Aggregate Planning

Aggregate Planning is the planning method used to determine the required resource capacity

a firm will need so as to satisfy its expected demand. Aggregate planning is the process of
developing, analyzing, and preserving a preliminary, approximate schedule of the
overall operations of an organization.
The aggregate plan usually carries targeted sales forecasts, production levels, inventory levels,
and customer backlogs. The goal of aggregate planning is to match 'demand' and 'supply' in the
aggregate using mentioned combination in a cost effective manner. Aggregate Planning helps to
matching demand with supply and minimizing the waiting time for the customers to
maximize customer service. Aggregate Planning process help to removes variable cost and
improves the bottom line of the financial statement for achieving the business goals of an
organization. It also helps to achieve the long-term objectives of a company. This longer-
term perspective on resource use can help reduce short-term necessities adjustments with a
resulting cost savings.
Aggregate planning is defined as a planning method in the production process. It’s includes a
combination of sub-contracting, sourcing, outsourcing, employment, labor overtime, amount of
inventory and planned output to match demand and supply cost-effectively. The term
"aggregate" is used because planning at this level includes all resources "in the aggregate;" for
example, as a product line or family. Aggregate resources could be total number of workers,
hours of machine time, or tons of raw materials. Aggregate units of output could include gallons,
feet, pounds of output, as well as aggregate units appearing in service industries such as hours of
service delivered, number of patients seen etc.
Types of aggregate planning:

1. Long term
2. Short Term
3. Intermediate
1. Long-term planning

• Product and service selection

• Facility size and location
• Equipment decision
• Facility layout
2. Intermediate planning
 • General levels of
• Employment
• Output
• Finished goods inventories

3. Short-term planning

Details plans of

• Machine loading
• Job assignments
• Job sequencing
• Work scheduling