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Understanding Aggregate Planning Essentials

Aggregate planning is an approach to planning production over the near to medium term by setting overall output levels and resource requirements rather than scheduling individual products. The goal is to effectively utilize resources to meet expected demand by minimizing costs and inventory levels while maximizing customer service and resource utilization. Aggregate planning translates annual business plans into a 2-12 month production plan and is useful when demand or capacity fluctuates seasonally.

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Rupakshi Saurabh Gaur
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86 views2 pages

Understanding Aggregate Planning Essentials

Aggregate planning is an approach to planning production over the near to medium term by setting overall output levels and resource requirements rather than scheduling individual products. The goal is to effectively utilize resources to meet expected demand by minimizing costs and inventory levels while maximizing customer service and resource utilization. Aggregate planning translates annual business plans into a 2-12 month production plan and is useful when demand or capacity fluctuates seasonally.

Uploaded by

Rupakshi Saurabh Gaur
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

aggregate planning An approach to planning that enables overall output levels and the appropriate resource input mix

to be set for related groups of products over the near to medium term. Thus the aggregate plan for a car factory would consider the total number of units produced per month, but would not be concerned with the scheduling of individual models, colours, standards of finish, engine sizes, etc. It would be concern DEFINATION

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

GOAL:
The goal of aggregate planning is to achieve a production plan that will effectively utilize the organizations resources to satisfy expected demand.
Objectives of the Aggregate planning 1. To minimize the investments in the various inventories. 2. To minimize the total cost over the planning horizon. 3. To maximize the customer service. 4. To minimize the changes in the workforce levels. 5. To minimize the changes in the production rates. 6. To maximize the utilization of the plant and the various equipments.

Introduction and meaning Aggregate planning can be defined as the process involving the development, analyzation and the maintenance of a preliminary and approximate schedule of the overall operations that take place or have to take place in an organization. It is actually an operational activity involving an aggregate plan, which would guide the production process. This plan is made in advance of about 3 to 18 months and this plan plays a very critical role in providing an idea to the

management about the quantity of the materials and the other resources that are to be procured and at what time of the operation all these are required. An aggregate plan also consists of the targeted sales forecasts, production levels, inventory levels, customer backlogs etc. In this type of planning, the word aggregate is used because the planning at this level includes all the resources in the aggregate. The schedule used in the aggregate planning plays a very critical and an essential role in providing the satisfaction to the demand forecast at a minimum cost. Aggregate planning serves as the basic structure for the future short range type planning and this type of planning can be categorized as follows 1. Production plan Also called as the manufacturing aggregate plan. Is a managerial statement of the period by period production rates, work force levels etc. 2. Staffing plan Also called as the service aggregate plan. Is a managerial statement of the period by period staff sizes and the labor related capacities, given customer requirements and the capacity limitations.

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