CH 13 10 Edition by 9vWWu0


									                                                                                       Aggregate Planning

                                                                       CHAPTER 13
                                                               AGGREGATE PLANNING

1.    Aggregate Planning. Aggregate planning is planning for general levels of employment and
      output to balance supply and demand typically for periods of one year or less. The term
      "aggregate" implies that planning is done for groups of products, or product types (i.e., product
      "families") rather than for specific or individual products.
2.    Elements of Aggregate Planning. Planners take into account projected demand, capacity, and
      costs of various options in devising an aggregate plan. Among the variables available to planners
      are adjustments in output rate, employment level, overtime/undertime, and subcontracting.
3.    Objective of Aggregate Planning. The goal of aggregate planning is to achieve a production
      plan that will effectively utilize the firm’s resources. Due to the nature of aggregate planning, it
      is seldom possible to structure a plan that is guaranteed optimal. Instead, planners usually resort
      to trial-and-error methods to achieve an acceptable plan.
4.    Aggregate Planning Strategies. Among the strategies aggregate planners might try are to:
      a. maintain a level work force and meet demand variations in some other manner, such as
           holding inventories or subcontracting.
      b. use some combination of pricing differentials, promotions and back orders to smooth out
           fluctuations in demand.
      c. match demand period by period with some combination of overtime and part time work, or
           putting workers on leave.
      Note: It is unlikely that planners would attempt to match demand period by period by varying
      employment levels alone because that would tend to be costly, disruptive, and result in low
      employee morale.
5.    Strategy Selection. Choosing a strategy usually depends on the cost entailed and company
6.    Data Required. In order to effectively plan, in addition to knowledge of company policy,
      estimates of the following items must be available to planners:
      a. Demand for each period
      b. Capacity for each period
      c. Costs (regular time, overtime, subcontracting, backorders, etc.)
7.    Disaggregation. In order to translate an aggregate plan into meaningful terms for production, it
      must be disaggregated (i.e., broken down into specific product requirements) to determine labor,
      material, and inventory requirements.
8.    Master Scheduling. A master schedule indicates the desired quantity and timing of deliveries.
      A master production schedule takes into account planned production, as well as on-hand inven-
9.    Master Scheduling Process. There are three basic inputs to the master schedule: Beginning
      inventory, forecasts for each period in the schedule, and customer orders. Outputs of the
      scheduling process include projected inventory, production requirements, and the amount of
      uncommitted inventory, which is referred to as available-to-promise (ATP) inventory.

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