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Aggregate planning is an intermediate planning method used to determine the necessary resource capacity a firm will need in order to meet its expected demand.
Process planning
Sales and operations (aggregate) planning Sales plan Aggregate operations plan
Services
Material requirements planning Weekly workforce and customer scheduling Daily workforce and customer scheduling
Short range
Order scheduling
Greater than one year planning horizon Usually performed in annual increments
Medium-range planning
Short-range planning
One day to less than six months Usually with weekly increments
Suppose the figure to the right represents forecast demand in units Now suppose this lower figure represents the aggregate capacity of the company to meet demand What we want to do is balance out the production rate, workforce levels, and inventory to make these figures match up
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External to firm
Current workforce
Inventory levels
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Summary
Aggregate production planning is a vital tool to aid firms in balancing supply and demand. All possible strategies should be considered initially and then eliminated based on cost and organizational policy. While pure strategies such as chase demand and level production may work for some firms, most tend to use a mixed strategy.