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Aggregate production planning refers to the process of deciding the overall quantities of products to be manufactured or produced in a plant or other manufacturing facility during a medium term planning period such as a month, or a quarter. The aggregate plan output consist of the total quantities of each product or a group of product to be manufactured in the plan period of going into details of scheduling of different manufacturing activities required to achieve the planned production levels. The aggregate production will also not specify details such as the dates when material ordered against individual customer order will be ready for delivery.
The aggregate production plan is prepared as a means of setting overall production targets and as input for planning availability of other inputs and supporting activities to meet the production targets.
The aggregate plans then form the basis of more detailed production, including such as daily and weekly production schedules and customer delivery schedules. Such production plan are further detailed out as machine loading schedules.
Aggregate production planning is characteristic of John Maynard Keynes economic theory of Aggregate Demand. The theory was based upon the idea that fiscal and monetary actions from within the government had the power to manipulate the business cycle, 'prime the pump' economics. F.D.R. implemented Keynes' theory into his 'New Deal for America'. Simply defined... 'no jobs...make jobs'. The New Deal created a new reality for Americans;
1. for the first time in U.S. history the U.S. government sought to economically assist a majority of its citizens in need of employment. Jobs were created...planting trees, sweeping streets..etc...a paycheck was better than a hand out.
2. labor unions were recognized as legal and the act of collective bargaining were within the rights of workers. (Wagner Act)
3. the Social Security Act of 1935 would assist older Americans, an old age pension for those who could not benefit from the new jobs being created.
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