Logistics and Operations Management - Essay Example

Aggregate planning also enables planners to effectively make decisions concerning changes in employment, output rates, and inventory levels and back orders (Stevenson, Chuong 615). It also helps in the implementation of plans and prediction of changes in demand. Aggregate planning helps an organization in the budgeting process and in the synchronization of flow throughout the supply chain (Stevenson, Chuong 617- 618). The most common decisions variables for both manufacturing and service setting are short term decisions, intermediate decisions and long term decisions (Stevenson, Chuong 615).

Long term decisions include where to locate the organization, its layout and product design. Intermediate decisions involve employment issues, subcontracting, output, and back orders. Finally, the short term decisions involve job assignments, order quantities, machine loading and work schedules. There are increased inventory costs due to the added expense. The other disadvantage is that there is an increase in idle time and overtime and this becomes very costly for the organization. In addition, the utilization of resources in the organization will keep on varying with time due to the instability in workforce ((Stevenson, Chuong 622)).

By maintaining a level workforce, an organization increases morale of employees and this makes them to be more dedicated in their work. The process is also less disruptive to managers since they do not keep on hiring and lying off workers ((Stevenson, Chuong 622)). The process can sometimes be very costly especially the hiring and lying off of workers. There is the risk of hiring insufficient and unskilled workers which may result to poor job performance. Lastly, the job can involve a lot of paper work in the hiring and lying off workers and maintain their file (Stevenson, Chuong 622) The process provides for stability in the use of facilities and equipments in the