Aggregate planning Introduction Capacity may be defined as the maximum or limiting capability of a production unit to produce in a specific period. This is expressed in terms of output per unit of time. If stated period of time is one month, the capacity is said to be the limiting capability of the producing unit in one month, e.g. 10,000 per units per month. This capacity is the capability of the producing unit under given (or specified) conditions, e.g. one shift working/ two shifts working or one related to the intensity of the facilities used. Aggregate planning It involves planning the best quantity to produce during time periods in the intermediate- range horizon (often 3 months to 1 year) and planning the lowest cost method of providing the adjusting capacity to accommodate the production requirements. For manufacturing operations, aggregate planning involves planning workforce size, production rate (work hours per week) and inventory levels. Features of aggregate planni...