Aggregate planning is an intermediate production plan that spans 2-18 months to determine resource procurement quantities and timing to minimize total costs. It considers inputs like workforce, facilities, demand forecasts, and costs. Strategies include proactively altering demand, reactively altering capacity, or using both. The master production schedule converts the aggregate plan into a schedule of individual products over a shorter time period like weeks. It lists products, completion dates, and quantities including firm orders, forecasts, and spare parts. Aggregate planning and the MPS differ in their timeframes, with aggregate planning using months and MPS using weeks.

2. Aggregate planning and MPS

3. Aggregate planning

4. It may be defined as an intermediate production plan
which has a range of 2 to 18 months to give an idea
to management as to what quantity of materials and
other resources are to be procured and when, so that
the total cost of operations of the organization is kept
to the minimum over that period..
It has different approaches strategies and objectives
which will be discussed next. . . . . . . .
Definition

5.  There are certain inputs of aggregate planning that is
to say the factors which should be kept in mind while
planning for aggregate production;
 These are
Inputs of aggregate planning

6. Workforce
Facilities
Demand forecasts
Policies
Costs
Inputs of aggregate planning

7.  Total cost of a plan
 Projected levels of inventory
 Inventory
 Output
 Employment
 Subcontracting
 Backordering
Outputs of aggregate planning

8.  Proactive
 Alter demand to match capacity
 Reactive
 Alter capacity to match demand
 Mixed
 Some of each
Aggregate Planning Strategies

9.  In a proactive strategy a firm plans to change the
demand by means of advertisements or by means of
offering benefits for a specific product.
Proactive strategy

10.  A reactive planning strategy has two parts which are;
 Level strategy
 Chase strategy
Reactive strategy

11.  A level strategy seeks to produce an aggregate plan that
maintains a steady production rate and/or a steady
employment level. In order to satisfy changes in customer
demand, the firm must raise or lower inventory levels in
anticipation of increased or decreased levels of forecast
demand. The firm maintains a level workforce and a steady
rate of output when demand is somewhat low. This allows
the firm to establish higher inventory levels than are
currently needed. As demand increases, the firm is able to
continue a steady production rate/steady employment
level, while allowing the inventory surplus to absorb the
increased demand
Level strategy

13.  A chase strategy implies matching demand and capacity
period by period. This could result in a considerable
amount of hiring, firing or laying off of employees;
insecure and unhappy employees; increased inventory
carrying costs; problems with labor unions; and erratic
utilization of plant and equipment. It also implies a great
deal of flexibility on the firm's part. The major advantage
of a chase strategy is that it allows inventory to be held to
the lowest level possible, and for some firms this is a
considerable savings. Most firms embracing the just-in-
time production concept utilize a chase strategy approach
to aggregate planning.
Chase strategy

15. Level strategy
 ADVANTAGES
- Stable output rates and workforce
 DISADVANTAGES
 -greater inventory costs
 -increased over time and idle time
 -resource utilizations vary over time

16.  ADVANTAGES
 -Investment in inventory is low
 -Labor utilization in high
 DISADVANTAGES
 -The cost of fluctuating work force
 -potential damage to employee morale
Chase strategy

17.  Linear programming model
 Linear decision rule
 Simulation
Techniques

18.  Master Production Schedule
 Lists the products to be manufactured, when they should be
completed, and in what quantities
 It is the conversion of the aggregate schedule into a very
specific schedule of individual
 products
 Products listed in the master schedule generally divide into
three categories:
 1. Firm customer orders
 2. Forecasted demand
 3. Spare parts
Master production schedule

19.  Aggregate planning is a relatively longer term
planning that spans over a period of around 18months
on the other hand MPS is the putting of AP action i.e.
planning individual products for a shorter time span.
 Time unit for aggregate planning is one month while
the time unit for MPS is a week.
Relationship between MPS and
aggregate planning

20. That’s all what we have today for
you
we could have explained it in more
detail but time constraint didn’t
allow us !!!!!!!!

21. Credits
 This is a joint effort of
UMAR YAZDANI (D 11 IN 05)
AFSAAR ALI ( D 11 IN 27)
HANIF HAZARA (D 11 IN 39)
TAUQIR HAIDER ( D 11 IN 33)