Aggregate Planning

Intermediate-range capacity planning that typically covers a time horizon of 2~12 months may extend to as much as 18 months. Long-term planning
Product and service selection Facility size and location Equipment decision Facility layout

Short-term planning
Machine loading Job assignments Job sequencing Work scheduling

Intermediate planning
General levels of Employment Output Finished goods inventories

Aggregate Planning
Concept of Aggregation Lump all models of a product together Deal with them as though they are a single product
Essentially a big picture approach to planning

Overview of Aggregate Planning

Begins with a forecast of aggregate demand for intermediate range Followed by a general plan to meet demand requirements by setting o Output o Employment o FG inventory level

Updated periodically rolling planning horizon

Aggregate Planning
Purpose and Scope

Balancing of Demand and Supply

Demand and Capacity concerns are quantity and timing of expected demand

Inputs to Aggregate Planning

Available resources over the planning period must be known A forecast of expected demand must be available Count any policies regarding changes in employment levels Output of Aggregate Planning

Production Planning

Aggregate Planning

Demand options
Pricing shift demand from peak periods to off-peak periods
Promotion sometimes are very effective in shifting demand

Back orders taken in one period and delivers for a later period
New demand creating new demand at off-peak time

Aggregate Planning
Capacity options
Hire and layoff workers hiring during peak and laying off during off-peak may have sever effect Overtime/ Slack time can be easily & quickly implemented less severe Part time workers for seasonal work - requiring low job skills Inventories produce goods in one period & sell in another period Subcontracting enables planers to acquire temporary capacity

Aggregate Planning
Techniques for Aggregate Planning Determine demand for each period Determine capacity for each period Identify company or departmental policies Develop alternative plans & compute cost for each Select the one that best satisfies objectives.