Aggregate planning is one of the business strategic techniques useful in predicting the supply and demand of the products and services offered by the business organizations ( Schroeder, Goldstein, & Rungusanatham, 2018 ). The main purpose of aggregate planning is minimizing input while maximizing output. This is achievable through streamlining the business operations. One strategic action taken during aggregate planning is hiring additional personnel during periods of increasing demand and conducting layoffs in times of lower demand; aimed at managing operational costs ( Schroeder, Goldstein, & Rungusanatham, 2018 ). However, hiring additional personnel during periods of high demand and conducting layoffs during periods of low demand has both merits and demerits.
There are two main advantages of hiring extra-workforce during high-demand periods and conducting layoffs during the periods of low demand. First, it serves to speed up production level ( Schroeder, Goldstein, & Rungusanatham, 2018 ). Periods of increased demand requires more workforces in order to meet the high market demand by production and supplying more goods and services to customers. Thus, companies are bound to employ additional workforce to assist in increasing production and supply; hence resulting in increased output of the companies. Secondly, conducting layoffs in times of low demand helps in reducing business costs ( Schroeder, Goldstein, & Rungusanatham, 2018 ). Reducing workforce during low demand periods saves the companies the burden of paying workers who are serving little or no purpose to the business.
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The idea of hiring extra-workforce during high-demand periods and conducting layoffs during the periods of low demand also comes with two main demerits. To start with, the new workforce may lack experience in the business operations ( Schroeder, Goldstein, & Rungusanatham, 2018 ). This is because new employees are employed every time there is high demand and getting same employees may be difficult; hence the company may not get optimum output out of the new workforce. In addition, the new employees lack loyalty to the company ( Schroeder, Goldstein, & Rungusanatham, 2018 ). This is because the new employees are aware that their employment is short-lived and they have no incentives in deploying their full potential to the business operations; hence this may lead to lower output than expected.
Reference
Schroeder, R. G., Goldstein, S. M., & Rungusanatham, M. J. (2018). Operations Management In The Supply Chain: Decisions And Cases (7th ed.). New York, NY: McGraw-Hill/Irwin.
