ABSTRACT

The aggregate production plan refers to a plan of future aggregate resource levels that makes sure that supply is in balance with demand and costs are minimized. It is a plan that covers the intermediate term (as opposed to short term or long term) and is intended to minimize the effects of frequent changes to levels of resources such as materials and workers due to shortsighted planning. As we shall see in this chapter, the aggregate production planning problem has been, and still is, a practical problem that generates intense academic interest. We begin by emphasizing its importance for operations and then review its academic development, from its genesis in the 1950s until today. However, if aggregate plans are to have practical usefulness, they must produce feasible decisions for the key resources covered by the plan that can be used by the more detailed operational plans that follow. Consequently, we will review the “disaggregation” problem and follow that with a discussion of aggregate production planning in practice. We close the chapter with some thoughts on the future research directions of this important topic and its implications for practitioners.