Aggregate planning involves determining production levels on a weekly or monthly basis for the next 6-18 months based on marketing forecasts. It aims to minimize costs from fluctuating production levels like hiring/laying off workers. The document discusses level, chase, and hybrid aggregate planning strategies and their advantages like reducing overhead from excess inventory. It also outlines the aggregate planning process including determining demand and capacity, developing alternative plans, selecting the optimal plan, and disaggregating it through master scheduling and rough cut capacity planning.

1. Presented by :BHAWAN SINGH
DEVESH MISHRA
DIPAK RAJAK
GAURAV SINGH
GAURI GUPTA
PGDM(13-15)
Sec -C
Aggregate Planning
1/31/2014
Presented to :Dr. V.K Arora

2. Aggregate Planning
Aggregate means ”Total” or “complete’’
Aggregate production planning is planning the no. of units of the product to be
produced on
 a weekly or monthly basis for the coming 6-
18 months.
It is based upon the demand forecasts provided by the marketing department.
Unplanned production leads to high costs like- Hiring ,laying-off costs of
workers,overtime costs,inventory costs,shortages of the product
Shortage or stock out is most harmful to the company, as it results in loss of goodwill on the
part of customers.
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3. Advantages of Aggregate planning
Minimize Staffing Fluctuations-businesses are better able to predict their staffing
requirements. And
able to reduce or eliminate the need to hire these extra
workers.
Business will save both time and money
Reduce Overhead- Excess inventory costs businesses a lot of money and damage the
product
with proper planning, managers can decide how much product they
will need and when they will need it so they
Increase Production rates.- it maximizes the utilization of production equipment.
 idea is to create a good balance so orders are fulfilled before
the deadlines,
Accommodate Changessince production orders often vary, most businesses cannot stick to one
plan at all times.
At different times, businesses can rotate between active, passive and mixed
strategies.
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4. Types of Aggregate Planning
Level Aggregate plans
Maintain the constant workforce.
Sets capacity to accommodate average demand.
Often used for make-to-stock product.
Disadvantage- Builds inventory and/or uses back orders.
Chase Aggregate Plans
Produces exactly what is needed each period.
Sets labour/equipment what is needed each period.
Disadvantage- constantly changing short term capacity.
Hybrid Aggregate Plans
Uses combination of options.
Option should be limited to facilitate execution.
May use a level workforce with overtime & temps.
May use short term sourcing.
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5. Operational Parameter of Aggregate Planning
Production Rate
Workforce
Overtime/Under time
Machine capacity level
Subcontracting
Backlog
Inventory on hand
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7. Aggregate Planning Strategies
Proactive
-Alter demand to
match capacity
Reactivealter capacity to match
demand
Mixedsome of each
Techniques for aggregate planning
Determine demand for each period
Determine capacity for each period
Identify policies
Determine units costs
Develop alternative plans and costs
Select the best plan that satisfies objectives
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8. Master Scheduling Process
Inputs
Outputs
Beginning inventor
Project Inventory
Forecast
Customer Order
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Master
Scheduling
Master Production
Schedule
Uncommitted Inventory

9. Disaggregating the Aggregate Plan
oMaster Schedule- It is the result of disaggregation of aggregate plan,
Time period in master schedule called TIME BUCKETS,
It covers a few weeks to 2-3 months
oRough Cut Capacity- It is tentative in nature,
It must be run through MRP systems
To check whether sufficient production capacities such as machines
equipments exist or not
oMaster Production Schedule-It details about the quantities and delivery timings of a
product but not the production plan.
oAvailable to promise Inventory-it is necessary for sales personnel to know how many units
of the product at maximum they can commit to customers in a given time period.
oTime Fences-
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The MPS can’t be changed near the actual production time,
If changes made the whole exercise of production planning will become
useless.
To set various time intervals called time fences to regulate changes in MPS.

10. Vendor Relationship Management(VRM):- Developing and
maintaining healthy working relationship with vendor.
Task structure
Length of contract
Selection of Vendor
Open tendering
Direct selection
Type of Distribution Strategies :Direct shipment
Cross – docking
Trans shipment
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