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Sem 5 Prep
← OperationsAggregate planning: options and strategies

Formulas for this chapter

Level output rate

Level rate per period = total demand over the horizon / number of periods Level rate per day = total demand / total production days

Sizing a level plan. Check it against total demand before costing anything, or the plan may be infeasible.

total demand
Sum of the period forecasts across the whole horizon
production days
Working days in each period; they usually differ

Inventory and backlog balance

Output - forecast, cumulated = ending inventory If the cumulative balance is negative, it is a BACKLOG, not negative inventory

Building the inventory rows of an aggregate plan. Cumulate; never recompute each period from scratch.

ending inventory
Stock at the end of the period, never below zero
backlog
Unmet demand carried into the next period, charged per unit per period
Step 1 of 21
The ideaTheory

The middle-distance decision

The factory is built, so capacity is fixed for years. Next Tuesday's schedule is fixed by the orders in hand. But the next six to twelve months are genuinely open.

Do you keep the workforce steady and let stock rise and fall, or keep stock low and let the workforce rise and fall? Aggregate planning is that choice, made in units of product families rather than individual models.

It sits between long-range capacity planning above it and the master production schedule below it, and everything the MRP chapter exploded came out of it.

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