Master Planning and Scheduling, 4th Edition

17Demand Management and Aggregate Master Planning

Customers can order anything they want as long as it agrees with the forecast.

In the final analysis, virtually all of us show up at work on Monday morning for one reason: to either create or satisfy demand for our company's products or services. Customer demand is the spark that ignites our entire economic system, and it serves as the controlling factor in all productive activities. While product supply can sometimes get out of balance and the imbalance appears as unsold inventory or poor customer service, the clear signal of customer demand eventually brings production back into equilibrium.

The master (supply) planner's and/or master (supply) scheduler's role in this dynamic process has already been discussed: to harmonize the when and how much of supply (produced or purchased) with actual and forecasted customer demand. If forecasted demand was always reliable, this would be a simpler job. But as we will see shortly, nothing is simple in predicting the future of customer orders.

What Is Demand Management?

The idea of supply management is easy enough to understand: It implies controlling the production and procurement processes to specified levels of output. Since manufacturing facilities and labor are under the control of the company's management, these ideas seem straightforward.

The concept of demand management requires more explanation. Demand generally comes from outside the company and is thus beyond the full control ...