What is aggregate planning in supply chain?

What is aggregate planning in supply chain?

Aggregate planning, a fundamental decision model in supply chain management, refers to the determination of production, inventory, capacity and labor usage levels in the medium term.

What are the steps in aggregate planning process?

This general procedure consists of the following steps:

  1. Determine demand for each period.
  2. Determine capacity for each period.
  3. Identify company, departmental, or union policies that are pertinent.
  4. Determine unit costs for units produced.
  5. Develop alternative plans and compute the cost for each.

What are the four things needed for aggregate planning?

Four things are needed for aggregate planning:

  • a logical unit for measuring sales and output.
  • a forecast of demand for a reasonable intermediate planning period in these aggregate terms.
  • a method for determining the relevant costs.

What is aggregate planning in production planning and control?

Aggregate planning is a method for developing an overall manufacturing plan that ensures uninterrupted production at a facility. An aggregate plan specifies what materials and other resources are needed and when they should be procured to minimize cost.

How do you manage inventory in aggregate planning?

In aggregate planning, inventory managers start by determining how many products to make in upcoming quarters to meet market demand. They look at elements such as raw materials, work-in-process products and finished items.

What are the eight costs generally considered in aggregate planning?

What are the eight costs generally considered in aggregate planning? The eight costs are – Regular time production cost, Overtime production cost, inventory cost, shortage or backorder cost, cost of hiring, cost of layoff, outsourcing cost and underutilization cost.

Why aggregate planning is important?

Importance of Aggregate Planning Aggregate planning helps in: Achieving financial goals by reducing overall variable cost and improving the bottom line. Maximum utilization of the available production facility. Provide customer delight by matching demand and reducing wait time for customers.

What is the concept of aggregate planning?

Aggregate planning refers to the process of developing, maintaining, and analyzing the approximate scope of the operations of a company. It usually contains targeted sales forecasts, inventory levels, and production levels.

What are the three types of aggregate planning?

3 Types of Aggregate Planning Strategies

  • Level Strategy: The goal of an aggregate planning strategy is to keep the production rate and the workforce level.
  • Chase Strategy: As the name implies, you are chasing market demand.
  • Hybrid Strategy: There is a third alternative, which is a hybrid of the previous two strategies.

What are the factors affecting aggregate planning?

Factors considered in the aggregate planning activity include:

  • Sales forecasts.
  • Inventory investment.
  • Capital equipment utilization.
  • Work force capacity.
  • Skills training requirements.
  • Corporate policies concerning customer service levels, overtime, and subcontracting.

What are 3 types of aggregate plan?

What are the 3 strategies for aggregate production planning?

Aggregate Planning Strategies

  • Level Strategy. As the name suggests, level strategy looks to maintain a steady production rate and workforce level.
  • Chase Strategy. As the name suggests, chase strategy looks to dynamically match demand with production.
  • Hybrid Strategy.