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In which way does the time horizon chosen for an aggregate plan determine whether it is the best plan for the firm?
Wiki User
∙ 13y ago
Many factors affect the selection of an appropriate time horizon. Perhaps, the most important is what the firm intends to plan during that time period. An aggregate plan implies a period of up to 18 months wherein the firm takes its forecast and plans production using inventory, work force size, overtime and under time, subcontracting, and backlogging orders to achieve a reasonable schedule at reasonable costs. A very stable firm in a very stable environment with a very stable demand really doesn't need to go out very far with its aggregate plan. However, when there is variation, especially when this variation is considerable, then a longer aggregate plan will show the need to find subcontractors, new workforce availability, etc. Planning for these can start early.
Wiki User
∙ 13y ago
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