This document discusses aggregate planning, which involves determining production levels for the intermediate future of 6-18 months. Aggregate planning begins with forecasting demand and adjusting production rates, staffing levels, and inventory levels. It requires input from various functional areas regarding capacity, customer needs, demand forecasts, suppliers, and resources. The objectives of aggregate planning are to meet demand, provide stable work and customer service levels, and develop an economic strategy. It aims to minimize costs and inventory while maximizing profit, customer service, and plant utilization.

1. Aggregate Planning
Unit 6

2. Concept
• Aggregate planning is concerned with
determining the quantity and timing of
production for the immediate future, often
from 6 to 18 months ahead.
• Aggregate operation plan begins with a
forecast of aggregate demand for the
intermediate range by adjusting production
rates, labour levels, inventory levels etc.

3. Aggregate plan and its functions
• Managerial inputs from functional areas to
aggregate plans.
• Current machine capacity
• Plans for future capacity
• Work force capacity
• Customer needs
• Demand forecasts
• Competitions behavour

4. • Mateiral suppliers capabilities
• Storage capacity and material availability
• Engineering new products.
• Product design changes,
• Machine standards
• Finance size and type
• Cost structure and data
• Financial condition of firm
• Human resources
• Labour market condition
• Training capacity

5. Objectives of Aggregate planning
• Customer service, work force stability
• To meet forecasted demand
• To estabilish company wide strategic plan for
allocating resources.
• To develop an economic strategy to meet
customer demand.

6. Importance of
Aggregate planning
• Minimize cost, maximize profit
• Maximize customer service
• Minimize inventory investment
• Minimize changes in production rates
• Maximize utilization of plant and equipment

7. Dimension of Aggregation
• Product families
• Labour
• Time

8. Goals of aggregate planning
• To provide the overall levels of output,
inventory required by business.
• To use capacity of the plant .
• Optimum use of existing capacity.

9. Aggregate planning strategy
• Level production strategy
• Chase demand strategy
• Peak demand strategy
• Overtime and under time
• Subcontracting
• Part time worker
• Backlogs

10. Planning Options
• Demand options
– Pricing
– Promotions
– Back orders
– New demand
• Supply options
– Hire and lay off workers
– Overtime/slack time

11. • Part time workers
• Inventories
• Subcontracting

12. Difference between mfg and service
organization
• Capacity is difficult to predict
• Demand for service can be difficult to predict
• Services occur when they are rendered
• Labour flexibility can be an advantages in services
• Service capacity is designed and provided at the
appropriate place and time.
– Hospitals
– Restaurants
– Airlines