This document outlines key aspects of aggregate planning including: - Aggregate planning matches supply and demand over an intermediate time horizon to determine necessary resource capacity. It balances demand forecasts with available resources. - Strategies for adjusting capacity include level production, chase demand, peak demand, overtime/under-time, subcontracting, and part-time workers. Strategies for managing demand include shifting demand, incentives, advertising, and partnering with suppliers. - Quantitative techniques for aggregate production planning include transportation methods, linear programming, and other approaches like linear decision rules and management coefficients models. Hierarchical planning involves multiple levels from items to operations.

1. Beni Asllani University of Tennessee at Chattanooga Aggregate Planning Operations Management - 5 th Edition Chapter 13 Roberta Russell & Bernard W. Taylor, III

4. Aggregate Planning Figure 13.2 Master production schedule and MRP systems Detailed work schedules Process planning and capacity decisions Aggregate plan for production Product decisions Demand forecasts, orders Marketplace and demand Research and technology Raw materials available External capacity (subcontractors) Workforce Inventory on hand

9. Transportation Method 1 900 1000 100 500 2 1500 1200 150 500 3 1600 1300 200 500 4 3000 1300 200 500 Regular production cost per unit $20 Overtime production cost per unit $25 Subcontracting cost per unit $28 Inventory holding cost per unit per period $3 Beginning inventory 300 units EXPECTED REGULAR OVERTIME SUBCONTRACT QUARTER DEMAND CAPACITY CAPACITY CAPACITY

10. Transportation Tableau Unused PERIOD OF PRODUCTION 1 2 3 4 Capacity Capacity Beginning 0 3 6 9 Inventory 300 — — — 300 Regular 600 300 100 — 1000 Overtime 100 100 Subcontract 500 Regular 1200 — — 1200 Overtime 150 150 Subcontract 250 250 500 Regular 1300 — 1300 Overtime 200 — 200 Subcontract 500 500 Regular 1300 1300 Overtime 200 200 Subcontract 500 500 Demand 900 1500 1600 3000 250 1 2 3 4 PERIOD OF USE 20 23 26 29 25 28 31 34 28 31 34 37 20 23 26 25 28 31 28 31 34 20 23 25 28 28 31 20 25 28

12. Hierarchical Nature of Planning Items Product lines or families Individual products Components Manufacturing operations Resource Level Plants Individual machines Critical work centers Production Planning Capacity Planning Resource requirements plan Rough-cut capacity plan Capacity requirements plan Input/ output control Aggregate production plan Master production schedule Material requirements plan Shop floor schedule All work centers