Question

Outline any three (3) important parameters required for aggregate planning. In your answer, you should identify and define clearly the parameters needed.

You should also relate how the aggregate plan can be useful to an organisation.

Answer 1

Aggregate planning is a critical activity for organisations as it helps in planing the workforce level, inventory level and production rate which will meet the long-term strategic planning for organization. it helps in achieving the financial goal, reduce investment in inventory stocking, meet customer demands and maximize machinery utilization. There are three types of aggregate planning strategies 1. Level strategy , 2. Chase Strategy and 3. Hybrid Strategy.

For aggregate planning to succeed, we need several parameter/inputs before hand so that we can plan properly. Three of these parameters are :

1. Demand Forecast: We need solid demand forecast for medium-range period. This parameter is very important to plan how much to produce during a time period. To meet customer demands this is very important. Also we should not produce too much when demand is low or too less when demand is high.

2. Workforce availability: In order to meet the customer demands and produce the optimal level and high quality products, it is important to know how many workers/labors/technicians are present. How much time it takes to hire a new person for job and train them to complete a job to satisfaction.

3. Financials : Financials around wages, cost of raw materials, cost of production, cost of inventory keeping etc. is very important. Target is always to achieve the target with minimal cost or optimal cost.

Different types of aggregate planning strategies aim to use these parameters and achieve the target which is in-line with the organizations strategy.