Aggregate planning, Purposes of aggregate planning, Inputs & Outputs of Aggregate Planning, Techniques for Aggregate Planning

Aggregate planning

Intermediate-range capacity planning, usually covering 2 to 12 months

• A ‘big-picture’ approach to planning, focus on a group of similar products or services, or sometimes an entire product or service line

Purposes of aggregate planning

• Think of capacity in terms of labor hours or machine hours per period, or output rates
• Optimum utilization of plant
• Product grouping frees planners to make general decisions
• Flexibility to respond to the market
• Synchronize flow throughout the supply chain

Aggregate plans are updated periodically, often monthly, to take into account updated forecasts & other changes

Inputs & Outputs of Aggregate Planning

Techniques for Aggregate Planning

A general procedure for aggregate planning consists of the following steps

• Determine demand & for each period

• Determine capacities (regular time, overtime, subcontracting) for each period

• Identify company or departmental policies that are relevant (maintain a safety stock of 5% of demand, maintain a reasonably stable workforce)

• Determine unit costs for regular time, overtime, subcontracting, holding inventories, back orders, layoffs & other relevant costs

• Develop alternative plans & compute cost for each

• If satisfactory plans emerge, select the one that best satisfies objectives. Otherwise, return to step 5

Use a worksheet or spreadsheet