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˜ In an aggregate plan, individual products are
combined together as a product group or
product type.

˜ The aggregate plan defines the best

combination of workforce level, inventory on
hand and production rate that matches the
company¶s resources to market demand.
˜ Äperations planning activities can be
Long range- more than one year
Eg: Process planning
Medium range ± 6 to 12 months
Eg: Aggregate planning
Master production schedule
Master Requirement planning
Short-range ± Less than 6 months
Eg: Ärder scheduling
Workforce scheduling
˜ Aggregate plan defines how resources can be
best employed to meet market demand for the
given products.
˜ The objective an aggregate plan is to
Minimize production costs,
Make appropriate changes in production rates
Make appropriate changes in work force
levels.
Improve profits
Improve customer service and
Äptimum utilization of resources
˜ Aggregate planning balances market demand
and the production rate of the organisation.

|oncept of Aggregation
Eg:1 A sugar factory measures capacity in terms
of tons of sugar produced.

2 Service organisations ± hospitals- number

of patients visited.
[or [MCG firms

Eg: 1 3 models of TV sets

4 models of cameras
4 models of soaps
 Aggregate Planning Goals

1) AP should contain information on the

required level of output to be produced,
inventory levels to be maintained and
backlogs based on the business plan.

2) AP should utilize the facility¶s capacity in an

efficient manner and the usage should be
consistent with the organization's strategy.
3) The company¶s objectives and its policies
regarding its employees should be in line
with its aggregate plan.

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 Materias
1. ppies capacity
2.torage capacity
3.Materias avaiabiity

perations
1.| rrent machine ngineering
capacities 1. ew prod cts
2. ans for 2. rod ct
esign
f t re capacities changes
3. Work force 3. Machine
capacities

Aggregate
an

istrib tion & H man eso rces
Marketing 1. Labo r market
1.| stomer needs conditions
2.
emand
orecast 2. raining
3. |ompetition |apacity

Acco nting &

inance
1.|ost data
2.
inancia condition
of firm
 Aggregate Planning
Techniques
1. Graphical Method for Aggregate Äutput
Planning
2. Äptimal Models for Aggregate Planning
Linear Programming
Linear Decision rules (LDRs)
Heuristic models ± based on historical aggregate
planning data available.
3. Computer Search Models.
 Master Production Schedule
(MPS)
˜ MPS defines the type and volume of each product
that is to be produced within the planning
horizon.
˜ MPS is a detailed plan that specifies the exact
timing for the production of each unit.
˜ MPS is based on an estimation of the overall
demand for the end product.
 [unctions of an MPS

1. Translate aggregate plans.

2. Evaluate alternative schedules
3. Identify material requirement
4. Generate capacity requirements
5. Effectively utilize capacity.
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 Capacity Planning
˜ Capacity Planning involves the
identification and evaluation of the long
term and short term capacity requirements
of an organisation and the development of
plans to satisfy them.

˜ CP is an important aspect of AP
˜ Capacity defines the maximum output
possible from a system or a process.

˜ To have an effective capacity plan, an

organisaton has to identify current capacity
and forecast the future requirements of
capacity.
˜ Capacity can be measured in terms of the
inputs or outputs of the conversion process.

˜ Capacity = Available Time x Utilization x

Efficiency
˜ Capacity utilization rate
= Capacity Used x 100
Capacity Available
˜ Capacity Available = Designed Capacity
˜ The extra capacity allocated for uncertain
future requirements is known as the
|apacity | shion.
˜ Capacity of an organisation can be
expanded accordingly with increase in
demand for the products and services.