A Model for Demand Planning in Supply Chains with Congestion Effects

Uday Venkatadri, Shentao Wang and Ashok Srinivasan
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Uday Venkatadri: Department of Industrial Engineering, Dalhousie University, Halifax, NC B3H 4R3, Canada
Shentao Wang: Michael Kors Hong Kong, Hong Kong, China
Ashok Srinivasan: Marshall School of Business, University of Southern California, Los Angeles, CA 90089, USA

Logistics, 2021, vol. 5, issue 1, 1-24

Abstract: This paper is concerned with demand planning for internal supply chains consisting of workstations, production facilities, warehouses, and transportation links. We address the issue of how to help a supplier firmly accept orders and subsequently plan to fulfill demand. We first formulate a linear aggregate planning model for demand management that incorporates elements of order promising, recipe run constraints, and capacity limitations. Using several scenarios, we discuss the use of the model in demand planning and capacity planning to help a supplier firmly respond to requests for quotations. We extend the model to incorporate congestion effects at assembly and blending nodes using clearing functions; the resulting model is nonlinear. We develop and test two algorithms to solve the nonlinear model: one based on inner approximation and the other on outer approximation.

Keywords: supply chain management; demand planning; order promising; capacity planning; enterprise resource planning; clearing functions (search for similar items in EconPapers)
JEL-codes: L8 L80 L81 L86 L87 L9 L90 L91 L92 L93 L98 L99 M1 M10 M11 M16 M19 R4 R40 R41 R49 (search for similar items in EconPapers)
Date: 2021
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