Demand Optimization Planning Under Severe Supply Shortages

During the COVID-19 pandemic I noted that the traditional business planning processes including demand forecasting and S&OP were rendered largely useless in managing uncertain futures and severe supply shortages. I realized that at least two special ad hoc planning processes needed to be added to the Hierarchy Demand-Supply Planning Framework: 1) ‘Quick Response under Uncertainty’ and 2) ‘Supply-in-Mind Demand Optimization under Risk.’ This column discusses these two processes and provides an illustration for a fictitious (yet realistic) carmaker using the Linear Programming algorithm to do Demand Optimization planning under severe supply ...