Question

• What is aggregate planning in regards to operation?
• In your view, is it important and what is its basic purpose?
• Do you believe there is still a need for aggregate planning today? Explain your response please.

Answer 1

Ans- Aggregate Planning is the process of analyzing, developing and maintaining the approximate schedule of the overall operations of the organization. The Aggregate Planning comprises of the production levels, inventory levels, sales forecasts and customer backlogs. This Schedule is intended to satisfy the demand forecast at the minimum cost. Aggregate Planning is an attempt to the balance capacity and demand in a way so that the costs are minimized.

In my opinion, Aggregate Planning is important and it plays an important role in achieving the long-term objectives of the organization. It helps in-

• Achieving the financial goals by decreasing the overall variable cost and improving the bottom line.
• Maximum Utilization of the available production facility.
• Decreasing the Investment in Inventory Stocking.
• Able to meet the scheduling goals by creating the satisfied and happy workforce.
• Reduce the investment in inventory stocking.

Purpose of Aggregate Planning

• Determine the Resources- The Basic Purpose of Aggregate Planning is to determine the resources for the short-term periods upto the 18 months. Resources comprises of the total no. of workers, total machine hours and in hand raw materal.
• Calculate Capacity- The other objective is to calculate the capacity of the organization. Look at how many units you can produce in a day, week or month depends upon your current capacity.
• Project Demand- Figure the demand of the units for the short-term period of time. It begins by basing your calculations on the previous year demand during the comparable time period. If You don't have the figure from the previous year, use the industry averages and prorate according to the market share.
• Adjust Capacity to meet Demand- If Your demand figures are not line with the capacity, then you have to adjust how to increase the capacity. You may need some more resources like equipments, employees or need to boost the productivity per employee. You may have to examine the areas in which improvements are required to meet the forecast demand.

Yes, there is still need for the aggregate planning today because scheduling of the overall operations is really necessary of the organization. It is an attempt to make the balance between the capacity and demand to minimize their costs. It helps in preparing the organization for the future about the improvements required in present.

So, this was about the Aggregate Planning meaning, its importance, purpose and needs.

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