Operation Management: Chapter Eight: Aggregate Planning

The purpose of this chapter is to introduce the concept of aggregate planning, discuss the pertinent costs and possible strategies, and illustrate some of the different approaches currently in use. In the spectrum of production planning, aggregate planning is intermediate-range capacity planning that typically covers a time horizon of 2 to 12 months. However, in some companies, it may extend to as much as 18 months. It is beneficial for organizations that experience seasonal or other fluctuations in demand or capacity. The goal of aggregate planning is to achieve a production plan that will effectively utilize the organization's resources to satisfy expected demand. Planners must decide on output rates, employment levels and changes, inventory levels and changes, back orders, and subcontracting.
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