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Chapter 3 - On Aggregate Planning - Chapter Paper
Chapter 3 - On Aggregate Planning - Chapter Paper
Introduction
The company have different activities and operations
throughout the year. Each operation has its own
weight; it might be a regular operation or a very
important operation. In every activity that a company
does, what the company must do it to plan for the
different activities. Planning is essential for the
company to be ready to accomplish its goal. Planning
also reduces failures or errors.
Main Discussion
Planning is done in every organization, from smallscale businesses to large-scale businesses. Planning
works in a specific process. The process, in
chronological order, is stated below (2):
1. Setting the goal of the company
2. Making different strategies to achieve the said
goal
3. Create the means required to achieve the
goal
4. Setting the start and completion date of the
project and the corresponding schedule of
completion for the sub-activities incorporated
along the planning process
5. Assigning persons of authority to supervise
the project
Aggregate Planning
Since planning involves decisions in order to achieve
a certain goal, aggregate planning takes into account
the different resources of the company, or what is
called capacities, in order to meet the demand of
customers at the lowest cost possible (1).
The time frame used in aggregate planning is the
intermediate range (with the range of 3 to 18 months).
This is because during the long-term period, there
may come a time that problems might fall within the
year with a range of three months or more. These
problems generally are due to the scarce resource of
the company. This is where aggregate demand makes
its position. Aggregate demand will help know the
number of units to be produced in a certain time
frame. For example, in the next five months, 4400
units should be produced to meet the 5000 unitdemand.
2.
Figure 3.1. A sample demand forecast in the 1st quarter of the year
(from January to April).
3.
4.
5.
Example (9):
Planners for a company that makes several models of
skateboards are about to prepare the aggregate plan
that will cover six periods. They have assembled the
following information:
B. Level Strategy
- The production and workforce level is
constant in this strategy (7). As the name
implies, production does no change from
one period to another (1). An advantage
of level strategy is a steady workforce (7).
Disadvantages include increase in
inventory levels and backlogs (7).
Formula Review:
Average Requirement
=
Manpower Requirement
=
produce a unit
Labor hours per day per man
(Equation 2.2)(1)
References
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)