events like Black Friday and Cyber Monday. Instead of defaulting to same- or next-day shipping, retailers are spreading deliveries over several days to reduce costs and balance labor.

Amazon bolstered its labor capacity by adding 250,000 seasonal hires. DHL’s CEO explains why spreading deliveries is a viable strategy – extending shipments by just a few days allows companies to control warehouse costs while still meeting customer delivery expectations.

OM and SCM plays a pivotal role in driving both revenue growth and cost efficiency. By offering customers flexibility in choosing their preferred shopping and delivery channels, retailers enhance the customer experience and boost sales. Simultaneously, costs are reduced by managing product delivery.

Classroom discussion questions:
1. In Chapter 6 of your textbook we learn that customer expectations are the standards against which service is judged. What is the effect of exceeding expectations on contribution? (i.e., same or next-day shipping)
2. Aggregate Planning Strategies are covered in Chapter 11. Which strategies are being used by retailers to support this holiday shopping season?

Guest Post: Aggregate Planning with Excel OM

Today’s Guest Post comes from Dr. Albena Ivanova, who is Professor of OM at Robert Morris University in Pennsylvania.

Excel OM software, which comes free with your Heizer/Render/Munson text, is an excellent tool for students to learn the various concepts of Operations Management. I have been using this software in conjunction with MyOMLab ever since I started teaching. I have found that using this software has not only made the homework completion process smoother but also helped students gain a better understanding of the course concepts.

 

The first thing that I do is show students how to arrange their tabs so they can have the two screens open at the same time next to each other. I usually pick algorithmic problems for class practice, where we are all working on the same problem, but with different numbers. I use the Study Plan for class practice and then give similar questions (but with different numbers) for homework and for the exam. My homework is not time limited, however, the students have only one (1) attempt. If they need to practice, they can do that in the Study Plan before completing the homework.

 

In the attached video I explain the process of using the Excel OM software to complete an Aggregate Problem homework in MyOMLab. The software has been slightly modified, and I have explained these modifications in detail in the video. I think that these small edits provide additional learning experience for the students, as they can see how to create or edit their own templates.

 

Overall, using Excel OM software has been a game-changer in my classroom. It has helped students better understand the course concepts. I hope my experience and the attached video will be helpful to fellow operations management professors in their efforts to enhance the learning of their students.

Guest Post: Seasonal Employees

Professor Howard Weiss shares his insights with our readers monthly. This topic is especially timely.

Chapter 13 in your Heizer/Render/Munson text, Aggregate Planning, discusses temporary workers as one strategy to use to adjust for changes in demand. This is a useful strategy when the size of the labor force is large. Thus, using seasonal workers is the appropriate strategy for UPS to follow– and it does. This year, beginning now in October and ending in January, UPS plans to hire over 100,000 employees to meet the December holiday demand when the volume of packages doubles. One benefit to the seasonal workers who are hired is that 35% of them will later be hired into full time positions as package handlers, delivery drivers, tractor-trailer drivers, and driver helpers.

Many other organizations also require seasonal workers. Retail stores clearly have the same seasonality as UPS. Spirit Halloween is a company that sells Halloween costumes, decorations, props, and animatronics and has over 1,400 stores open in September and October in all 50 states and in 9 provinces in Canada. Summer is a season rife with seasonal jobs. Philadelphia and many other cities hire seasonal workers for the summer for parks and recreation. Summer camps do the same, as do zoos. Barnes & Noble hires seasonal workers for the beginnings of semesters at universities. H&R Block hires seasonal workers in the winter for tax preparation. Seasonal fruit pickers are hired during harvest times. Landscapers hire workers seasonally.

Your textbook notes the downside of hiring seasonal employees is that “new employees need to be trained, and productivity drops temporarily.” In addition, the training may not be as complete as training for full time employees. The book further states that “layoffs or terminations lower the morale of all workers and also lead to lower productivity.” In addition, seasonal workers may be less committed and less loyal than full time employees.

Of course, there are several advantages to using seasonal workers, the most obvious of which is the flexibility it affords to handle increased seasonal demands and keep wages and benefits costs as low as possible since the seasonal employees are not full-time employees. In addition, if there is an issue with a seasonal employee, it is easier to dismiss the employee. Or on the optimistic side, if a seasonal worker is excellent he or she can be hired full time, as is the case with UPS.

Classroom discussion questions:
1. How else can seasonality of demand be approached?
2. What products/services not mentioned above require seasonal employees?

Guest Post: Southwest’s Airplane Disruptions

Today’s guest Post comes from Prof. Howard Weiss, who upon returning from Europe, observed an aggregate planning problem.

From October 10 through October 12, 2021 Southwest canceled more than 2400 of its flights due to bad weather and air traffic control problems in Florida, reported The Wall Street Journal (Oct 21, 2021). Your Heizer/Render/Munson Aggregate Planning chapter (Ch. 13) discusses planning for the airline industry and more specifically about airlines that use hubs. But Southwest does not use hubs. Rather it operates a very complex spider web-like point-to-point route network, and thus a flight between two cities in California can be impacted by bad weather in Florida, for example. According to Southwest’s COO, “40% to 50% of the airlines’ planes flow through Florida nearly every day, and many crews change there. So when we have a disruption, a significant disruption, in Florida, it tends to spread to our entire network.” By Friday night, he said, the airline had “well over” 100 planes and crews “that weren’t where they were supposed to be.” 

Your textbook suggests that for successful Aggregate Planning there should be:

  1. Accurate scheduling of labor hours. 
  2. An on-call labor resource
  3. Flexibility of individual worker skills.
  4. Flexibility in output rate

These suggestions are difficult for any airline to follow but even more difficult for Southwest. Of course, the cancellations led to a large increase in the number of customers trying to reach Southwest and because telephone staffing did not increase this led to waits of several hours to reach customer service.

Classroom Discussion Questions

  1. What could Southwest do to appease customers whose flights were cancelled?
  2. How does Southwest’s on-time performance and cancellation rate compare to other airlines’ performance in general? 

 

 

 

OM in the News: Scramble to Produce Covid Vaccine Derails Supply of other Drugs

The unprecedented effort to manufacture Covid-19 vaccines is disrupting supplies of other critical medicines in the U.S., including treatments for infectious diseases and injectable drugs that prevent blindness. Pfizer has told U.S. hospitals to expect interruptions to supplies of four of its products — an antibiotic, a steroid and two types of testosterone — according to The Financial Times (March 19, 2021). The drugs require some of the same ingredients and manufacturing capacity as the Covid-19 vaccine that Pfizer has co-developed.

covid

Pfizer warned of “short-term supply interruptions to medicines due to increased vaccine production” and stated that hospitals should “anticipate some disruptions” in the second half of the year. The company said that it aimed to deliver approximately 2 billion doses of its Covid vaccine globally by the end of 2021.

This comes as the U.S. tries to boost vaccine supplies in order to fully reopen its economy. The government has invoked the Defense Production Act to ensure that vaccine makers get the drugs and production capacity they need. But the use of that Korean war-era powers has left a third of pharmaceutical firms scrambling for ingredients, equipment or space on production lines.

Other groups involved in medicine production and distribution are also struggling. Schott, one of the world’s largest glassmakers, warned that there was a wait of 12- 18 months for new orders of glass vials. That shortage is affecting almost every type of injectable drug in the U.S., including chemotherapy, insulin and other medicines that are found in crash carts in ERs, ICUs, and surgical suites in hospitals.

Catalent, a contract manufacturer working for the vaccine makers Moderna and Johnson & Johnson, is also prioritizing large orders of injections over other treatments, meaning thousands of patients have had to do without Tepezza, a treatment for thyroid eye disease.

Classroom discussion questions:

  1. Chapter 13 of your Heizer/Render/Munson text lists 5 capacity options used as aggregate planning strategies. Which could Pfizer and others employ today?
  2. What are the advantages and disadvantages of each option you named?

Guest Post: Hiring Workers to Meet Demand

Our Guest Post today comes from Howard Weiss, Professor of Operations Management Emeritus at Temple University.

The city of Philadelphia is one of many cities that due to COVID-19 are experiencing increasing volumes of residential trash that needs to be collected, reports The Philadelphia Inquirer (Aug. 26, 2020). Because people have been spending more time at home there has been a dramatic increase of household trash. The problem is compounded by the fact that some of the trash collectors are not showing up for work because they have the virus, fear getting the virus or are self-quarantining because they have been exposed to someone who has the virus.

In Aggregate Planning, Chapter 13 in your Heizer/Render/Munson OM text, one option suggested is to hire workers as needed to meet the demand. This may be easier said than done. In July, the mayor of Philadelphia announced that between 120 and 150 workers would be hired into the Streets Department. The city maintains a list of 3,455 labor candidates but at the moment there are only 45 of these candidates employed for trash collection. Fifty-five have been hired but 10 have quit.

The Inquirer notes that “The city has faced challenges at every step of the hiring process. Issues include finding workers from the city’s existing list of laborer civil service candidates who are interested in taking the job, getting them to show up for and pass medical assessments, and then keeping them at work once they begin.”

Baltimore is using a different option of collecting trash but not recyclables. For recyclables, Baltimore is using a self-service option as discussed in Chapter 7 in which citizens are expected to take their recyclables to a drop-off center. Dallas is considering ending collections in alleyways because collecting on streets is more efficient in terms of labor.

Classroom discussion questions:
1. What other options do cities have to increase their trash collection?
2. What other resources are required if more trash collectors are hired?

 

Guest Post: Using Excel Teaching Videos at U. of Dayton

steve harrodDr. Steven Harrod is Assistant Professor of Operations Management at the University of Dayton. If you teach Excel modeling in your OM class, you will enjoy Steve’s detailed “how to” videos.

Videos are a great  way to help students learn the complexities of modeling in spreadsheets. Students can be overwhelmed when this material is presented live in lecture. Too often, students experience computer technical problems, and become lost in lecture while they attempt to fix their technical issue. These videos allow students to follow the lesson at their own pace, as they resolve problems such as installing add-ins (or even charging their battery!).

The first video supports Chapter 4, Forecasting. Titled “Creating an Exponential Forecast in Excel, Including Error Statistics” (http://youtu.be/uHy5tG1Rdvg), it walks
students through the process of formatting a spreadsheet, generating an exponential forecast, and calculating error statistics for that forecast. This video, and the others, was purposely recorded at a low screen resolution and high magnification, so that the visual clarity is high. The runtime for this video is 23 minutes.

The second and third videos are fundamentally linear programming exercises. “How to Create a Linear Programming Transportation Model” (http://youtu.be/RZX2bmoCzLI) is self-explanatory (runtime 14 minutes). Sharp eyed readers will recognize this as Problem 16 from Module B.

“Aggregate Planning on Microsoft Excel, Transportation Model” (http://youtu.be/m44gSMpb3Ic) is another transportation model, this time from Chapter 13, Aggregate Planning. This problem is “Planning Example 1” from the Heizer/Render text (Tables 13.2 and 13.3). This video is longer, at 36 minutes, because the data entry and model structure for the aggregate planning problem are more complex.

I hope you find these videos useful in your course presentation, and I welcome your comments at steven.harrod@udayton.edu.