Discuss the primary objective and operational parameters of aggregate planning

What will be an ideal response?

Answer: The goal of aggregate planning is to satisfy demand in a way that maximizes profit. Aggregate planning is a process by which a company determines levels of capacity, production, subcontracting, inventory, stockouts, and even pricing over a specified time horizon. The aggregate planner's main objective is to identify the following operational parameters over the specified time horizon:
• Production rate: the number of units completed per unit time (such as per week or per month).
• Workforce: the number of workers/units of capacity needed for production.
• Overtime: the amount of overtime production planned.
• Machine capacity level: the number of units of machine capacity needed for production.
• Subcontracting: the subcontracted capacity required over the planning horizon.
• Backlog: demand not satisfied in the period in which it arises but carried over to future periods.
• Inventory on hand: the planned inventory carried over the various periods in the planning horizon.

The aggregate plan serves as a broad blueprint for operations and establishes the parameters within which short-term production and distribution decisions are made. The aggregate plan allows the supply chain to alter capacity allocations and change supply contracts.