Which Of The Following Is Not Associated With Manipulation Of Product Or Service Demand?

What is Aggregate Planning ? - Importance and its Strategies

Introduction

An organisation can finalize its business plans on the recommendation of demand forecast. Once business plans are gear up, an organisation can do backward working from the final sales unit to raw materials required. Thus almanac and quarterly plans are broken downwards into labor, raw material, working capital, etc. requirements over a medium-range period (6 months to xviii months). This process of working out product requirements for a medium range is chosen aggregate planning.

Factors Affecting Aggregate Planning

Aggregate planning is an operational activity critical to the organization as information technology looks to balance long-term strategic planning with short term production success. Following factors are critical before an aggregate planning process can really start;

• A complete information is required near available production facility and raw materials.
• A solid demand forecast covering the medium-range period
• Fiscal planning surrounding the production cost which includes raw material, labor, inventory planning, etc.
• Organization policy around labor management, quality management, etc.

For aggregate planning to be a success, following inputs are required;

• An aggregate demand forecast for the relevant menstruum
• Evaluation of all the bachelor ways to manage capacity planning like sub-contracting, outsourcing, etc.
• Existing operational status of workforce (number, skill prepare, etc.), inventory level and product efficiency

Amass planning will ensure that organization can plan for workforce level, inventory level and product rate in line with its strategic goal and objective.

Aggregate planning as an Operational Tool

Aggregate planning helps accomplish balance between functioning goal, financial goal and overall strategic objective of the organization. It serves equally a platform to manage capacity and need planning.

In a scenario where need is non matching the capacity, an arrangement can try to rest both by pricing, promotion, order management and new demand creation.

In scenario where chapters is not matching need, an organization can attempt to residue the both by various alternatives such every bit.

• Laying off/hiring backlog/inadequate excess/inadequate excess/inadequate workforce until demand decrease/increase.
• Including overtime as office of scheduling there by creating additional capacity.
• Hiring a temporary workforce for a set period or outsourcing activity to a sub-contrator.

Importance of Amass Planning

Aggregate planning plays an important part in achieving long-term objectives of the organization. Aggregate planning helps in:

• Achieving financial goals by reducing overall variable cost and improving the bottom line
• Maximum utilization of the available production facility
• Provide customer delight past matching demand and reducing wait fourth dimension for customers
• Reduce investment in inventory stocking
• Able to meet scheduling goals there by creating a happy and satisfied work force

Aggregate Planning Strategies

In that location are 3 types of amass planning strategies bachelor for organization to choose from. They are as follows.

1. Level Strategy

   Every bit the proper noun suggests, level strategy looks to maintain a steady product rate and workforce level. In this strategy, organization requires a robust forecast demand as to increase or subtract production in apprehension of lower or higher client demand. Reward of level strategy is steady workforce. Disadvantage of level strategy is high inventory and increase back logs.

2. Chase Strategy

   As the name suggests, hunt strategy looks to dynamically match demand with production. Advantage of chase strategy is lower inventory levels and back logs. Disadvantage is lower productivity, quality and depressed work force.

3. Hybrid Strategy

   As the proper name suggests, hybrid strategy looks to balance between level strategy and chase strategy.

Authorship/Referencing - About the Author(s)

The article is Written By "Prachi Juneja" and Reviewed Past Management Study Guide Content Team. MSG Content Team comprises experienced Kinesthesia Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on Almost Us. The employ of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.

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