QUESTION ONE

Read the extract below and answer the questions that follow: Aggregate planning system is a technique used in logistics and supply chain management to improve margins and reduce waste. In order to create a sustainable supply chain, companies should use aggregate planning system. This technique is a great way for companies to achieve a more efficient and effective logistics process that both reduces costs and helps achieve social goals such as reducing carbon emissions. Supply chains are faced with numerous challenges such as optimizing inventory, managing transportation costs, balancing demand and supply, aligning organizational goals with environmental objectives, etc. With the help of an aggregate planning system these problems can be addressed effectively by streamlining the supply chain process. Aggregate planning does not distinguish among sizes, colors, features, and so forth. For example, with automobile manufacturing, aggregate planning would consider the total number of cars planned for not the individual models, colors, or options. When units of aggregation are difficult to determine (for example, when the variation in output is extreme) equivalent units are usually determined. These equivalent units could be based on value, cost, worker hours, or some similar measure. Aggregate planning is considered to be intermediate-term (as opposed to long- or short-term) in nature. Hence, most aggregate plans cover a period of three to 18 months. Aggregate plans serve as a foundation for future short-range type planning, such as production scheduling, sequencing, and loading. The master production schedule (MPS) used in material requirements planning (MRP) has been described as the aggregate plan "disaggregated."

1.2 Discuss the usefulness of using mathematical models in generating an aggregate plan. (14)