Reference no: EM133389101

Case Study: Supply chain management has become one of the most important core functions of both service and product companies. When meeting the demand for a product or service, supply chain management looks at all the steps, from getting the raw materials to how the final users use the product or service. In the simplest terms, a supply chain is made when there is a need for a product or service and there are enough supplies to meet that need.

Sustainability has become an important part of making decisions about managing supply chains. This is because customers are getting more aware of how their purchases affect the environment.

In aggregate planning, the person in charge first figures out the total cost of labor, changing capacity, production, holding inventory, stock-out and backlog costs, and subcontracting. It's hard to figure out how much these things will cost, but it's a necessary step for overall planning. Aside from the cost factors, the aggregate plan needs to take into account the demand forecast for each period, the number of working days, the labor hours needed to make each item, and the initial inventory, backlog, and staffing levels. When these factors are known, the aggregate planning problem can be written as a mathematical programming problem and solved. The plan should then be broken up into smaller parts to make the Master Production Schedule (MPS) and the Materials Requirements Plan. In other words, aggregate planning is needed for many operations, such as planning production, making schedules, and keeping track of inventory.

Aggregate planning is an essential part of managing the supply chain and operations. In this feature, the person making the decision comes up with the best production plan. This plan includes the production, inventory, capacity, and workforce levels for the short- to medium-term planning horizon. The goal is to make sure that the total cost is as low as possible. Instead of just focusing on economics. Studies show that the best plan changes when these things are thought about. Even though environmental and social benefits are possible, they cause the total economic cost to rise. Also, regulatory agencies or market mechanisms should put in place specific laws and incentives to make sure the proposed way of making decisions is used.

An aggregate plan helps operation managers figure out how much capacity they will need in the future. This lets them change or adapt how they do business to meet those needs. When making an aggregate plan, operations managers need to answer a series of strategic questions that all have to do with how much capacity will be needed in the future. If you know the most important questions to ask when making an aggregate plan, you can make the best plans for your production operations.

Questions:

1. What are the key considerations of Aggregate Planning?
2. What are the advantages of Aggregate Planning?