A thankless task

Planning is a thankless task. Sure, the advent of material requirements planning (MRP) almost 50 years ago simplified things. Take your bill of materials, your quantity per, your material lead times and minimum order quantities. Multiply by your demand signal to determine order timing and size. As manufacturing consumes raw material, you decrement your on-hand balances of supplies, run MRP again and launch new orders of raw material. But one challenge remains the same: Changes in the demand signal create changes in the raw material need, and large changes in demand quickly can create shortages or excess inventory. Planning is tough because forecasts by their very nature are inaccurate. Demand is estimated using models that often are based on biased, historical data.