Aggregate planning provides the link between the corporate strategic and capacity plans and workforce size, inventory quantity. and production levels. It does not involve detailed planning. It is also useful to point out some practical consideration – in aggregate planning. First, demand variations are a fact of life, so the planning system must include sufficient flexibility to cope with such variations. Flexibility can be achieved by developing alternative sources of supply, cross-training workers to handle a wide variety of orders, and engaging in more frequent planning during high-demand periods.
Second decision rules for production planning should be adhered to once they have been selected. However, they should be carefully analyzed prior to implementation by such checks as using simulation of historical data to see what really would have happened if these rules had been in operation in the past.
Services typically require a chase strategy due to the customer’s direct involvement with the service delivery system. However, services, under certain conditions, can successfully apply the concept of yield management, which simultaneously adjusts customer demand and the operation’s capacity with the goal of maximizing the firm’s profit.