Background:

For operations managers, the aggregate schedule ties the firm's strategic goals to production plans, but for service organizations, the aggregate schedule ties strategic goals to workforce schedules. Four things are needed for aggregate planning:

1. A logical overall unit for measuring sales and output

2. a forecast of demand for a reasonable intermediate planning period

3. A method for determining costs

4. A model that combines forecasts and costs to that scheduling decisions can be made for each planning period

Quotas are short run aggregate planning milestones. Many companies use periodic quotas to guide their overall aggregate plan. At times managers can focus too much on quotas and become myopic with regard to the overall aggregate plan and in turn the strategy of the company.

Questions for Thought:

1. Have you ever worked at a job where quotas were used to ensure the right amount of production was accomplished?

2. How can a manager balance the costs of having too much inventory versus having not enough inventory in a planning period?

3. How does the advice the "line manager" give to his employees effect the overall production plan, the quality of the product, the strategy of the company?