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Aggregate Planning

Aggregate Planning!

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Companies often use Aggregate Planning for a general plan that is congruent to the company's goals and objectives without extensive details that can take extended time to plan.  Aggregate Planning involves strategic statements that give the goals in a quantitative method.  To help simplify aggregate planning, common aspects are broken into families.

    These plans work towards long term goals while examining the objectives, capacity, and needs that are probable to be in use during the short term (a year or two).  The length of time that an aggregate plan covers is called a planning horizon.

 

TYPICAL OBJECTIVES/ GOALS

1. Minimize cost/ maximize profits

2. Maximize customer service

3. Minimize inventory investment

4. Minimize changes in production rates

5. Minimize changes in work force levels

6. Maximize utilization of plant and equipment

 

But this is a catch 22, you cannot maximize all of these goals all the time therefore you have to balance these objectives to arrive at an aggregate plan that works for you.

 

There are several Reactive Alternatives to achieve these goals:

 

~Work Force Adjustments:  This involves hiring and laying off employees when needed.

       This is best for unskilled or semiskilled labor force from which there is a large pool.

 

~Anticipation Inventory: Stocking more inventory during a period of light production in anticipation of using it during higher demand periods.

        This helps stabilize output rates and work force levels but can be expensive  because of the storage cost.

 

~Work-Force Utilization:  Using overtime and undertime to account for periods of higher or lower demand

        Can be problematic because employees often will not remain happy working for extended periods of overtime and undertime.

 

~Subcontractors:  "Farming" out part of the process to an outside source.

 

 

    AGGRESSIVE ALTERNATIVES

These are actions that attempt to modify demand and consequently resource requirements,

 

~Complementary Products: These are services that have similar requirements but different demand cycles.

 

~Creative Pricing: Using promotions, clearances etc. during slow months

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