AGGREGATE PLANNING

Aggregate planning is an intermediate term

planning decision. It is the process of planning the
quantity and timing of output over the Intermediate
time horizon (3 months to one year) . With in this
Range, the physical facilities are assumed to be
fixed for the planning Period. Therefore,
fluctuations in demand must be met by varying
Labour and inventory schedule. Aggregate
planning seeks the best combination to minimize
costs.

Complied by Prof. Shrinivas Repak

 Aggregate Planning Strategies

1. Vary the size or the workforce : Output is controlled by

hiring or laying off workers in proportion to changes in
demand.

2. Vary the hours worked :: Maintain the stable workforce, but

permit idle time when there is a slack and permit overtime
(OT) when demand is peak.

3. Vary inventory levels:: Demand fluctuations can be met by

large amount of inventory.

4. Subcontract :: Upward shift in demand from low level.

Constant production rates can be met by using
subcontractors to provide extra capacity.

Complied by Prof. Shrinivas Repak

 Aggregate Planning Guidelines

1. Determine corporate policy regarding

controllable variables.
2. Use a good forecast as a basis for
planning.
3. Plan in proper units of capacity.
4. Maintain the stable workforce.
5. Maintain needed control over
inventories.
6. Maintain flexibility to change.
7. Respond to demand in a controlled
manner.
8. Evaluate planning on a regular base.
Complied by Prof. Shrinivas Repak
 MASTER PRODUCTION SCHEDULE (MPS)

Master scheduling follows aggregate planning. It

expresses the overall plans in terms of specific end items
or models that can be assigned priorities. It is useful to
plan for the material and capacity requirements.

Time interval used in master scheduling depends

upon the type, volume, and components lead time of the
products being produced. Normally weekly time intervals
are used. The time horizon covered by the master
schedule also depends upon product characteristics and
lead times. Some master schedules cover a period as
short s few weeks and for some products it is more than a
year.

Complied by Prof. Shrinivas Repak

 FUNCTIONS OF MPS

MPS gives a formal details of the production plan and

converts this plan into specific material and capacity
requirements. The requirements with respect to labour,
material and equipment is then assessed.

1. To translate aggregate plans into specific end items.

2. Evaluate alternative schedules

3. Generate material requirements.

4. Generate capacity requirements

5. Facilitate information processing

6. Effective utilization of capacity

Complied by Prof. Shrinivas Repak
 CAPACITY PLANNING
Capacity planning is to be carried out keeping in mind future
growth and expansion plans, market trends, sales forecasting,
etc. It is a simple task to plan the capacity in case of stable
demand. But in practice the demand will be seldom stable. The
fluctuation of demand creates problems regarding the
procurement of resources to meet the customer demand.
Capacity decisions are strategic in nature. Capacity is the rate of
productive capability of a facility. Capacity usually expressed as
volume of output per period of time.

• Sufficient capacity is required to meet the customers demand

in time.
• Capacity affects the cost efficiency of operations.
• Capacity affects the scheduling system.
• Capacity creation requires an investment

Capacity planning is the first step when an organization decides

to produce more or new products.
Complied by Prof. Shrinivas Repak
 Capacity & output relationship

DESIGN CAPACITY

Reduced by long range effects,

product mix, long range market
conditions, Tight quality
specifications, Imbalance in
equipment or labour.
SYSTEM CAPACITY

Reduced by short range effects,

Actual demand, Inefficiency of
workers, Machine inefficiencies,
Scheduling, Planning & Control.
ACTUAL OUTPUT

Complied by Prof. Shrinivas Repak

MEASUREMENT OF CAPACITY PLANNING

1. Design capacity

2. System capacity

3. Licensed capacity

4. Installed capacity

5. Rated capacity

Complied by Prof. Shrinivas Repak

 PROCESS OF CAPACITY PLANNING

Capacity planning decisions are taken based upon the consumer

demand and this is merged with the human, material and financial
resources of the organizations.

Capacity requirements can be evaluated from two perspectives

1. Long term capacity strategies

2. Short-term capacity strategies

Complied by Prof. Shrinivas Repak

LONG-TERM CAPACITY STRATEGIES ::

1. Multiple products

2. Phasing in capacity

3. Phasing out capacity

Complied by Prof. Shrinivas Repak

SHORT-TERM CAPACITY STRATEGIES ::

1. Inventories

2. Backlog

3. Employment level (hiring or firing)

4. Employee training

5. Subcontracting

6. Process design

Complied by Prof. Shrinivas Repak

Capacity planning is the process
of determining the production
capacity needed by an organization
to meet changing demands for its
products

Aggregate planning is the

process of developing, analyzing,
and maintaining a preliminary,
approximate schedule of the overall
operations of an organization.

Complied by Prof. Shrinivas Repak

Complied by Prof. Shrinivas Repak
CAPACITY CALCULATION

Capacity is :
(number of machines or workers)
× (number of shifts)
× (utilization)
× (efficiency)

Complied by Prof. Shrinivas Repak

 CAPACITY PLANNING
TECHNIQUES

1.capacity planning using overall

factors
2.capacity bills
3.resource profiles
4.capacity requirements planning

Complied by Prof. Shrinivas Repak

AGGREGATE PLANNING FUNCTION

Complied by Prof. Shrinivas Repak

 AGGREGATE PLANNING STRATEGIES

LEVEL STRATEGY: seeks to

produce an aggregate plan that
maintains a steady production rate
and/or a steady employment level

CHASE STRATEGY: implies

matching demand and capacity
period by period

Complied by Prof. Shrinivas Repak

 BEST SOLUTION

ANNUALISED HOURS

• CONTRACT : FOR CERTAIN NUMBER

OF HOURS IN A YEAR

• OFFER : CERTAIN SUM OF

MONEY

• ACCORDING TO DEMAND: UTILISE

HOURS OF LABOR

Complied by Prof. Shrinivas Repak