Aggregate planning involves determining a company's optimal production output levels over the next 6-18 months on a weekly or monthly basis. It aims to match supply and demand while minimizing costs associated with inventory, workforce changes, and production rate fluctuations. The key objectives are to minimize costs and maximize customer service, resource utilization, and profits. Important inputs include demand forecasts, resource/facility information, and cost data. Outputs include total plan costs and projected inventory, output, employment, and subcontracting levels.
Aggregate planning involves determining a company's optimal production output levels over the next 6-18 months on a weekly or monthly basis. It aims to match supply and demand while minimizing costs associated with inventory, workforce changes, and production rate fluctuations. The key objectives are to minimize costs and maximize customer service, resource utilization, and profits. Important inputs include demand forecasts, resource/facility information, and cost data. Outputs include total plan costs and projected inventory, output, employment, and subcontracting levels.
Aggregate planning involves determining a company's optimal production output levels over the next 6-18 months on a weekly or monthly basis. It aims to match supply and demand while minimizing costs associated with inventory, workforce changes, and production rate fluctuations. The key objectives are to minimize costs and maximize customer service, resource utilization, and profits. Important inputs include demand forecasts, resource/facility information, and cost data. Outputs include total plan costs and projected inventory, output, employment, and subcontracting levels.
Aggregate planning involves determining a company's optimal production output levels over the next 6-18 months on a weekly or monthly basis. It aims to match supply and demand while minimizing costs associated with inventory, workforce changes, and production rate fluctuations. The key objectives are to minimize costs and maximize customer service, resource utilization, and profits. Important inputs include demand forecasts, resource/facility information, and cost data. Outputs include total plan costs and projected inventory, output, employment, and subcontracting levels.
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Aggregate planning
Meaning
• Aggregate planning is the process of
determining output level of product groups over the next 6 to 18 months period on a weekly or monthly basis. The plan indicates the overall level of outputs supporting the business plan. • Aggregate Planning is concerned with matching supply and demand of output over the medium time range, up to approximately 12 months into the future. • The aim of aggregate planning is to set overall output levels in the near to medium future in the face of fluctuating or uncertain demands. Aggregate planning might seek to influence demand as well as supply. Objectives of the Aggregate planning To minimize the investments in the various inventories. To minimize the total cost over the planning horizon. To maximize the customer service. To minimize the changes in the workforce levels To minimize the changes in the production rates. To maximize the utilization of the plant and the various equipments. Pre required inputs for Aggregate Planning • Information about the resources and the facilities available. • Demand forecast for the period for which the planning has to be done. • Cost of various resources. This includes cost of holding inventory, ordering cost, cost of production . • Organizational policies Outputs from Aggregate Planning • Total cost of a plan • Projected level of inventory, output, employment, subcontracting Need Of Aggregate Planning • Minimise cost and maximise profits • Keep Production cost low • Maximise the customer services • Minimise inventory investment • Minimise change in production rates Steps in Aggregate Planning • Prepare the sales forecast • Sum up the individual product forecast into one aggregate demand for the factory • Transform the demand for each time period into labor , materials, machines and other elements of production capacity required to satisfy the aggregate demand • Determine the unit costs for regular time, overtime, subcontracting, holding inventories etc. Steps in Aggregate Planning • Develop alternative resource scheme for supplying the necessary production capacity to support the cumulative aggregate demand and calculate the cost of each alternative plan. • Select the best capacity plan from alternatives. Approaches to Aggregate Planning • Top down approach: • Bottom up approach: Costs associated with Aggregate Planning • Cost of over time , second shifts. • Costs of hiring of workers • Costs of excess inventory • Cost of production rate changes THANK YOU
