Aggregate planning for seasonal demand: reconciling theory with practice

Abstract

Purpose -The paper reports on the ramifications for production planning when monthly sales exhibit predictable seasonal highs and lows. The literature first acknowledged and dealt with the (aggregate planning) problem 50 years ago. Nevertheless, there is neither evidence that industry has adopted any of the mathematical techniques that were subsequently developed, nor a convincing explanation as to why not. Hence this research sets out to discover the methods manufacturers use to cope with seasonal demand, and how germane the published algorithms really are. Design/methodology/approach -Forty-two case studies were compiled by interviewing senior managers and then conducting plant tours. No prior assumptions were made and the list of questions covered the gamut of production planning. Findings -The main finding is that manufacturers select a straightforward production strategy, right from the outset, so the fundamental cost-balancing format is not relevant. The majority pick a "chase" strategy, since most organizations subscribe to a "just in time" ethos. Whenever a different strategy is preferred the rationale springs from skilled labour considerations or binding facilities constraints. The chosen strategy serves as a road map for resources acquisitions, and the master production schedule is constructed directly. So, the complex issue of how to disaggregate an optimal aggregate plan never even arises. Managers do not seek perfect solutions, but strive to eliminate, or contain, the most significant marginal costs. The nature of the business determines the most appropriate tactics to employ. Originality/value -These findings break the mould as far as orthodox aggregate planning is concerned and show why theory is at odds with practice, whilst reaffirming the importance of concepts such as "flexibility", "integration", and "just-in-time production".

Should we try out for the major leagues? A call for research in sport operations management

“…All the characteristics discussed above add complexity to standard operations management tasks such as capacity planning (Buxley, 2005), service quality and quality control (Parasuraman et al, 1985), supply chain management (SCM) (Christopher and Towill, 2000), and process design (Lu and Wood, 2006) when compared to the more stable and continuous operating environment often observed in manufacturing or most other service operations. Such a context therefore provides a wealth of opportunities for OM researchers.…”

“…Additionally, sporting facilities need to forecast demand at different times of the day and for different services to better enable capacity management and aggregate planning (Buxley, 2005). Both represent fruitful areas for further research.…”

An optimisation approach for capacity planning: modelling insights and empirical findings from a tactical perspective

“…This gap has been a recurrent theme in many papers (Buxey, 2003;2005;Corti et al, 2006;Ramezanian et al, 2012;Sharda & Akiya, 2012;Jamalnia & Feili, 2013;Lingitz et al, 2013;Liu et al, 2013;Díaz-Madroñero et al, 2014). In a recent literature review, comprising 250 optimisation models for tactical production planning, Díaz-Madroñero et al (2014) outlined that, although some proposals have been validated in real environments, very few are reported to be implemented and incorporated into the planning systems of the companies considered.…”

Plan Agregado De Producción en Barracas Madereras: Estudio De Caso Para Una Pequeña Industria

“…Buxey (2005) señala que en Estados Unidos no hay evidencia que la industria la haya adoptado ampliamente después de más de 50 años de desarrollo y, si se aplica, se hace con modifi caciones. Gunasekaran y Marri (2004) estudiaron la PA en países en desarrollo como India, Malasia, México y Brasil, encontrando que no ha tenido la atención que se esperaba, considerando el desarrollo de las tecnologías de información.…”