Aggregate planning

Aggregate Planning is a process planning quantity and timing of the Output (output) for a period of medium time. Which is around 3 months up to 1 year. This gives an Aggregate planning to management about the need of production variables like inventories of materials, labor and other resources. So that the operating costs can be control may be minimal. An overview of the needs of the times should be able to present a number of quantity and time required in order to make the production process can be run as plan.

The Concept of Aggregation 

Aggregate planning can be look at as a “big picture” approach to planning. It  is the usual practice for planners to try to avoid focusing on individual products or services, unless the organisation deals in only product or service.  Rather, they focus on a group of similar products or sometimes an entire  product line.

Let’s look at some examples: 

• For purposes of aggregate planning, planners in a television  manufacturing firm would not concern themselves with 21 –inch sets  versus 18-inch or 14-inch. Instead, they would lump all models together  and deal with them as a simple product. Hence, the term aggregate  planning.


• Again, for the purposes of aggregate planning, a refrigerator  manufacturing firm might lump. All different sizes and styles of  refrigerators it produces into a single category of “fridges”.


• In the same vein, when fast-food outfit such as Mr. Biggs, sweet  sensation, and Tasty Fried Chicken plan employment and output levels. They would not try to determine how demand will be broke down into  the various options they offer. Instead, they focus generally on overall  demands and the overall capacity they want to provide.

In each of the examples cite above, it can be seen that an aggregate approach permits planners. To make general decisions about intermediate – range capacity without having to deal with highly specific details. Instead, they often concern  themselves with overall decision on levels of output, employment and  inventories.

The approach

This is complete by lumping demand for all products into one or a few  categories then planning on that basis.  For purposes of aggregate, it is better to think of capacity in terms of labor  hours or machine hours per period, or output rates. (e.g. barrels per period, notes  per period). Without necessarily worrying about how much of a particular item  will actually be involve.

The advantage in this approach is that it frees planners to make general  decision about the use of resources. Without having to get into the complexities of individual product or service requirements.

Aggregate planning strategies

As previously mention, the important variables in a system of production is the supplies and labor. A growing number of labor use, the higher the volume of output or the number of units of a product that can be produce. However, the amount of labor require can also be convert into the addition of work time for the existing workforce or usually refer to with the term of overtime (OT/Overtime). Therefore, the amount of labor and the use of overtime is two interrelate variables that also can be use as an aggregate in planning strategy.

The material can be either raw materials or material support is also a very important variable in the process of production. There is no Output that can be produce without the presence of the Material. Therefore, the Material must always be maintain inventory and order conditions.

Controllable Variables

Some Aggregate planning strategies that can be taken in the face of fluctuations in demand and uncertainty of the production on the variables that can be controllable Variables are as follows:

1. The vary the Workforce: Request necessary changes can be overcome by adding or reducing the manpower use in accordance with the proportion of such request.


2. Vary work time: remain a number of workforce stability, but allow idle time (idle) at a time when demand is low and allowing Overtime (Overtime/OT) when the demand rises.


3. Vary the level of necessary changes or fluctuations in inventory: requests can be address by having a quite inventory (inventory).


4. Subcontracting: using third party or Sub-contractor to provide higher capacity.

The table below is an example of planning an aggregate (Aggregate Planning) by using the Strategy of adding work time or overtime to labor.

Guidelines for Planning an Aggregate

Here are some guidelines that can be use in the planning of an Aggregate.

1. Determine company policy regarding the variables that can be control.


2. Using the Forecast (Forecasting) is good as a basis for planning.


3. Make Planning into units the right capacity.


4. Try to keep the number of workforce stability.


5. Better do control of inventory with the inventory provides stricter than excessive inventories.


6. While maintaining the flexibility to face the necessary changes.


7. Responding to a request by means of a control.


8. Evaluate the planning on a regular basis.

Aggregate planning establishes general levels of employment, output, and inventories for periods of two to twelve months. In the spectrum of planning, it falls between the broad design decisions of long-range planning. The very specific and detail short-range planning decisions. It begins with overall forecasts for the planning horizon and ends with preparations for applying the plans to specific products and services.