Concepts of Aggregate Planing and Process Analysis

Concepts of Aggregate Planning and Process Analysis

In order to begin contrasting the concepts of Aggregate Planning and Process Analysis as support mechanisms to organizations planning requirements we first, must understand that both concepts originate with the need for organizations to provide better customer service, lower inventories, shorten customer lead times, stabilize production rates and give top management a grip on the business. Once, Sales and Marketing have forecasted an estimate on a product group, the plan is coordinated through departments on the best course of action, in order to achieve an optimal balance between supply and demand, and ultimately have the operational plan in line with the business plan.

The aggregate plan main concern is to set-up production rates by product group or other broad categories for the intermediate term (3 to 18 months). The aggregate plan’s leading purpose is to specify the optimal coordination of production rate, workforce level and inventory on hand. The aggregate plan is useful because it focuses on a general course of action consistent with the company’s strategic goals and objectives without getting bogged down with details. Clearly the primary objective of the aggregate plan is to minimize the cost of resources required to meet demand over the intermediate term period.

Whereas the process analysis is any part of an organization that takes inputs and transforms them into outputs, the intention is to bring greater value to an organization than the original inputs. We can differentiate process analysis from aggregate planning by stating where process analysis the planning focus entirely on individual products, whereas aggregate plan mainly focus on product groups. The purpose of process analysis is critical at setting the level of detail in modeling the process both effectively and efficiently.

The aggregate plan comprises of three production-planning strategies: these strategies involve...