Aggregate planning is the process of determining production levels over the next 6-18 months on a weekly basis to support business plans. It involves translating long-term forecasts into specific production rates and labor requirements. The objectives are to minimize costs and maximize profits, customer service, and utilization while minimizing inventory, production changes, and workforce changes. Key factors in aggregate planning include sales forecasts, inventory levels, workforce capacity, and skills training needs. Strategies include level capacity, which maintains steady output through inventory and overtime, and chase demand, which matches capacity directly to demand.

1. AGGREGATE PLANNING

2. Defined as
• The process of determining output levels of product groups over
the coming 6 to 18 months on a weekly basis, the plan identifies
the overall level of outputs in support of the business plan.
• Aggregate Planning involves translating long-term forecasted
demand into specific production rates and the corresponding
labour requirements for the intermediate term.

3. Objectives
• Minimize cost/ maximize profits
• Maximize customer service
• Minimize inventory investment
• Minimize changes in production rates
• Minimize changes in workforce levels
• Maximize utilization of plant and equipment

4. Following factors are critical before an aggregate
planning process can actually start:
• The complete information is required about available production
facility and raw materials.
• A solid demand forecast covering the medium-range period
• Financial planning surrounding the production cost which includes
raw material, labor, inventory planning, etc.
• Organization policy around labor management, quality
management, etc.

5. Factors affecting Aggregate planning
• Sales forecasts.
• Inventory investment.
• Work force capacity.
• Skills training requirements

6. 1) Sales forecasts - Forecasts are about the future. It’s hard to
overstate how important it is for a company to produce an
accurate sales forecast. Sales forecasting adds value across an
organization. Finance relies on forecasts to develop budgets for
capacity plans and hiring, and production uses sales forecasts to
plan their cycles.
2) Inventory investment - Aggregate planning is used in
manufacturing companies to map out production plans and
resource needs for the next three to 18 months. Inventory levels
play a key role in aggregate planning, because a major goal of
this process is to ensure you have enough inventory to meet
production goals but not too much that you carry excess.

7. 3) Work force capacity - The term “workforce capacity” refers to
your organization’s ability to ensure sufficient staffing levels to
accomplish its work processes and successfully deliver your products
to your customers, including the ability to meet seasonal or varying
demand levels.
4) Skills training requirements - Skills training is designed to
provide employees with the targeted training they need to gain the
knowledge and abilities necessary to fulfill the specific
requirements of their job positions. Skills training can also be used
to re-educate and retrain employees whenever new technology,
processes or systems debut

8. Aggregate planning strategies
• Proactive strategies involve demand options: They attempt to
alter demand so that it matches capacity.
• Reactive strategies involve capacity options: They attempt to
alter capacity so that it matches demand.
• Mixed strategies involve an element of each of these approaches.

9. Basic Strategies
• Level Capacity Strategy: Maintaining a steady workforce which
gives steady rate of output while meeting variations in demand by
using a combination of inventories, overtime, subcontracting and
back orders.
• Chase Demand Strategy: Matching capacity to demand i.e,
operations would be planned to meet expected demand for that
period.

10. THANK YOU
Presented by:
Rutakshi Patel IU2152000031
Shreya Shah IU2155550064