1. The Aggregate Operations Plan
• An aggregate plan links strategic goals and
objectives of the organization with the plans for
individual products, services and their various
components.
• Aggregate Production Planning is planning about
how many units of the product are to be produced on
a weekly or monthly basis for the coming Six to
Eighteen Months ensuring the plan to be in line with
the overall business plan of the company.
• Main purpose is to specify the optimal combination of
– production rate (units completed per unit of time)
– workforce level (number of workers)
– inventory on hand (inventory carried from
previous period) with a view to minimize the
overall production costs.

2. Aggregate Planning Objectives
To Maximize Customer Service and Profits
To Minimize Costs:
• Minimize Investment in Inventory
• Minimize Changes in Production Rates
• Minimize Changes in Workforce Levels and
• Maximize Utilization of Plant and Equipment

3. Aggregate Planning Process
Determine
requirements for
planning horizon

4. Aggregate Planning Process
Determine
Identify alternatives,
requirements for
constraints, and costs
planning horizon

5. Aggregate Planning Process
Determine Prepare prospective
Identify alternatives,
requirements for plan for
constraints, and costs
planning horizon planning horizon

6. Aggregate Planning Process
Determine Prepare prospective
Identify alternatives,
requirements for plan for
constraints, and costs
planning horizon planning horizon
Is the plan
acceptable?

7. Aggregate Planning Process
Determine Prepare prospective
Identify alternatives,
requirements for plan for
constraints, and costs
planning horizon planning horizon
No
Is the plan
acceptable?

8. Aggregate Planning Process
Determine Prepare prospective
Identify alternatives,
requirements for plan for
constraints, and costs
planning horizon planning horizon
No
Is the plan
acceptable?
Yes
Implement and
update the plan

9. Aggregate Planning Process
Determine Prepare prospective
Identify alternatives,
requirements for plan for
constraints, and costs
planning horizon planning horizon
No
Is the plan
acceptable?
Yes
Move ahead
Implement and
to next
update the plan
planning session

10. An Overview of Aggregate Production
Planning System
Corporate Cap.Installed Funds
Plan / Utilized Avail.
External Manpower
capacity Aggregate
available
Production
Sub contract
Planning
plan
Sales Plan
y
acit
Cap an
Pl
Aggregate Investment Manpower Hiring/
Prodn Plan Plan Lay off Plan

11. Strategies for Aggregate Planning
• Chase
• Level
• Minimum Manpower
• Mixed

12. Strategies for Aggregate Planning (contd.)
Chase Strategy - As demand changes, hire and
layoff work force to produce the units required.
Some inventory also has to be accounted for,
because of rounding errors.
Level Strategy - Constant Work Force. As demand
changes inventory build-up & stock outs occur.
Minimum Manpower Strategy - Use of minimum
manpower based upon minimum demand during
the plan period and meeting the additional demand
through overtime and or subcontract.
Mixed Strategy - Use any or all of the production
variables to determine the lowest cost plan.

13. The Chase Strategy

14. The Level Strategy
Cont….

15. Example on Aggregate Planning
M/s ABC Ltd. has projected sales of 300, 500, 400, 100, 200 and
300 for the six months Jan to June and the number of working
days in the corresponding month are 22, 19, 21, 21, 22 & 20
respectively. The company at present employs 20 workers and
each unit requires 10 labour hours for its production. The
hiring costs are Rs 300 and layoff costs are Rs 400 per person.
Company policy is to retain a safety stock equal to 20% of the
monthly forecast. There are currently 50 units in stock carried
at Rs 2/- per unit - month. Stock outs have been assigned a
cost of Rs.20/- per unit – month. Labour cost /hr is Rs 6/- and
Rs 9/- on regular & O.T. basis respectively. Suggest an
aggregate plan based upon the following strategies:-
1. Chase
2. Constant Work force of 20 & using O.T. & Idle times to meet
the demand
3. Constant Workforce of 20 & build inventory /occur stock out
cost.

16. Solution to the problem on Aggregate
Planning – Chase Straegy
Month Days DJ Safety Op. Prodn Man Hiring/
Stock Retrench-
(20%) Reqd reqd ment
Stock
JAN 22 300 60 50 ?
FEB 19 500 100
MAR 21 400
APR 21 100
MAY 22 200
JUN 20 300

17. Solution to the problem on Aggregate
Planning – Chase Straegy
Month Days DJ Safety Op. Prodn Man Hiring/
Stock Retrench-
(20%) Reqd reqd ment
Stock
JAN 22 300 60 50 310
?
FEB 19 500 100
MAR 21 400
APR 21 100
MAY 22 200
JUN 20 300

18. Solution to the problem on Aggregate
Planning – Chase Straegy
Month Days DJ Safety Op. Prodn Man Hiring/
Stock Retrench-
(20%) Reqd reqd ment
Stock
JAN 22 300 60 50 310
FEB 19 500 100 60 540
MAR 21 400
APR 21 100
MAY 22 200
JUN 20 300

19. Solution to the problem on Aggregate
Planning – Chase Straegy
Month Days DJ Safety Op. Prodn Man Hiring/
Stock Retrench-
(20%) Reqd reqd ment
Stock
JAN 22 300 60 50 310
FEB 19 500 100 60 540
MAR 21 400 80 100
APR 21 100 20 80
MAY 22 200 40 20
JUN 20 300 60 40

20. Solution to the problem on Aggregate
Planning – Chase Straegy
Month Days DJ Safety Op. Prodn Man Hiring/
Retrench-
Stock Reqd reqd ment
Stock
JAN 22 300 60 50 310 ?
FEB 19 500 100 60 540
MAR 21 400 80 100 380
APR 21 100 20 80 40
MAY 22 200 40 20 220
JUN 20 300 60 40 320

21. Solution to the problem on Aggregate
Planning – Chase Straegy
Month Days DJ Safety Op. Prodn Man Hiring/
Stock Retrench-
(20%) Reqd reqd ment
Stock
JAN 22 300 60 50 310 (310x10)÷
(22x8)= 18
FEB 19 500 100 60 540
MAR 21 400 80 100 380
APR 21 100 20 80 40
MAY 22 200 40 20 220
JUN 20 300 60 40 320

22. Solution to the problem on Aggregate
Planning – Chase Straegy
Month Days DJ Safety Op. Prodn Man Hiring/
Stock Retrench-
(20%) Reqd reqd ment
Stock
JAN 22 300 60 50 310 18
(310x10)÷176
FEB 19 500 100 60 540 (540x10)÷
152=36
MAR 21 400 80 100 380
APR 21 100 20 80 40
MAY 22 200 40 20 220
JUN 20 300 60 40 320

23. Solution to the problem on Aggregate
Planning – Chase Straegy
Month Days DJ Safety Op. Prodn Man Hiring/
Stock Retrench-
(20%) Reqd reqd ment
Stock
JAN 22 300 60 50 310 18
(310x10)÷176
?
FEB 19 500 100 60 540 36
MAR 21 400 80 100 380 23
APR 21 100 20 80 40 3
MAY 22 200 40 20 220 13
JUN 20 300 60 40 320 20

24. Solution to the problem on Aggregate
Planning – Chase Straegy
Month Days DJ Safety Op. Prodn Man Hiring/
Stock Retrench-
(20%) Reqd reqd ment
Stock
JAN 22 300 60 50 310 18
(310x10)÷176
(2)
FEB 19 500 100 60 540 36
MAR 21 400 80 100 380 23
APR 21 100 20 80 40 3
MAY 22 200 40 20 220 13
JUN 20 300 60 40 320 20

25. Solution to the problem on Aggregate
Planning – Chase Straegy
Month Days DJ Safety Op. Prodn Man Hiring/
Stock Retrench-
(20%) Reqd reqd ment
Stock
JAN 22 300 60 50 310 18
(310x10)÷176
(2)
FEB 19 500 100 60 540 36 18
MAR 21 400 80 100 380 23
APR 21 100 20 80 40 3
MAY 22 200 40 20 220 13
JUN 20 300 60 40 320 20

26. Solution to the problem on Aggregate
Planning – Chase Straegy
Month Days DJ Safety Op. Prodn Man Hiring/
Stock Retrench-
(20%) Reqd reqd ment
Stock
JAN 22 300 60 50 310 18
(310x10)÷176
(2)
FEB 19 500 100 60 540 36 18
MAR 21 400 80 100 380 23 (13)
APR 21 100 20 80 40 3 (20)
MAY 22 200 40 20 220 13 10
JUN 20 300 60 40 320 20 7

27. Solution to the problem on Aggregate
Planning-Chase Strategy (contd.)
RUPEES
Cost of Hiring Manpower
Cost of Retrenchment
Cost of Regular Prodn
TOTAL COST OF CHASE STRATEGY 1,33,100

28. Solution to the problem on Aggregate
Planning-Chase Strategy (contd.)
RUPEES
Cost of Hiring Manpower (18+10+7)x300/- 10,500
Cost of Retrenchment
Cost of Regular Prodn
TOTAL COST OF CHASE STRATEGY 1,33,100

29. Solution to the problem on Aggregate
Planning-Chase Strategy (contd.)
RUPEES
Cost of Hiring Manpower (18+10+7)x300/- 10,500
Cost of Retrenchment (2+13+20)x400/- 14,000
Cost of Regular Prodn
TOTAL COST OF CHASE STRATEGY 1,33,100

30. Solution to the problem on Aggregate
Planning-Chase Strategy (contd.)
RUPEES
Cost of Hiring Manpower (18+10+7)x300/- 10,500
Cost of Retrenchment (2+13+20)x400/- 14,000
Cost of Regular Prodn 1810x10x6/- 1,08,600
TOTAL COST OF CHASE STRATEGY 1,33,100

31. Solution to the problem on Aggregate Planning-
constant work force with O.T./ Idle time strategy
Month Prodn Hrs Days Hrs O.T. Idle Cost
Reqd Reqd Avai* Hrs Hrs
JAN 310 3100 22 3520 420
FEB 540 5400 19 3040 2360
MAR 380 21
APR 40 21
MAY 220 22
JUN 320 20 - - --
*Hours Available=Days*Manpower*Working Hrs./Day

32. Solution to the problem on Aggregate Planning-
constant work force with O.T./ Idle time strategy
Month Prodn Hrs Days Hrs O.T. Idle Cost
Reqd Reqd Avai* Hrs Hrs
JAN 310 3100 22 3520 420
FEB 540 5400 19 3040 2360
MAR 380 3800 21 3360 440
APR 40 400 21 3360
MAY 220 2200 22 3520
JUN 320 3200 20 3200 - -
*Hours Available=Days*Manpower*Working Hrs./Day

33. Solution to the problem on Aggregate Planning-
constant work force with O.T./ Idle time strategy
Month Prodn Hrs Days Hrs O.T. Idle Cost
Reqd Reqd Avail Hrs Hrs
JAN 310 3100 22 3520 420 ?
FEB 540 5400 19 3040 2360
MAR 380 3800 21 3360 440
APR 40 400 21 3360 2960
MAY 220 2200 22 3520 1320
JUN 320 3200 20 3200 - - --

34. Solution to the problem on Aggregate Planning-
constant work force with O.T./ Idle time strategy
Month Prodn Hrs Days Hrs O.T. Idle Cost
Reqd Reqd Avail Hrs Hrs
JAN 310 3100 22 3520 420 2,520 (Rs6)
FEB 540 5400 19 3040 2360
MAR 380 3800 21 3360 440
APR 40 400 21 3360 2960
MAY 220 2200 22 3520 1320
JUN 320 3200 20 3200 - - --
Total cost of strategy=?

35. Solution to the problem on Aggregate Planning-
constant work force with O.T./ Idle time strategy
Month Prodn Hrs Days Hrs O.T. Idle Cost
Reqd Reqd Avail Hrs Hrs
JAN 310 3100 22 3520 420 2,520 (Rs6)
FEB 540 5400 19 3040 2360 7,080 (Rs3)
MAR 380 3800 21 3360 440
APR 40 400 21 3360 2960
MAY 220 2200 22 3520 1320
JUN 320 3200 20 3200 - - --
Total cost of strategy=?

36. Solution to the problem on Aggregate Planning-
constant work force with O.T./ Idle time strategy
Month Prodn Hrs Days Hrs O.T. Idle Cost
Reqd Reqd Avail Hrs Hrs
JAN 310 3100 22 3520 420 2,520
FEB 540 5400 19 3040 2360 7,080
MAR 380 3800 21 3360 440 1,320
APR 40 400 21 3360 2960 17,760
MAY 220 2200 22 3520 1320 7,920
JUN 320 3200 20 3200 - - --
Total cost of strategy=?

37. Solution to the problem on Aggregate Planning-
constant work force with O.T./ Idle time strategy
Month Prodn Hrs Days Hrs O.T. Idle Cost
Reqd Reqd Avail Hrs Hrs
JAN 310 3100 22 3520 420 2,520
FEB 540 5400 19 3040 2360 7,080
MAR 380 3800 21 3360 440 1,320
APR 40 400 21 3360 2960 17,760
MAY 220 2200 22 3520 1320 7,920
JUN 320 3200 20 3200 - - --
Total cost of strategy=18100x6 + 8400 +28200= 1,45,200

38. Solution to the problem on Aggregate Planning-
constant work force with Invy/stock out strategy
Month Prodn Days Hrs Actual Cum Cum Excess/
Prodn
Reqd Avail Prodn Reqd (Short)
JAN 310 22 3520 352
FEB 540 19 3040 304
MAR 380 21
APR 40 21
MAY 220 22
JUN 320 20
Total cost of strategy=?

39. Solution to the problem on Aggregate Planning-
constant work force with Invy/stock out strategy
Month Prodn Days Hrs Actual Cum Cum Excess/
Prodn
Reqd Avail Prodn Reqd (Short)
JAN 310 22 3520 352
FEB 540 19 3040 304
MAR 380 21 3360 336
APR 40 21 3360 336
MAY 220 22 3520 352
JUN 320 20 3200 320
Total cost of strategy=?

40. Solution to the problem on Aggregate Planning-
constant work force with Invy/stock out strategy
Month Prodn Days Hrs Prodn Cum Cum Excess/
Reqd Avail Prodn Reqd (Short)
JAN 310 22 3520 352 352
FEB 540 19 3040 304 656
MAR 380 21 3360 336 992
APR 40 21 3360 336 1328
MAY 220 22 3520 352 1680
JUN 320 20 3200 320 2000
Total cost of strategy=?

41. Solution to the problem on Aggregate Planning-
constant work force with Invy/stock out strategy
Month Prodn Days Hrs Prodn Cum Cum Excess/
Reqd Avail Prodn Reqd (Short)
JAN 310 22 3520 352 352 310
FEB 540 19 3040 304 656 850
MAR 380 21 3360 336 992 1230
APR 40 21 3360 336 1328 1270
MAY 220 22 3520 352 1680 1490
JUN 320 20 3200 320 2000 1810
Total cost of strategy=?

42. Solution to the problem on Aggregate Planning-
constant work force with Invy/stock out strategy
Month Prodn Days Hrs Prodn Cum Cum Excess/
Reqd Avail Prodn Reqd (Short)
JAN 310 22 3520 352 352 310 42
FEB 540 19 3040 304 656 850 194
MAR 380 21 3360 336 992 1230 238
APR 40 21 3360 336 1328 1270 58
MAY 220 22 3520 352 1680 1490 190
JUN 320 20 3200 320 2000 1810 190
Total cost of strategy=?

43. Solution to the problem on Aggregate Planning-
constant work force with Invy/stock out strategy
Month Prodn Days Hrs Prodn Cum Cum Excess/
Reqd Avail Prodn Reqd (Short)
JAN 310 22 3520 352 352 310 42
FEB 540 19 3040 304 656 850 194
MAR 380 21 3360 336 992 1230 238
APR 40 21 3360 336 1328 1270 58
MAY 220 22 3520 352 1680 1490 190
JUN 320 20 3200 320 2000 1810 190
Total cost of strategy=20000x6 + 432x20 +480x2= 1,29,600