Agregate Planning

Aggregate Planning is a very important tool/technique in the world of purchasing/procurement. It is a fundamental process in which assists in the overall successful of production. “Aggregate planning is an operational activity that does an aggregate plan for the production process, in advance of 2 to 18 months, to give an idea to management as to what quantity of materials and other resources are to be procured and when, so that the total cost of operations of the organization is kept to the minimum over that period.” (Dicitonary.com) In order to improve inventory management strategies, a plan at an aggregate level must be successfully in place through an aggregate operations plan. “Aggregate Operations Plans: Translating annual and quarterly business plans into labor and production output plan for the intermediate term. The objective to minimize the cost of resources required to meet demand (Balakrishnan, Chase, Jacobs, Snider, 281). It is evident that an Aggregate Operations plan would be the first step to improve inventory management strategies, this is due to the fact that historical information is combined and analyzed in order to properly produce goods required for inventory. This would fundamentally assist with another type of planning which is Sales and Operation planning. By focusing on the Aggregate level operations plan in the beginning, the Sales and Operating Planning fall right in sync, which will ultimately not only assist with inventory management, but also “help firms provide better customer service, lower inventory, shorten customer lead times, stabilize production rates, and give top management a handle on the business.” (Balakrishnan, Chase, Jacobs, Snider, 259)

​It is evident that aggregate planning and process designs are important tools used to properly and efficiently produce goods, and overall benefit one’s organization. By applying aggregate planning to one’s organization, you ultimately attempt to create a plan that will impact the...