Supply Chain Management

Read Complete Research Material

Supply Chain Management

Supply Chain Management


Aggregate planning is an essential component of supply chain management of a business. It serves as a link between decisions and programming facilities (Slack, 2011). Aggregate planning decision establishes levels of production for overall medium term, which is why it is necessary that the company implements these processes and make decisions and policies that relate to the time bonus, hiring, layoffs, outsourcing and levels of inventory (Kanyalkar, 2007). The knowledge of these factors will allow the company to determine production levels involved and the mix of resources used.


As part of the aggregated overall planning, business must predict environmental developments, economic fluctuations and long-term sales trends of the time in the production planning. Based on the results, necessary balancing of time and space are made (mostly seasonal employment fluctuations) (Chopra, 2013). The aggregate production plan will handle aggregate amounts of capacity for the year but this does not mean that the capacity requirements should be consistent, and it will be because the monthly production needs will not always be the same, although the sum of those numbers match the figure in the production plan for that period.

In the case of Washing Machines, we shall compute the total costs using one month time horizon. The demand for Oct, Nov, and Dec is forecasted to be 200, 300, and 200 respectively. The company has 100 units in the beginning inventory. The computations are as follows;

One Month Planning - October


Costs Per Supplier

$ 1,600



Beg Inventory


Production Needs


Suppliers Needed


Costs of Suppliers

$ 16,000

Costs of Not Using Suppliers

$ 4,000

Total Costs

$ 20,000

Since we have planning for one month horizon and we have 100 units in the inventory, only 100 more units need to be produced. Thus, we can only utilize ten suppliers and the rest has ...
Related Ads