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Concept of Aggregation

The first step in developing an aggregate plan is to identify a meaningful measure of output. This is easily done for organizations with a single product, but is quite difficult for organizations producing several products. A sugar factory manager, for example, can measure capacity in terms of tons of sugar produced. Service organizations such as hospitals may use number of patients visited as a reasonable measure. But for organizations with large product portfolio like FMCG firms, it is difficult to find a common measure that defines the complete product portfolio.

In such cases, a meaningful measure can be found by identifying groups or families of individual products. These products, although different from one another, share common production processes or consume similar resources. Three models of television sets form a single product family or group, as do six models of wristwatches, or four models of cameras. The planning for such groups can be done in terms of a 'representative' or 'typical' product model that broadly represents all the products in the group.               

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