The safety capacity constraint at the thermoforming presses is shown in Cells AC5:AC16. The safety capacity constraint indicates that the available thermoforming capacity in a given period be at least (1+x) times the forecast demand. x is shown in Cells AD5:AD16 (Currently set at 1, implying x=0). x indicates the fraction of current demand carried as safety capacity.
The safety capacity/inventory formulation is superior to setting demand in each period to be 1+x times forecast demand because demand in each period will not exceed the forecast. The aggregate plan thus only needs to accomodate safety inventory/capacity and not increased demand in each period.
Copyright 2001, Sunil Chopra