Aggregate Production Plan

CIOP is an end-to-end supply chain training and certification program designed and developed by supply chain practitioners and consultants. The syllabus was developed in consultation with the industry, which led to Inventory Management Body of Knowledge (IMBoK v3.0). Most of the class discussions you will hear cannot be found in any textbook rather these are all the original contribution from the developers of CIOP. For example, think about the types of inventories such as raw material, work-in-process and finished goods. Out of these three, WIP is the most difficult to sell in the market and that is one of the reasons, WIP should be controlled well. The company has a built-in capability and capacity to sell finished goods, which is their business. The second easy to sell are the raw materials as you know the suppliers, who may either buy-back or at least guide you. But in case of WIP, this is custom manufactured to suit your manufacturing processes and may not well fit any other organisation, hence you may have to sell it as a scrap.

Aggregate production planning consists of two major elements; one is to identify the present production rate of the company and the second is to determine the future, desired production rate of the company. If the present production rate of the company is increasing continuously then it can be said that the company should adopt a hybrid strategy in order to increase its production rate simultaneously. On the other hand, if the company's production is decreasing continuously then it should adopt consistent chase supply. In case of consistent chase supply, the company should use a hybrid strategy and increase the production rate at the same time.

Aggregate production planning involves three important elements; adequate number of requisite raw materials, adequate number of requisite products and adequate number of requisite warehouse. If any one of these three elements is lacking then it results in the inability of the company to meet the overall production demand. For example, if there is a huge requirement for steel items but there is no proper storage space for steel items then it results in a reduction of overall steel production and the company suffers a loss in terms of orders. Similarly, if the demand for cars is increasing but there is no proper storage space for cars then it leads to increase in the level of production and the company suffers a loss in terms of orders. These factors can be used by the manufacturer to estimate the demand on the market and plan the production accordingly. This helps the manufacturer to meet the demand successfully.

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