Presented by Vrijendra Pal, Unnati Joglekar, Balamurugan , Pankaj Kale

 It deals with translating annual business and marketing plans into a production plan for all products.Definition of Aggregate Planning Aggregate planning is intermediate-range capacity planning that typically covers a time horizon of 2 to 12 months. 2 .  It is particularly useful for organizations that experience seasonal or other fluctuations in demand or capacity.

3 .Goal of Aggregate Planning To develop a realistic production plan on an aggregate level that will satisfy organizational goals and customer demand needs at the lowest total cost.

The concept of Aggregation  Aggregate planning is essentially a “big picture” approach to planning  Convenient to think of capacity in terms of labour hours/ machine hours /output rates 4 .

 Inventories are built up and drawn down at a uniform rate and output occurs at a uniform rate throughout each period 5 . that is’ sufficient inventory capacity exists to accommodate a plan. subcontractors with appropriate quality and capacity are standing by. and changes in output can be made as needed.  Cost figures can be reasonably estimated and are constant for the planning horizon.  Plans are feasible.Assumptions in aggregate planning  The regular output capacity is the same in all periods.  Cost is a linear function composed of unit cost and number of units.  All costs associated with a decision option can be represented by a lump sum or by unit cost that are independent of the quantity involved.

Advantages and Disadvantages 6 .

Overview of Planning Levels 7 .

 Corporate Strategic Planning -.Identifies the equipment.  Financial Planning -.  Resource planning -. and personnel needs to accomplish long-range production plan 8 .Articulates how these objectives and goals are to be achieved in light of the company’s capabilities and its economic and political environment.Translates these into individual market and product line objectives.Long-Range Planning Begins with a statement of organization objectives and goals to be achieved over the next two to ten years.Analyzes the financial feasibility of these objectives relative to capital requirements and return on investment goals.  Product and Market Planning -. facilities.

Reviews the MPS to make sure that there are no obvious capacity constraints that would require the schedule to be changed. Generates the amounts and need dates for the manufacture of specific end products.  Master Production Scheduling -. which when integrated with aggregate production plan.Specifies output requirements by major product groups either in labor hours required or in units of production for monthly periods up to 18 months in the future.Provides an estimate of specific products. become the output requirement for the master production schedule.Medium-Range Planning  Aggregate Production Planning -. 9 .  Item Forecasting -.  Rough-cut Capacity Planning -.(MPS).

Purchase Planning and Control -. 10 . Describes scheduling and shop floor control activities.Short-range Planning  Materials Planning -. Production Activity Control -. Capacity Requirements Planning -.(PAC).Refers to a variety of reports and procedures focusing on schedule demands and capacity constraints deriving from the materials plan.Provides operations required to put the product in its final form.Deals with the acquisition and control of purchased items specified by the materials plan. Takes the end product requirements from      MPS and breaks it into component parts or subassemblies. Final Assembly Scheduling -.(CRP). Input / Output Planning and Control -. Provides detailed schedule of when each operation is to be run on each work center.(MRP).

Organizations need Aggregate Planning?  Planning .It takes time to implement plans.  Aggregation .It is not possible to predict with any degree of accuracy. the timing and volume of demand for individual items. 11 .

Departmental Aggregate planning Operations Materials Distributions and Marketing Aggregate Planning Engineering Accounting Human Resources 12 .

13 . competitive and political conditions. Objective To coordinate the intermediate plans of various organizational functions. forecasts of demand for the organization’s products or services. such as marketing. taking into account the organization’s strategies and policies. and finance. and economic. operations.Business Plan and Objective The Business Plan establishes guidelines for the organization.

Planning sequence Corporate strategies and policies Economic. and political conditions Aggregate demand forecasts Business Plan Establishes production and capacity strategies Production plan Establishes production capacity Master schedule Establishes schedules for specific products 14 . competitive.

Inputs to Production Planning System Competitor's behavior Raw material availability Market demand External Firm External Capacity Planning for Production External conditions Current physical capacity Current workforce Inventory levels Activities required for production Internal to firm 15 .

Purpose & scope of aggregate planning Demand and Capacity  If capacity and demand are nearly equal emphasis should be placed on meeting demand as efficiently as possible.  If capacity is less than demand the firm might consider subcontracting a portion of the work load. 16 .  If capacity is greater than demand the firm might chose promotion and advertising in order to increase demand.

Level of production & capacity planning Items Product lines or families Production Planning Aggregate production Planning Master production schedule Capacity Planning Resource requirement plan Rough-cut capacity plan Resource Level Plan Individual Products Critical work centers Components Material requirement plan Capacity requirement Plan Input /Output control All work centers Manufacturin g operations Shop floor schedule 17 Individual .

 Develop alternative plans and calculate the cost for each.  Chose the best overall plan based on company objectives and cost. 18 .  Determine unit cost based on all relevant sources.  Determine capacities for each period.Inputs to Aggregate Planning  Determine demand for each period.

Thank you 19 .

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