Aggregate planning refers to the “big picture” approach of production process that focuses on groups of similar products in an entire product line for the intermediate future of 2 to 18 months (Nahmias, 2009). Aggregate planning addresses the maintenance of a level workforce, a steady input rate that of a steady output rate.
Aggregate planning and the maintenance of a level workforce
Aggregate planning evaluates the need for outsourcing, subcontracting as well as addition or reduction of the workforce to suit certain production targets. In other cases, the management can also reassign workers to areas that they are best suited. The planning in this optimizes the human capital to respond to lull and peak periods in order to maintain the profitability of a business venture (Nahmias, 2009). For instance, an aggregate plan for a factory that produces decoration lights can detail the hiring of more workers from for three months (say from September to November) to handle production operations in anticipation of high demand and sales during the Christmas festivities. Aggregate planning and the maintenance a steady input rate
Aggregate planning addresses a balance in the rates at which the following inputs come to play. These are strategic objectives, the demand forecasts, and the constraints in capacities (Clough n.d). Other input variables include the company policies and the financial constraints. The lighting factory in this scenario considers the expected demand of decoration lights during Christmas festivities for Christian target markets, the costs of production, the cost of hiring and later dismissing workers after the peak period, the company policies on quality and human resource management among others issues. The plan can bear figures such as current inventory units, say 10,000 units, current labor force, say 56 employees, labor hours per unit say one employee hour/unit among other input issues. Aggregate planning and the maintenance a steady output rate
Aggregate planning addresses the following steady output rates, the production per month, the levels of inventories, and the units subcontracted, lost, or back ordered (Clough, n.d). The output rates of the lighting company can include the production of a specified inventory at the start of the festivities. It can also include estimating the number of faulty lights that customers are expected to return for say every 1000 units. The overall plan should detail the final forecasts matched with the production factors to match them in a master schedule.
Aggregate planning addresses issues such as human resource requirements, financial constrains, company policies among others with the aim of planning for profitability within intermediate periods of 2 to 18 months.
Clough R. B. (nd) Reid, D., & Nada, R. S. (2005) “Chapter 13-Aggregate planning.” Operations Management. Wiley. 2nd Ed. Ppt.
Nahmias, S. (2009). Production and Operation Analysis. New York: McGraw-Hill Inrwin