Planning is carried out after finalizing the demand forecasting. This planning is mainly a strategic function which deals with the future course of action based on the demand forecasting and current planning. Main types of planning are discussed below
The objective of the capacity planning is to ensure the future production capacity matches with the forecast demand. This also includes shorter term adjustments to reduce the variations in demand or any mismatches with the current capacity
Capacity Planning follows the following approaches
Location planning takes care of the planning of the manufacturing plant locations which plays in important role in effective supply chain management. Proper plant location is important to distribute the end products to all the customers through distribution network. The main points Location Planning looks at
Aggregate production planning
Aggregate production planning is mainly done for a medium range time horizon. The aggregate plan takes into consideration the production rate, employment, inventory, and economic cycle to devise the long term plan for an organization.
The Aggregate production plan lays the foundation for long term growth story and all the capacity planning and locational planning are short term planning on top of the same to achieve short term growth objectives.