In aggregate planning, planners avoid focusing on individual products or services because:

With the primary goals of minimizing costs and maximizing profits, the strategic objectives of aggregate planning include:

Minimize inventory investment – Aggregate planning software optimally balances efforts to minimize the cost of inventory management and storage with efforts to ensure sufficient inventory to meet both independent and dependent demands through material resource planning.

Minimize workforce demand and fluctuation – Aggregate planning software uses data from demand forecasts and material resource planning to calculate an optimal workforce plan – one that balances the cost of onboarding/layoffs due to workforce fluctuation with the cost of worker idle time and/or overtime.

Maximize production rates while minimizing fluctuation – Aggregate planning software analyzes production capacity versus demand forecasts to maximize the overall production rate while avoiding periods of idle capacity.

Maximize facility and production equipment utilization – Aggregate planning software accounts for available production equipment and facilities, and targets maximum utilization over the aggregate planning period.

To achieve these objectives, aggregate planning software may employ one of two approaches, or a combination of both. The chase approach attempts to match production capacity with demand. With this approach, a manufacturer adjusts resource procurement and availability to keep up with fluctuations in customer (or make-to-stock) orders. This approach enables a manufacturer to minimize inventory levels and maximize resource utilization, but the manufacturer must contend with costs associated with adjustments to capacity: workforce onboarding and layoffs or underutilized floor space, for example.

The level approach to aggregate production planning, on the other hand, avoids the cost of adjustments by keeping production rates steady. This means that the manufacturer builds up inventory at times of lower demand to be able to fulfill orders during periods of peak demand. Alternatively, the manufacturer may maintain a steady level of workforce and production capacity and ramp up productivity during periods of high demand. In either case, the level approach encounters costs associated with inventory management, idle capacity, workforce idle time and/or overtime, and other expenses associated with fluctuating utilization of resources.

CHAPTER 12 Objectives
AGGREGATE PLANNING

1.      What is aggregate planning? In production planning, it is the intermediate-range capacity planning that typically covers a time horizon of 2 to 12 months.

1. What is the purpose of aggregate planning? The purpose of aggregate planning is planning ahead because it takes time to implement plans. The second reason is strategic of the company and third aggregate planning help synchronize flow throughout the supply chain; it affects costs, equipment utilization, employment levels and customer satisfaction.
2. List the demand options in aggregate planning?
   1. Price
   2. Promotion
   3. Back orders
   4. New demand

4.      List the capacity options in aggregate planning
1. Hire and lay off workers
2. Overtime/slack time
3 part-time workers
4. Inventories
5. Subcontracting

5.      List the main strategies for meeting uneven demand.
1. Maintain a level of workforce
2. Maintain a steady output rate
3. Match demand period by period
4. Use a combination of decision variables

6.      Name two important factors that influence choice of strategy.
They are company policy, which may set constraints on the available options the extent to which they can be used and cost also influence choice strategy.

1. Briefly describe the informal, trial and error approach to aggregate planning.
   Trial-and-error approach of planning consist of developing simple tables or graphs that enable planners to visually compare projected demand requirements with existing capacity.
2. What difficulties do services pose for aggregate planning?
   1. Services occur when they are rendered-most services can�t be inventories and services capacity that goes unused is wasted.
   2. Demand for services can be difficult to predict. There is a greater burden for service providers to anticipate demand; therefore they have to pay careful attention to planned capacity levels.
   3. Capacity availability can be difficult to predict. In services, the types of variety of task are more pervasive than compare with manufacturer and this makes it difficult to establish measures of capacity.
3. Explain these terms:
   Disaggregating the aggregate plan- this means breaking down the aggregate plan into specific product requirements in order to determine labor requirement (skills, size, or workforce), materials, and inventory requirements.

   Master schedule- the result of disaggregating the aggregate plan is master schedule showing the quantity and timing of specific end items for a scheduled horizon that covers about six to eight weeks ahead.

   Rough-cut capacity planning-this involves testing the feasibility of a proposed master schedule relative to available capacities, to assure that no obvious capacity constraints exist. It means checking capacities of production and warehouse facilities, labor, and vendors to ensure that no gross deficiencies exist that will render the master schedule unworkable.

   ATP or Available to Promise inventory- the master schedule process uses this information on a period-by-period basis to determine the projected inventory, production requirements and the resulting uncommitted inventory.

4. Why is it important to stabilize the master schedule?
   Master schedule enables marketing to make valid delivery, enables production to evaluate capacity requirements, and provides necessary information for production, marketing and senior management with opportunity to determine whether the business plan and its strategic objectives will be achieved.
5. How are master schedules stabilized?
   By the master scheduling process which involves the input and outputs.
6.  The duties of the master scheduler generally include:
   1. evaluating the impact of new orders.
   2. Providing delivery dates for orders.
   3. Dealing with problems:
        a. evaluating the impact of production delays or late deliveries of purchased
           goods.
   b. Revising the master schedule when necessary because of insufficient                supplies of capacity.
   c. Bringing instances of insufficient capacity to the attention of production and marketing personnel so that they can participate in resolving conflicts.
7. List the inputs and outputs of master scheduling:
   Inputs- the beginning inventories, which is actual quantity on hand from the preceding period; the forecasts for each period of the schedule; and the customer orders, which are quantities already committed to customers.

   Outputs- Projected inventory, master production schedule and uncommitted inventory.

8. What are time fences?
   Are use to facilitate order promising and the entry of orders into the system? It divides a scheduling time horizon into three phases, frozen, slushy and liquid.

Briefly describe these scheduling phases:
Frozen-is the near term-phases that is so soon that delivery of a new order would be impossible, or only possible using very costly or extraordinary options such as delaying another order.

Slushy- is the second phase, and its time fence is usually a few periods beyond the frozen phase.|

Liquid-is the farthest out on the time horizon.

How does aggregate planning for services differ from aggregate production planning for products?

What is one difference between aggregate planning for goods and for services?

Which of the following is not an input to aggregate planning process?

What is aggregate planning quizlet?