Aggregate planning and strategies are incorporated when developing a production plan. Aggregate planning addresses the supply and demand for a product by determining the inputs, transformation and outputs. The decisions are made for production, staffing, inventory and back orders. The strategies of aggregate planning are the active strategy, the passive strategy or reactive strategy and the mixed
. strategy. Active strategy addresses the fluctuations surrounding demand management, the use of pricing and advertising and handling customers with back orders. Passive strategy handle the fluctuations pertaining to supply and capacity of management and the varying work forces by hiring and layoffs. It also pertains to subcontract production and the allowance of backlogs, back orders and stock outs. Mixed strategy is a combination of Active Strategy and Passive Strategy. Most companies will combine both strategies in Aggregate Planning.
