Which of the following is not correct: The aggregate plan determines the quantity and timing of...

Which of the following is not correct:
1. The aggregate plan determines the quantity and timing of production for the intermediate future (from 3 to 18 months ahead).
2. The aggregate plan minimizes the overall cost over the time planning horizon while meeting the forecasted demand.
3. Utilizing inventories, shifting demand approaches, and varying the size of the workforce, part-timers, subcontractors are strategies adopted when designing an aggregate plan.
4. The aggregate plan details the type and timing of production at any time in the intermediate future.

Expert Solution

Answer: Option c: “The aggregate plan details the type and timing of production at any time in the intermediate future”.

The above statement is incorrect because “aggregate plan details the quantity and timing of production at any time in the intermediate future”.

Aggregate planning is used to determine the quantity and timing of production for the intermediate future. It is normally for 3 to 18 months ahead. The operations manager plans the best way to meet the forecasted demand by adjusting the production rates, labor levels, inventory levels, overtime, subcontracting and other controllable variables. The objective of an aggregate plan is to match the forecasted demand and minimize costs over the period planned. An aggregate plan means combining the relevant resources into a suitable equation to maximize the use of available resources and minimize cost. It includes the given demand forecast, facility capacity, inventory levels, workforce size, and related inputs. The planner schedules the rate of output for a production facility over the next 3 to 18 months. The aggregate planning strategies do not change demand but attempt to absorb demand fluctuations and firms try to smooth out changes in the demand pattern over the planning timeframe.

keosha answered 6 months ago

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