Aggregate planning refers to intermediate-range planning, typically covering two to twelve months, and aims to balance production and demand. This planning helps businesses manage fluctuations in capacity and demand, aligning available resources with forecasted needs. By focusing on groups of products rather than individual items, organizations maintain flexibility in operations. It also supports informed decisions on staffing, inventory, and subcontracting to ensure efficient production and service delivery.

Key Components of Aggregate Planning

1. Forecasting Demand: Aggregate planning begins with estimating the total demand over the planning horizon.
2. Resource Allocation: Organizations assess available resources such as labor, equipment, and raw materials.
3. Output and Inventory Levels: Decisions are made about the amount of production and inventory required to meet forecasted demand.
4. Employment and Subcontracting: Plans are developed to adjust workforce levels or use subcontractors to meet varying demands.

Strategies for Aggregate Planning

• Level Strategy: Maintains a steady production rate and uses inventory to absorb fluctuations in demand.
• Chase Strategy: Adjusts production to match demand, resulting in varying output levels.
• Mixed Strategy: Combines elements of level and chase strategies to optimize operations and minimize costs.

Techniques for Aggregate Planning

1. Graphical and Spreadsheet Approaches: Simple trial-and-error techniques allow planners to compare various scenarios visually.
2. Mathematical Models: Linear programming and other quantitative tools help identify optimal solutions.
3. Simulation Models: Simulations enable businesses to test different conditions and develop robust plans.

Aggregate planning helps synchronize operations across the supply chain, supporting effective capacity management and cost control.

Master Scheduling: Translating Plans into Action

Master scheduling breaks down the aggregate plan into detailed schedules for individual products or services. It provides a time-phased plan showing what needs to be produced and when to meet customer orders and maintain appropriate inventory levels.

Master Scheduling Process

1. Inputs: Include demand forecasts, current inventory levels, and customer orders.
2. Outputs: Generate production schedules, identify available-to-promise (ATP) inventory, and ensure all resources are aligned with demand.
3. Time Fences: Divide the schedule into frozen, slushy, and liquid phases to manage order changes efficiently. Frozen phases are fixed, while liquid phases offer more flexibility.

Benefits of Aggregate Planning and Master Scheduling

• Improved Efficiency: Aligns production with demand, minimizing stockouts and excess inventory.
• Customer Satisfaction: Ensures timely fulfillment of customer orders.
• Cost Management: Reduces operational costs by optimizing labor, inventory, and resource use.
• Supply Chain Coordination: Supports better planning and collaboration across the supply chain.

Conclusion

Aggregate planning and master scheduling play crucial roles in managing operations effectively. While aggregate planning provides a strategic framework for meeting fluctuating demands, master scheduling ensures that production aligns with specific customer needs. Together, they enhance operational efficiency, minimize costs, and maintain customer satisfaction through well-coordinated planning and execution.