Aggregate planning

It begins with a forecast of aggregate demand for the intermediate range. This is followed by a
general plan to meet demand requirements by setting output, employment, and finished-goods
inventory or service capacities.

Managers must consider a number of plans, each of which must be examined in light of feasibility
and cost.

If a plan is reasonably good but has minor difficulties, it may be reworked.

Aggregate plans are updated periodically, often monthly, to take into account updated forecast and
other changes.

Aggregate Planning Inputs

 Resources
 Workforce/production rate
 Facilities and equipment •
 Demand forecast
 Costs

Aggregate Planning Outputs

 Total cost of a plan
 Projected levels of:-
1. Work force level
2. Inventory level
3. Production level

Need for Aggregate Capacity Planning

 Workforce level
 Utilization of the workforce.
 Inventory Level
 Subcontract
Approaches to Aggregate Planning

 Top-down approach
 Bottom-up approach
 Informal or trial and error approach
 Mathematical optimal approach.
 Linear programming
 Linear decision rules
Master Production Schedule (MPS)
It is a plan for the production of individual final items. The MPS breaks down the production plan to
show, in each period, the quantity to produce of each final article.
 Breaks down, or disaggregates, the production plan into product families.
• Promotes valid order promises.
• Provides a communication medium between Marketing/Sales and Operations.
• Proactively control ability to deliver goods to customers.
• Resource availability control.
• Proactively control inventory levels.

Guidelines to MPS:

 Work from an aggregate production plan

 Schedule common modules when possible
 Load facilities realistically
 Release orders on timely basis
 Monitor inventory levels closely.
 Reschedule as required.