Aggregate planning with Flexibility Requirements Profile

Demand uncertainty can cause frequent changes in production plans, which create nervousness in manufacturing companies. Traditional methods used for stabilizing production plans do not provide the adequate flexibility in production plans to handle the random demand. Flexibility Requirements Profile (FRP) is an alternative stabilizing approach, where flexible bounds are enforced on production plans in order to maintain a desired degree of flexibility. In this study, we incorporate FRP into conventional aggregate planning, which is formulated as a mixed-integer linear program with additional constraints to reflect the FRP requirements. To ascertain the effectiveness of the proposed method, several structural results are presented along with a comprehensive numerical study using a design of experiments framework with examples from automotive and textile industries. Based on production costs and production plan stability, the effectiveness of FRP-based aggregate planning is compared to traditional aggregate planning without FRP as well as to FRP planning without optimization. The results show that aggregate planning with FRP can consistently identify more stable production plans without significantly sacrificing the cost objective.