1. Aggregate Planning Intermediate-range capacity planning that typically covers a time horizon of 2~12 months – may extend to as much as 18 months. Product and service selection Facility size and location Equipment decision Facility layout General levels of Employment Output Finished goods inventories Machine loading Job assignments Job sequencing Work scheduling Long-term planningShort-term planning Intermediate planning

2. Concept of Aggregation Essentially a “big picture” approach to planning Lump all models of a product together Deal with them as though they are a single product Overview of Aggregate Planning Begins with a forecast of aggregate demand for intermediate range Followed by a general plan to meet demand requirements by setting o Output o Employment o FG inventory level Updated periodically – rolling planning horizon Aggregate Planning

3. Purpose and Scope Balancing of Demand and Supply Demand and Capacity concerns are quantity and timing of expected demand Available resources over the planning period must be known A forecast of expected demand must be available Count any policies regarding changes in employment levels Inputs to Aggregate Planning Output of Aggregate Planning Production Planning Aggregate Planning

4. Demand options Aggregate Planning Pricing – shift demand from peak periods to off-peak periods Promotion – sometimes are very effective in shifting demand Back orders – taken in one period and delivers for a later period New demand – creating new demand at off-peak time

5. Capacity options Hire and layoff workers – hiring during peak and laying off during off-peak – may have sever effect Aggregate Planning Overtime/ Slack time – can be easily & quickly implemented – less severe Part time workers – for seasonal work - requiring low job skills Inventories – produce goods in one period & sell in another period Subcontracting – enables planers to acquire temporary capacity

6. Aggregate Planning Techniques for Aggregate Planning Determine demand for each period Determine capacity for each period Identify company or departmental policies Develop alternative plans & compute cost for each Select the one that best satisfies objectives.