Alternate approaches to solving the Holt et al model and to performing sensitivity analysis

The staircase structure of the recurrence relations for the Holt et al. model can be used to develop simple and efficient computational approaches for obtaining the optimal solution. The computational approaches are noniterative. We deal with finite planning horizon cases in which one or more terminal boundary conditions are not specified. The computation time varies linearly with the number of periods in the planning horizon. A framework is also developed for sensitivity analysis on the terminal values and for generation of alternate production plans. The alternate plans provide considerable flexibility to the decision maker because they can be evaluated in the context of (a) constraints not included in the model, (b) plant capacity, (c) actual costs, and (d) implications beyond the planning horizon. The results should be of interest for real world applications as well as for research because the Holt et al. model continues to be used as a benchmark to evaluate the performance of other aggregate production planning models.