A firm must plan its manufacturing activities at a variety of levels and operate these as a system. Aggregate planning is medium‐range capacity planning which typically covers a time horizon of anywhere from three to 18 months. The goal of aggregate planning is to achieve a production plan which will effectively utilize the organization′s resources to satisfy expected demand. Planners must make decisions on output rates, employment levels and changes, inventory levels and changes, back orders, and subcontracting. Aggregate planning determines not only the output levels planned but also the appropriate resource input mix to be used.
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