Question

What costs must be monitored when analyzing aggregate planning strategies?

Answer 1

Given the overall operations of the Organization, an aggregate planning strategy is formed such that the schedule that was preliminarily made for the Organizational operations, is maintained by undertaking such an aggregate planning strategy that helps in developing the schedule, analyzing and monitoring the same such that it is maintained.

Following are the costs that must be hence monitored when analyzing aggregate planning strategies:

• Costs pertaining to the levels of production, sales and inventory.
• Controlling of the costs pertaining to the demand forecasts.
• Minimizing the costs of the day-to-day scheduling, near-sightedness of operations that amounts to ordering of materials in small quantities, hiring of labor without considering the long-term impacts, etc.
• Overall minimizing of costs of the short-term requirement changes.
• Overtime costs, subcontracting costs, backorder costs, inventory carrying costs, etc. are also some of the costs that must be monitored.