12.5.

Aggregate Resources
In a production system products are processed by several different resources. These resources include labor, tools, and
machines, among others. For example, in an auto assembly plant, a car goes through tens and hundreds of different stations
before it is completed. Incorporating these tens and hundreds of different resources into an aggregate planning model is very
complex. Hence, similar to the aggregate product that represents a group of products, we can define an Aggregate Resource to
represent a pool of several resources.

In processes that are very labor-intensive (such as call centers), the main aggregate resource is labor. Other resources such as
phones and computers do not play a significant role in planning services and workforce. In processes that rely on machines
and operators, where both can become a bottleneck, resources can be aggregated into two aggregate resources: Equipment
and Labor. Another option, which is often used, is to aggregate based on their functions. For example, one can aggregate all the
workers and equipment in a drilling department into one aggregate resource: Drilling Department.

The decision of how to aggregate resources depends on many factors such as the resource's contribution to the final product
as well as the variable and fixed costs of resource, among others. When resources are aggregated into one or a few resources,
for each resource the following must be determined. First, if the aggregate resource is a pool of resources (e.g., labor in the call
center example), we must determine how many of the resources are in the pool (e.g., how many agents are in the call center).
Second, it should also be determined how long it takes for the aggregate resource to process each unit of aggregate product
(e.g., how long it takes on an average for an agent to respond to a phone call). Third, how many hours the aggregate resource is
available during each period (e.g., what are the working hours of the agents in a week or in a month?).

Establishing the concepts of aggregate units of production and aggregate resources, the remaining of this chapter is devoted to
presenting some basic and fundamental aggregate planning analytics that are very effective in finding cost-effective
production, inventory, and workforce plans. However, while the general aggregate planning is concerned with developing those
plans for multiple future periods, it is useful to first show how aggregate planning helps to develop such plans in single-period
problems.

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