Integrating current end-item inventory conditions into optimization-based long-run aggregate production and distribution planning

Firms with thousands of unique finished-goods items typically develop their annual production plans at an ‘aggregated’ product level. Nevertheless, it is necessary to evaluate current inventory positions and requirements at the end-item level in order to assure that a firm’s annual production plans do not underestimate total manufacturing capacity requirements. This article presents a simple, yet effective algorithm for integrating disaggregate end-item inventory positions and requirements into aggregate production/distribution planning models of multi-location, multi-echelon networks.