A managerial perspective on aggregate planning

Aggregate Planning first appeared in the literature nearly 40 years ago and has proven a popular topic for research ever since. However, industry seems to have ignored repeated claims that there are algorithms available which would yield significant cost savings. This paper explores the divergence between theory and practice, via an empirical study covering 30 firms. Most authors have blamed weaknesses in particular methods for the lack of applications. The evidence presented here indicates that the Aggregate Planning model itself is at fault, and that the broad characteristics of real production plans follow from other business, tactical, or operational considerations. Furthermore, a chase option is generally preferred at the outset.