Aggregate Planning

Proper planning in any organization is important to becoming successful. Organizations and project managers must be able to forecast future events and determine time of year surges or declines in business in order to adapt to consumer demands. One such way for organizations to accomplish this planning is through aggregate planning or scheduling and can differ based on what service an organization provides.

Aggregate planning is concerned with determining the quality and timing of production for the intermediate future, often 3-18 months ahead (Heizer, & Render 2008). Aggregate planning in manufacturing is planning so that you allocate the right amount of resources for every process of the manufacturing so that time will be minimized when slow production periods. Manufacturers attempt to coordinate their production goals with their strategic goals. For manufacturing firms the luxury of building up inventories during periods of slack demand allows coverage of an anticipated time when demand will exceed capacity. Services cannot be stockpiled or inventoried so they do not have this option. Items in services that go unused are deemed wasted and cannot be stored and sold later unlike manufactured items held in inventory. For services, aggregate planning serves to schedule your employees and it varies as to what particular season you are in. In aggregate planning for services it is difficult to accurately inventory services due that some services cannot be inventoried. Services are much more labor intensive than manufacturing. This labor intensity can actually be an advantage because of the variety of service requirements an individual can handle. This can provide flexibility that can make aggregate planning easier for services than manufacturing.

Aggregate planning is crucial in both manufacturing and service organizations. Manufacturing planning is more established for the long haul by forecasting future events, while service planning will have a forecast of 1-3 months.

Heizer, J., & Render, B. (2008). Operations management (9th ed.). Upper Saddle River,NJ: Prentice Hall