Aggregate planning problem from sustainability perspective

Aggregate planning refers to the determination of production, inventory and capacity levels for a medium term. Traditionally standard mathematical programming formulation is used to devise the aggregate plan so as to minimize the total cost of operations. However, this formulation is purely an economic model that does not include sustainability considerations. In this study, we revise the standard aggregate planning formulation to account for additional environmental and social criteria from sustainability perspective. We analyze the revised models and propose results that would be insightful for decision makers. We show how these additional criteria can be appended to traditional cost accounting in order to address sustainability in aggregate planning.

I. Introduction

Supply chain management has become one of the most important core functions of companies in manufacturing and service sectors. Supply chain management considers all of the processes from raw material to the end users in fulfilling the demand for a certain product or service. In the simplest terms, whenever there is a demand either for a product or a service and supply to fulfill this demand, a supply chain emerges.