Operations Management - 20ME41P 2021-22

Week -4 Session-4
CAPACITY AND AGGREGATE PLANNING

Content Page No.

 Aggregate Planning 2
 Planning Hierarchy 3
 Pure strategy 3

 Mixed strategy 3

Expected Outcomes: - CO-1

Course Outcome: - Production capacity utilization plan based on demand forecast

and available production capacity for a given product.

Linked Programme Outcome: - PO-1

Session Time / Teaching Hours: - 1hour

Mechanical Engineering Program 1

Operations Management - 20ME41P 2021-22

Week - 4
CAPACITY AND AGGREGATE PLANNING:

Aggregate Planning:

Aggregate planning is an intermediate term planning decision. It is the process of

planning the quantity and timing of output over the intermediate time horizon (3
months to one year). Within this range, the physical facilities are assumed to be fixed
for the planning period. Therefore, fluctuations in demand must be met by varying
labour and inventory schedule. Aggregate planning seeks the best combination to
minimise costs.

Production planning in the intermediate range of time is termed as ‘Aggregate

Planning’. It is thus called because the demand on facilities and available capacities is
specified in aggregate quantities. For example aggregate quantities of number of
Automobile vehicles, Aggregate number of soaps etc. Here the total expected demand
is specified without regard to the product mix that makes up the specified figure.

While dealing with production problems, the planning process is normally

divided in three categories.

(i) Long range Planning which deals with strategic decisions such as purchase of
facilities, introduction of new products, processes etc.

(ii) Short term planning which deals with day-to-day work, scheduling and
sometimes inventory problems.

(iii) Intermediate Planning or Aggregate Planning, which is in between long range

and short term planning, which is concerned in generally acceptable planning taking
the load on hand and the facilities available into considerations. In aggregate planning
the management formulates a general strategy by which capacity can be made to
satisfy demand in a most economical way during a specific moderate time period, say
for one year. The aggregate planning is made operational through a master schedule
that gives the manufacturing schedule (Products and dates of manufacture). Generally,
day-to-day schedules are prepared from master schedule. Facility planning and
scheduling has got very close relationship with aggregate planning.

Mechanical Engineering Program 2

Operations Management - 20ME41P 2021-22

Mechanical Engineering Program 3

Operations Management - 20ME41P 2021-22

References
1. Production and Operations Management–Creating Value along the Supply
Chain ByRusseland Taylor, Wiley Publications, 7 Editions.
2. Modern Production and Operation ManagementBy Buffa and Sarin, Wiley
Publications, 8 edition
3. Production and Operations ManagementBy Chary, Tata Mc Graw Hill
Publications
4. Production and Operations Management-Concepts, Models and Behavior by
Adam and Ebert, Prentice Hall Publications.

LIST OF SOFTWARE/LEARNING WEBSITES

1. www.youtube.com/watch?v=SF53ZZsP4ik
2. www.youtube.com/watch?v=iPZlQ3Zx5zc

Mechanical Engineering Program 4