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    The Purpose of Aggregate Production Planning

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    What is the purpose of aggregate production planning and when is it most useful?

    © BrainMass Inc. brainmass.com December 24, 2021, 11:17 pm ad1c9bdddf
    https://brainmass.com/business/business-management/purpose-aggregate-production-planning-554435

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    Before explaining the main purposes of aggregate production planning, it is good to note what aggregate production planning is. "Aggregate production planning is concerned with the determination of production, inventory, and work force levels to meet fluctuating demand requirements over a planning horizon that ranges from six months to one year." Some definitions of aggregate production planning have the time horizon ranging from as low as two months to as high as 18 months.
    Aggregate planning by all means can be considered as a strategic move. Its main purpose is "to provide an overall framework for reconciling the demands of the marketplace through forecasting based on the capabilities of the manufacturing place." Aggregate planning allows firms to plan ahead. It takes time to implement plans and by planning ahead, firms can have an idea of the bulk of resources that will be needed in order to meet aggregate product demand. With aggregate planning firms can therefore determine the 'optimal combination' of production rates (units completed per unit of time), workforce levels (or number of workers) and inventory on hand.
    Aggregate production planning is considered to be "a useful tool in the creation and evaluation of alternatives such as the adjustment of the labor force through hire/fire/layoff/overtime, the use of subcontractors, anticipatory inventory, and, even the development of complementary products and pricing strategies." By adopting aggregate plans, firms are able to avoid waste of raw materials or even finished products as well as time - this inevitably will result in minimization of costs. Finally and most importantly, it is felt that aggregate production planning is particularly useful for organizations that experience seasonal or other fluctuations in demand or capacity.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    © BrainMass Inc. brainmass.com December 24, 2021, 11:17 pm ad1c9bdddf>
    https://brainmass.com/business/business-management/purpose-aggregate-production-planning-554435

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