Forecast errors can only be dealt with using one of the following levers in aggregate planning:
In the case of SPC, given that no inventory of finished product is to be carried, one possibility is to carry safety capacity at the thermoforming presses and safety inventory of plastic sheet after the extruders. We now modify the previous aggregate planning formulation to allow for the safety capacity and inventory. Proceed to sheet relative safety inventory.
The safety inventory constraint is shown in Cells AB5:AB16. The safety inventory constraint indicates that the available supply (previous inventory + current production + current subcontracting) of sheets in a given period be at least (1+x) times the planned consumption. x is shown in Cell AB17 (Currently set at 1, implying x=0). x indicates the fraction of current demand carried as safety inventory.
Copyright 2001, Sunil Chopra