ing will develop an operations plan for a time horizon of about one year. Materials and labour are scheduled in a production plan. The objective is to develop a plan that is low cost, meets the demand forecast, and considers hire/fire policy consistent with the firm's mission (Adam & Ebert, 1990). Production capacity may be adjusted by hiring, firing, layoffs, overtime, subcontracting, and short term leases of equipment (Daniels & Burns, 1997).
Using another definition, aggregate production planning is medium term capacity planning that typically encompasses a specific time scale and lies between long range planning and short range planning (Zhiwei, Cernich, Meredith, & Lanier, 1997). Aggregate production planning is closely linked to Master Production Scheduling. Long range planning includes facilities planning; short range planning includes scheduling. Long range planning is higher than aggregate planning in a firm's organizational structure; short range planning is lower (Daniels, 1998).
In a one-year planning period, ABC does not have time for capital expenditures, so the only variables it can usually count on controlling are labor and materials. The one-year time horizon is further divided into time periods (sometimes called "buckets" or "segments" or "slots"). The usual time frame for these is monthly. The key thing is to be consistent, so time frames of equal size are used. It is not necessary to be concerned with the individual monthly variation in number of days, since daily demand is totaled or aggregated. The key elements which ABC must determine as part of their aggregate planning model are these: Master Production Schedule, Detailed Scheduling, Job Assignment, Sequencing (or flow), and Expediting. Once these key elements have been thoroughly analysed, then the aggregate planning process can commence for ABC.
Creating a Master Production Schedule
ABC has sales records for the past seven years so...