Production Switching Heuristics for the Aggregate Planning Problem

A number of approaches to the aggregate planning problem have been proposed in the literature, yet experience suggests that industrial concerns seldom use these models in actual planning situations. This paper describes a modified random walk production-inventory heuristic for the problem which should appeal to managers on the basis of simplicity as well as efficiency. The proposed approach is contrasted with linear programming, parametric programming, and linear decision rule optimal and near optimal solutions for several well known production situations. The simple production switching heuristic produces schedules which exceed optimal schedules by only 1 to 2 percent of total production costs in all cases.