Aggregate production planning using spreadsheet software

Abstract

Firms can benefit by developing and using aggregate production plans. However, reports of ongoing production planning applications are rare. The complexity of production planning models has been cited as one of the reasons that firms do not develop formal production plans. This study was conducted to determine if a simple model, trial-and-error on a spreadsheet, could be used to produce cost-effective production planning solutions. Results indicate that good solutions can be obtained using this method. Furthermore, solutions tend to improve as the knowledge of the production planner increases and as time spent developing solutions increases. In addition, experience at producing spreadsheet-based solutions can translate into lower cost solutions for more complex problems while using less time for analysis. These findings indicate that spreadsheets can be effective decision aids for developing production planning solutions. By coupling the power and simplicity of a spreadsheet modelling package with the trial-and-error approach to production planning, model complexity should no longer be cited as a reason for not developing and using formal aggregate production plans.