The Nature of Aggregate Planning

An S&OP team builds an aggregate plan that satisfies forecasted demand by adjusting production rates, labor levels, inventory levels, overtime work, subcontracting rates, and other controllable variables. The plan can be for Frito-Lay, Whirlpool, hospitals, colleges, or Pearson Education, the company that publishes this textbook. Regardless of the firm, the objective of aggregate planning is usually to meet forecast demand while minimizing cost over the planning period. However, other strategic issues may be more important than low cost. These strategies may be to smooth employment, to drive down inventory levels, or to meet a high level of service, regardless of cost.

Let’s look at Snapper, which produces many ...

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