Total or aggregate planning is a source of competitive advantage especially for organizations with multiple product/services in both the manufacturing and service sectors. An aggregate plan is an intermediate plan over a range of 3 to 18 months and is the primary job responsibility of the operations manager to achieve its objective of meeting the forecast demand while achieving effective utilization of resources at minimum cost. (10 pts)

1. What is the actual basis or primary consideration of the aggregate plan? What are the capacity options and demand options that can lead to an effective aggregate plan?
2. Which capacity or demand option in (a) is not applicable to the service sector?