Aggregate capacity planning

In the context of capacity planning, capacity refers to a firm’s labor and machine resources. Aggregate capacity planning is the process of devising a plan for providing a production capacity scheme to support the intermediate range sales forecast.

As a forecast demand becomes known in the form of customer orders, aggregate capacity plan may have to be revised upwards and downwards to avoid either overloaded or underloaded facilities. The aggregate capacity plan checks whether there is sufficient capacity to meet the demand expressed in the aggregate output plan.

The planning lays down how the capacity will be utilized and how over or under capacity will be corrected by using different strategies.

While the basic capacity is fixed, in the short run it could be augmented by overtime or running an extra shift or by subcontracting. The labor inputs could be varied.

Aggregate capacity planning models are often found in process industries because firms in these industries typically focus on capacity first and then schedule materials and labor.
Aggregate capacity planning

Definition of logistics

The English world logistics appears to have been derived from both the Greek word logistikos and the French word logistique. The term logistics entered military terminology in 18th century Europe.

It is difficult to determine when a formal definition of the term first appeared. The 1916 Webster’s Dictionary defined logistics as ‘that branch of the military art which embraces the details of the transport, quartering and supply of troops’.

Logistics means different things to different people. To some, logistics is managing the flow and stock of materials.

Council of Logistics Management defined logistics management is part of supply chain management that plans, implements, and controls the efficient, effective forward and reverses flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers’ requirements.

The Chartered institute of Logistics and Transport (CILT) in the United Kingdom describes logistics as involving: Getting the right product to the right place in the right quantity at the right time, in the best condition and at an acceptable cost.

Many definition of logistics suggests that supply chains may be more than the linear links of three or four companies, and also that the buyer-supplier or seller-buyer interface is of critical importance to improvement of the flow of goods and information.
Definition of logistics