ARTICLE IN PRESS

Int. J. Production Economics 85 (2003) 331–346

Strategy not tactics drives aggregate planning

Geoff Buxey*
Faculty of Business and Law, Deakin University, Geelong, Vic. 3217, Australia

Abstract

The aggregate planning model supposedly shows how manufacturers cope with seasonally biased sales.
Unfortunately, industry has failed to embrace any of the sophisticated algorithms that were developed to solve the
corresponding resources allocation problem. This paper reveals why such methods have proven so unattractive.
Aggregate planning is a chimera. In practice, planners construct the master production schedule directly, in line with a
preferred production strategy. A ‘‘chase’’ plan is the most popular choice. When this option proves infeasible,
management plumps for another predetermined strategy. The resultant stockpiling brings certain financial risks.
However, companies take various measures to reduce their exposure.
r 2003 Elsevier Science B.V. All rights reserved.

Keywords: Aggregate planning; Seasonal sales; Strategy; Case studies

1. Aggregate planning theory
The demand for many products varies in a
predictable manner over a 12 months cycle, due to
the weather, Xmas shopping, the sporting calen-
dar, etc. Therefore, manufacturers experience
difficulties in scheduling production to satisfy
anticipated sales, whilst ensuring that sufficient
resources will always be on hand to execute the
plan. Holt et al. (1955) defined the aggregate
planning model, using a paint factory as an
example. The basic concept is that the most
economical solution comprises a mix of two pure
production strategies. A level plan maintains a
steady production rate over the entire year, using
finished goods (smoothing/anticipation) stocks to
absorb ongoing differences between output and
sales. The chase alternative simply tracks the
*Tel.: +61-3-5227-1421; fax: +61-3-5227-2151.
E-mail address: gbuxey@deakin.edu.au (G. Buxey).
0925-5273/03/$ - see front matter r 2003 Elsevier Science B.V. All rights reserved.
doi:10.1016/S0925-5273(03)00120-8
expected monthly sales, and computes the corre-
sponding direct labour requirements. Plant and
equipment is a given entity. Therefore, the relevant
options to raise or lower production capacity are
overtime or undertime, hiring or firing to alter
manning levels or the number of shifts that
operate, and subcontracting work out. The best
plan incurs the minimum total marginal cost over
a calendar year. It achieves this end by balancing
stockholding charges against additional labour
expenses and premiums. All sales forecasts,
inventory levels, labour inputs and production
rates are expressed in a suitable aggregate format.
The purpose is to simplify the myriad of calcula-
tions.
This model has been accepted in the literature
with few reservations. Indeed, researchers continue
to use it as a platform to demonstrate the efficacy
of various analytic methods. Examples include
(the original) linear decision rules derived from
differential calculus (Holt et al., 1955), and
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332 G. Buxey / Int. J. Production Economics 85 (2003) 331–346
simulation (Jones, 1967; Taubert, 1968), produc-
tion switching rules (Elmaleh and Eilon, 1974;
Mellichamp and Love, 1978), and several kinds of
mathematical programming (Bowman, 1956;
Akinc and Roodman, 1986). An apparent lack of
any real applications has been reported (Nam and
Logendran, 1992), and this has provided grounds
for minor modifications. For instance, goal
programming (Deckro and Hebert, 1984;
Gilgeous, 1989) permits ‘‘soft’’ policy objectives
to be included in the model. Two postal surveys
were undertaken to discover why the practitioners
have consistently ignored the purported benefits of
the different mathematical techniques. The find-
ings led Gilgeous (1987) to propose extending the
original model to accommodate the interests of
other functional areas like human resources,
marketing, and finance. On the other hand,
DuBois and Oliff (1991) concluded that potential
industrial users did not possess reliable enough
sales forecasts and cost information to make
rigorous algorithms worthwhile. Also, managers
lack the necessary mathematical expertise.
Three later papers assume that the operational
bounds of the model are set by fixed management
policies. Hwang and Cha (1995) modified the
switching rule to stay within desirable inventory
levels, and Silva et al. (2000) adapted the linear
decision rule to find the optimum number of
permanent employees. A flexible labour contract
underpins another stable workforce model (Hung,
1999). The method provides a pure ‘‘chase’’ solution.
2. The steps of production planning
When standard texts (Schmenner, 1993; Slack
et al., 2001; Heizer and Render, 1999; Gaither and
Frazier, 1999; Schroeder, 2000; Dilworth, 2000)
discuss production planning they commence with a
long-range business plan. This matches capital
expenditures against projected broad market
requirements. The exercise determines a plant’s
maximum capacity limits and expected average
utilisation, and confirms its economic viability.
Next, the medium term aggregate plan sets the
overall monthly production rates, and the corre-
sponding monthly workforce numbers and fin-
ished goods inventory levels. To yield a tangible
schedule, the aggregate production totals should
be decomposed back into the original constituent
products. At the same time, the master production
schedule (MPS) must conform to the previously
configured (aggregate) marginal cost structure.
For complex assemblies, materials requirements
planning (MRP) software ‘‘explodes’’ the MPS,
generating detailed purchasing and production
schedules for all dependent parts and raw materi-
als. Finally, just-in-time (JIT) production is lauded
as the ideal system for repetitive manufacture. The
implementation of a JIT system drastically reduces
raw materials and intermediate stocks. It is
noteworthy that the underlying operations man-
agement philosophy confounds the long estab-
lished, cost balancing, economic order quantity
(EOQ) model.
The modern books previously cited recommend
that firms influence the market in a way that
ameliorates their seasonal sales patterns. The
relevant steps include slashing prices during quiet
periods, spending more on advertising, or, devel-
oping a counter-seasonal product range. A good
example of the latter is greetings cards, designed
for different occasions spread throughout the year
(Slack et al., 2001). The texts explain conventional
aggregate planning logic, and go on to describe
several well-known analytical techniques. Never-
theless, the majority recommends a trial and error
approach for practitioners. There is a distinct
absence of guidelines though for extracting the
MPS from the aggregate plan, and any worked
examples are trivial. Typically, the MPS is
conjured up from nowhere in particular, and used
as a vehicle to demonstrate the logic of MRP. No
links are established between aggregate planning
and JIT production. Nor are they even suggested.
Hierarchical production planning (HPP) has
succeeded in integrating the development of the
MPS with the aggregate plan (Bitran et al., 1982;
Hennet, 1999). The methods concentrate on
capacity planning and are normally restricted to
one or two-stage manufacturing processes. A 0–1
integer-programming model by Chung and
Krajewski (1987) expresses the aggregate plan in
terms of product families. Families are groups of
products that take advantage of common machine
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G. Buxey / Int. J. Production Economics 85 (2003) 331–346
setups, and the model incorporates the corre-
sponding costs. A second LP model breaks the
initial monthly schedule into a weekly MPS.
Ozdamar et al. (1996) merely state the aggregate
plan. Then their algorithm focuses on minimising
family batch changeover costs. After enforcing a
level workforce constraint, Venkataraman and
Smith (1996) found an aggregate LP solution for
another paint factory problem. An integer goal-
programming model applied minimum batch size
rules, and translated it into a production schedule
comprising 17 different product families.
The rubric of the American Production and
Inventory Control Society (APICS) is somewhat at
odds with the aforementioned planning methodol-
ogy (Everdell, 1984). There is no aggregate plan.
Instead, the weekly MPS is the vehicle to set stocks
and manning levels, reconcile workloads with
capacities, meet productivity targets, and, satisfy
market demands. Real products should be speci-
fied right away, unless there are more than one
hundred. If so, it is permissible to use a more
manageable number of broad types at first. Every
4 weeks, at least, the rolling MPS is regenerated, in
order to react to fresh sales and production data.
The right degree of flexibility should always be
maintained. Accordingly, only the ‘‘live’’ portion
is (semi) frozen. As the furthest sections gradually
move towards the front end they become more
product specific and the MPS becomes less flexible.
Even then minor product details like colour and
packaging are ignored, until week 1 is partitioned
into a daily production schedule. A set of rigid,
fully integrated, optimum plans is clearly not what
is wanted. Furthermore, product aggregation and
disaggregation never occurs. Two recent articles
(Enns, 2001; Shtub, 2001) describe how to design
an integrated, basic MRP I system, and a more
elaborate enterprise resource planning (ERP)
system, respectively. Both schemes dispense with
aggregate planning.
3. Relevant applications
A lone HPP implementation (Burch et al., 1987)
demonstrates the importance of batch changeovers
in process industries. The aggregate planning algo-
333
rithm is an extension to the production-switching
rule, which is not recommended for pronounced
seasonal sales swings. Management nominated
several feasible output/capacity configurations,
and set an appropriate inventory range. Occasion-
ally, the impending month’s sales forecast triggers
the allocation of more (or less) labour to opera-
tions. A second algorithm compiles a daily produc-
tion schedule. It assigns woven fibreglass product
families to a number of semi-dedicated looms, and
finds combinations for efficient simultaneous
batch production. The mat fibreglass product
groups are directed to appropriate production
lines, whence HPP finds the best batch sequences.
A giant apparel manufacturer used to carry
excessive finished goods inventories (Edwards
et al., 1985). Single product groups like jeans
break down into lines (e.g. men’s corduroy), styles
(e.g. straight leg), lots (e.g. blue), and sizes. There
are up to 75 lots per line, leading to more than
10,000 stock keeping units (SKUs). Nowadays
seven distinct (management science) models are
applied. However, the company insisted on a level
workforce strategy from the outset. Annual
monthly sales forecasts are prepared for each lot
and corresponding safety stock figures calculated.
Using aggregate data, a simulation model pro-
duces a level production plan for each complete
product line. The next model translates the target
monthly line inventories (smoothing stock plus
safety stock) back into lot format. Staple lots are
allocated proportionally more smoothing stocks
than their less predictable, fashion counterparts.
A further step divides the lots into the constituent
sizes, before a weekly production schedule is
generated that incorporates economic batch quan-
tities. The final (LP) model selects a cost-effective
set of weekly markers for cutting the required
fabrics. In this instance, a somewhat limited degree
of model aggregation and disaggregation does take
place. However, the main aim of the exercise is to
level production. After that the idea is to minimise
the risks associated with accumulating smoothing
stocks. At no stage are any labour–inventory type
cost balancing calculations involved.
The second edition of Slack et al. (1998)
showcases a highly automated canned soft drinks
plant. Production has to cope with both seasonal
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334 G. Buxey / Int. J. Production Economics 85 (2003) 331–346
sales swings and short-term, weather-related
peaks. The warehouse holds a mere 5-day’s output
and the beverages have a limited shelf life.
Management adopts a pure chase policy. How-
ever, accepting some idle time during winter allows
the operation to maintain a constant workforce.
Another authentic situation is described in a later
edition of the book (Slack et al., 2001). This
factory produces cheese. The output is compelled
to ‘‘chase’’ the seasonal variations that occur in the
milk supply. Management negotiated an annual-
ised working hours arrangement, so as to stabilise
the employment level.
Several articles (Silva et al., 2000; Vergin, 1966;
Lee and Khumawala, 1974) offer proof that
mathematical techniques will outperform current
industrial practices. The former are fed a test
company’s actual aggregate forecast or historical
demand figures. For cost comparison purposes,
the researchers transform the relevant real life
production schedule into an assumed aggregate
plan. Thus, they avoid having to generate their
own MPS. On top of this, the methodology
overlooks the fact that it is much easier to predict
aggregate demand than actual (model) sales. The
typical MPS is also subject to further batch size
and sequence constraints. These tend to inflate the
levels of finished goods stocks. Paint manufacture
schedules are prone to this debilitating effect
(Hill et al., 2000).
4. Research objectives, methodology and summary
findings
A worrying gap obviously exists between
aggregate planning theory and industrial practice.
For the literature the main issue is whether or not
the current mathematical methods are robust
enough. In other words, can they accommodate
all the factors that managers routinely take into
account? A broader consideration of production
planning suggests a more fundamental question.
Perhaps the original aggregate planning model is
at fault, rather than a host of derived algorithms.
This would explain the dearth of published
applications, covering a span of almost 50 years.
There are some secondary issues as well. Is a
highly constrained process of product disaggrega-
tion a realistic proposition? How does the aggre-
gate planning model fit into the overall scheme of
things? Can we reconcile its medium term rigidities
with the need for short-term scheduling flexibility?
Finally, why is there no nexus to JIT production?
The JIT credo treats inventories as ‘‘waste’’. So
why give planners carte blanche regarding smooth-
ing stock deployment? After all, finished goods are
the most expensive form of inventory.
To provide some answers, a study was made of
42 manufacturers that experience seasonally
biased demand. The aim was to cover a wide
range of industries and organisations. Taking a
case based approach means that the sample is
much richer in information content than both of
the surveys previously cited. Nevertheless, it is of
comparable size. An interview with a senior
manager(s) was followed up by a plant tour in
order to make observations and prompt further
questions. No substantive body of evidence exists
to indicate that the aggregate planning model
represents normal industrial practice. Therefore,
the discussions avoided preconceptions. The topics
encompassed the company’s business environ-
ment, strategy for dealing with seasonal variations,
the objectives and broad format of production
planning, and resources scheduling. Also included
were the development of the MPS, shop floor
constraints, management issues, and the nature of
the volume and mix flexibility.
Plans can have a strategic, tactical or opera-
tional dimension. Orthodox aggregate planning
focuses exclusively on the compromise ‘‘mixed’’
strategy option. As a consequence it is only
concerned with tactics. A number of possible
strategies can be inferred from the literature and
the study (level; chase; mixed; demand manage-
ment; modified chase; modified level; level work-
force; level core workforce). The ‘‘modified’’
strategies stem from case-specific operational and
business constraints. These factors may eliminate
any chance of matching outputs to peak monthly
demands, or prevent a factory from completely
smoothing out its workload.
Faced with a seasonal production problem, each
firm in the sample abides by a predeter-
mined strategy. Remarkably, about three quarters
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Table 1
Strategies selected by sample firms
Strategy Number of % Cumulative %
cases
Chase 19 45.2 45.2
Modified chase 12 28.6 73.8
Demand management 4 9.5 83.3
Level 4 9.5 92.8
Other 3 7.1 99.9
Mixed 0 0.0 99.9
Total 42 100 100
selected a chase or modified chase option, and more
than 80% have adopted a policy that tries to keep
minimum quantities of stocks (Table 1). Not a
single enterprise has implemented a mixed strategy,
or even attempted to balance marginal labour costs
against imputed charges for smoothing inventories.
Appendix A presents a list of all 42 manufacturers,
with a brief outline of the most pertinent factors as
far as responding to seasonal sales is concerned.
The cases are classified and sorted according to
their chosen strategy, which makes it easier to
discuss the pertinent underlying reasons. Some
detailed descriptions are included as well. These
serve to illustrate the overall methodology, the
idiosyncratic nature of the investigations, and the
complexity of the results. The ways that different
aspects of specific cases interact add some sub-
stance to the general arguments presented.
It would be most convenient if a certain product
or production category could always be associated
with a specific seasonal strategy. Unfortunately,
this is not so. All plants possess limited volume
flexibility, due in the main to high average capacity
utilisation or the extensive training that new
labour requires. The first constraint depends on
the fixed cost of the production equipment.
Nevertheless, the two factors are not related. The
magnitude of the seasonal sales swing has to be
considered too. This effect is definitely indepen-
dent of any normal industrial classification.
5. The chase strategy
A strong seasonal demand pattern magnifies the
consequences of over stocking. For example, the
335
weather is notoriously fickle, and if sales fall well
below peak forecasts the enterprise could be stuck
with surplus goods for the best part of a year.
In addition, many consumer products run the risk
of obsolescence. A chase plan implies minimum
financial exposure. Also, it is important to be able
to react quickly, in the event that demand has been
underestimated. Retailers will not accept back-
orders, once their own critical sales period has
passed. Certain companies make a high variety of
similar products, or, their designs embody an
element of fashion. These factors compromise
accurate sales forecasting and amplify the risks
of stockpiling. A ‘‘make to order’’ arrangement
negates this particular issue, but completely pre-
cludes building up anticipation stocks. Some wares
are bulky or valuable, perishable, or hard to
handle. These characteristics make it impossible or
undesirable to store them for long or in mean-
ingful quantities. Contemporary business is well
aware of the benefits of the JIT approach. In the
present climate, substantial quantities of finished
goods stocks are an anathema.
A manufacturer of jewellery offers an extremely
wide selection to chain stores and buyer
groups that represent the small retailers. Standard
pieces include earrings, rings, lockets, brooches,
bracelets, etc., made of 9, 14 and 18-carat gold,
silver, or plated metal and set with various
precious stones. Cash flow is a problem, due to
the high value of the raw materials. Customers are
often late settling accounts, but some suppliers
want their money immediately. A debt-collecting
agency ensures that 75% of clients pay within 60
days. Diamonds and other raw materials
are purchased at a few days notice. Gold can be
obtained the next day. However, certain precious
stones must be sourced overseas with a 4–6
weeks lead time. The invoice situation means that
gold is sometimes bought in less than ideal
quantities for melting. Manufacturing is a batch
process involving several departments. Hinges,
brackets, pins and similar components are pro-
duced in economic lot sizes and kept in stock, since
casting and press setups are time consuming. Some
semi-finished pieces are held in stores too, minus
their expensive stones. This cuts the time to fill
customers’ orders.
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336 G. Buxey / Int. J. Production Economics 85 (2003) 331–346
Demand peaks when shops stock up for Xmas
and December’s sales are about eight times the
January figure. There is relatively little work from
May through August, despite buyers being offered
deals to level the profile and plenty of long-range
orders being received. The majority of the items
are made to order, although stock replenishment
applies to the higher-volume, lower-variety, cheap-
er lines. However, no seasonal smoothing stocks
are maintained. The planning system promises to
dispatch a regular order within 14 days of receipt
and also accepts rush jobs. Typically, an order
comprises a mix of different items, and customers
often stagger their delivery dates. For budgetary
purposes, a rolling 12 months forecast is compiled
by product group. It is quite reliable, apart from
new products, but due to the need to turn orders
around quickly the actual production plan only
covers the first 20 days. Every morning (consoli-
dated) orders are released to the shop floor. They
will have arrived in the previous day’s mail.
The factory employs 34 people on a single shift,
including 8 jewelers and one apprentice. A 1-week
training period suffices for the packers and many
other operations can be learnt in a day. Approxi-
mately half of the workforce is employed on a
casual basis. These employees can be called in for
just a morning’s work although their hourly wage
is higher. At weekends, bench assembly tasks can
be performed at home, paid at the normal rate.
Nevertheless, home-based local subcontractors
provide the greatest volume flexibility. This mode
can be cheaper too because no overheads are
incurred. Overtime is never planned but it is
available in emergency situations. A 3 weeks
vacation shutdown occurs in the January trough,
and a further week of holidays is scheduled for
whatever is expected to be the next quietest period.
6. The modified chase strategy
Frequently, the chase option is abandoned in
favour of a modified chase strategy. The reasons
for this are summarised in Table 2. In 50% of
these operations there is insufficient equipment to
accommodate maximum monthly demand, given
that not all firms are able to run right round the
Table 2
Reasons for selecting modified chase
Constraint Number of cases %
Equipment 6 50.0
Training time 4 33.3
Training capacity 1 8.3
Seasonal raw materials 1 8.3
Total 12 100
clock. The situation reflects a pre-existing financial
trade off between capital investment, the efficient
utilisation of capacity, and money tied up in
warehouse stock. Almost as many firms find it
difficult to ramp up their labour input for short
periods. Principally, this is because skilled workers
are unwilling to accept limited seasonal employ-
ment and inexperienced recruits need extensive
training. In addition, the training department may
not be able to cope with the required intake rate.
At one particular factory production must respond
to the seasonal availability of perishable crops.
Therefore, the enterprise cannot avoid keeping
large inventories of the corresponding finished
goods.
Planners acting under modified chase con-
straints commonly engage in forms of stockpiling
that carry negligible financial risk. For example,
customers lodge export orders, indent orders and
very big orders well in advance of requested
delivery dates. Such jobs can be slotted into the
MPS earlier than necessary. This adjustment
transfers work away from overloaded periods
and into the slack ones. The resultant stockpiles
still tie up cash temporarily, but there is no danger
of producing unwanted or obsolete products.
A supplier of pharmaceutical cre" mes, liquids,
sterile products, tablets and capsules sells brand
name products from stock to medical wholesalers.
In addition, 35–40% of the business is contract
manufacture using the clients’ own recipes and
labels. Aggregate sales peak during November and
December because the public buys pharmaceutical
items to take on holiday. Also, pensioners use up
their free scripts at the end of the year. Sales in
January are correspondingly flat, compounded by
the reluctance of vacationers to consult a different
doctor. About 60 products (10% of total) suffer
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more pronounced (2–3-fold) monthly swings. For
instance, strong spring and autumn winds lift the
sales of eye drops and ointments, while more
antibiotics and cough mixtures are bought in
winter. The actual sales volumes depend greatly
on the weather, and the random spread of germs
and viruses. For branded products, unpredictabil-
ity is the biggest planning problem. On the other
hand, the established contract customers generally
give the factory 3 months to supply firm orders,
and provide a requirements forecast for a further
9 months. Occasionally, the business obtains an
unexpected, labour-intensive contract.
Production capacity is spread over two separate
sites that employ around 200 people. One of the
plants is split between cre" mes/liquids and sterile
products. A single shift operates for both labour-
and capital-intensive processes. There is a mixing
room with various vats. The resultant cre" mes and
liquids are pumped to 9 semi-automatic filling and
packing lines. Sterile products are made much the
same way, except that the 5 mixing/filling lines
are located in separate rooms to avoid cross-
contamination. Only the critical lines are kept fully
occupied. The situation could be classed as
medium-volume batch production. Setups take
from 2 hours to 2 days and the longest production
run lasts 4 days (the majority consumes 1 day).
Consequently, the jobs are sequenced in
‘‘families’’, and all changeovers occur at the
termination of a shift.
Each year an MPS is constructed in monthly
buckets for the 600 end products. It stretches over
a 2 years horizon, but gradually shrinks to a 1-year
plan before the next complete regeneration. A very
lengthy plan is necessary, despite substantial
forecast errors, because many of the 3000–4000
ingredients are imported on very long lead times
(manufacturing offsets range from 6 weeks to 9
months). The upshot is that the initial 3 months
are updated in detail, whereas the next 6 buckets
are just subject to general revisions. A modified
chase strategy applies. The contract clients’ orders
are shunted within their lead times until the
planned output is leveled over each individual
3 months block. MRP utilises monthly time
buckets and fortnightly renewals, but each plant
manually prepares its own detailed, short-term
337
production schedule, specified in weeks. The
minimum manufacturing lead time is 1 week for
rush orders. A degree of flexibility is gained by
maintaining a 2–3 week safety stock buffer of
proprietary products. Unplanned overtime can
address forecast errors, if it proves necessary.
Most tasks entail machine minding, materials
handling or packing. These activities necessitate
just a few hours of training. New operatives are
assigned to the easy positions. Later, they are
rotated to build up their experience. This permits
flexibility in planning. However, nobody works in
the sterile products area until they have been with
the firm for a considerable length of time. The
seasonal staff are picked from a pool of former
employees who proved satisfactory. They can be
called in at a day’s notice, although not all at once.
These people know that their tenure will last
between 1 and 3 months. When it expires the
worker can be put off for a day and then rehired.
There is an 18 days shutdown over the Xmas and
January holiday period.
7. The demand management strategy
On the surface it appears that demand manage-
ment is the ideal way to tackle the seasonal
problem. This strategy affords the prospect of
combining zero smoothing stocks with the luxury
of level or stable production. Despite the obvious
attractions there is a paucity of applications.
Clearly, it is a hard strategy to implement. The
apparel, footwear and greetings card cases contain
an element of this approach. However, there is still
enough residual seasonal bias to call for a different
strategy. On the other hand, the barbecues
business developed, from scratch, a complemen-
tary product range (heaters). In addition, two
manufacturers simply purchased another company
with a suitable line of products and consolidated
operations at a joint plant. The lawn bowls
producer supplies several big export markets
located in different parts of the world. A fairly
even work schedule results.
At the air conditioners/gas heaters factory there
is sufficient process and labour flexibility to adjust
the product mix on a daily basis. This allows the
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338 G. Buxey / Int. J. Production Economics 85 (2003) 331–346
monthly production schedule to chase two com-
pletely different sales profiles all year round. Such
a pure chase response is impossible to implement
for the fans/heaters and barbecues/heaters plants.
So, their strategies are based on separate, semi-
independent, mini schedules for each product
range. The production facilities are switched over
twice per year to the other product type and the
corresponding level resources plans cover different
parts of the year. There has to be a small amount
of stockpiling to cover the sales troughs. Little risk
is attached. Fans and heaters’ sales contain a high
proportion of indent orders. The other organisa-
tion includes an extensive retail arm. If it wants to
move dormant stocks, the stores discount their
barbecues or heaters in order to stimulate the
market.
Unfortunately, the principal export destinations
(New Zealand, the Pacific Islands, and South
Africa) reinforce Australia’s domestic seasonal
bias. Foreign multinationals prevent their local
divisions from targeting the northern hemisphere.
Anyway, the counterbalancing effects of overseas
sales are somewhat distorted by long shipping
times. As a consequence, exports are no panacea,
although 6 out of the 26 exporters do dampen their
seasonal sales variations to a certain extent. A
manufacturer made several failed attempts to
export electric wall heaters. Eventually, the firm
turned to subcontract work for clients in the
automotive industry. This keeps the skilled work-
ers in key sections of the plant busy throughout
summer.
8. The level strategy
A mere four manufacturers adhere to the level
strategy. The main driver is the long time it takes
new operators to become proficient at critical
production tasks. This means that there is little
room to manoeuvre as far as short-term capacity is
concerned. Besides, 24 hours per day operations is
the norm for the capital-intensive battery plant.
The ‘‘level’’ group generally makes a low variety of
stable products, while the seasonal factor is fairly
benign. Thus, sales forecasts are quite reliable,
there is little chance of creating obsolete products,
and modest levels of smoothing stocks suffice. The
cricket ball manufacturer is an exception because it
suffers a big seasonal sales swing. In response,
management designed an attractive invoicing
policy, which actively encourages customers to
place indent orders. Their objective was to put a
limit on the financial effects of stockpiling.
The radiators factory breaks the low variety
mould. A fairly steady rate of production for the 6
OE models is designed to fill the order schedules of
two big motor vehicle builders. This side repre-
sents only 30% of total production. The rest
consists of radiator assemblies and cores for the
general aftermarket. Approximately 1200 catalo-
gue items are made for stock. Older cars require
another 300–400 cores. These are made to order
on a 24 hours service basis. Spares sales exhibit a
summer peak (monthly variation is roughly 50%)
and a demand forecasting exercise is carried out
for all the stocked items. Predictions are quite
accurate for the top sellers. On the other hand, the
low-volume sales are erratic, leading to substantial
sales forecast errors.
There are dedicated production lines for the
high-volume OE models. The rest of the items are
made in a general workshop area. Spares are
normally produced in monthly lot sizes. However,
to economise on set ups, some low-demand items
are made less frequently, with minimum batch
quantities of 4 cores and 20–25 radiators. Each day
the plant produces 50–60 different cores and 12
different radiators. A significant part of the labour
force is engaged in hand soldering. These workers
take 3 months to reach regulation speed. A full day
shift runs, plus a small afternoon shift. The latter
group is assigned to the current bottleneck
equipment. Along with the modular nature of
radiator design, this short-term action provides
sufficient model mix flexibility.
A 6 months rolling production plan is generated
for the aftermarket in the middle of each month.
The first month is ‘‘frozen’’ and the next 5 periods
incorporate purchases of raw materials from
overseas. Fixed manufacturing lead time offsets
equal 6 weeks. The resultant workloads are fitted
around the weekly or daily shipment requirements
of the repetitive low-volume OE orders. Pareto’s
law applies, and 9 popular models account for
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G. Buxey / Int. J. Production Economics 85 (2003) 331–346
60–70% of the aftermarket sales. The policy is that
the smoothing inventories should comprise just
these few best selling catalogue items. This allows
the shop to level production, without taking any
undue risks concerning unsatisfactory stock turn-
over. Overtime is considered to be expensive.
Therefore, it always appears as an unplanned
reaction to rush orders or machine breakdowns.
9. The other strategies
The three remaining cases are dominated by
labour considerations. Pyrotechnics workers need
6 months to master certain tasks and 2 years to
achieve complete job rotation. This firm’s former
chase policy depended on ‘‘hiring and firing’’, and
it was very wasteful. There are legal limits on
storage capacity and the magazine holds just 4–6
weeks’ production. Since this makes the corre-
sponding level output infeasible, management
switched to a stable (core) workforce strategy. In
spring and summer temporary recruits fill the
unskilled positions. A pure chase policy can also
be discounted under this labour regime, because
hazardous operations are confined to daylight
hours. The smoothing stocks are all fireworks, due
to the fact that flares have a limited storage life
(and the date of manufacture is printed on the
packaging).
Most work at the wood heater plant entails
semi-skilled welding. Training lasts 4 weeks. The
old chase system was based on ‘‘hiring and firing’’
and spawned unwarranted quality and productiv-
ity losses. A switch to a stable workforce strategy
cut the average labour content per unit from 8.5 to
3 hours. The warehouse is not big enough to
facilitate a pure level alternative for such bulky
products, and by the start of the high season it is
already full. Extensive overtime is scheduled
throughout the rest of the peak period. During
the off-season the employees make jigs and fixtures
for the new models, but some idle time is
unavoidable. However, this is an expensive brand
with high profit margins.
The club/corporate wear and school uniforms
are custom designed. Production consists entirely
of firm orders. So, any recourse to regular stock-
339
piling is irrelevant. Trainee machinists take from
3 to 6 months to become fully productive and
weavers spend 2 years learning their jobs.
Not surprisingly, the workforce is permanent.
A modified level strategy is pursued. The school
uniforms side of the business is highly seasonal
and represents 60% of the sales volume. It has a
fixed customer base, which always places indent
orders. These jobs are spread out to try and level
the workload as far as possible. In the overall peak
season the daily output rate is lifted slightly.
A minor alteration of the duty roster allows the
weavers to run bottleneck equipment for longer
hours each day. Certain operatives undertake
ancillary duties during the low season, plus extra
training to improve the scheduling flexibility.
Besides this some voluntary labour turnover
permits a modest downward adjustment to the
workforce.
10. Labour issues
First and foremost, ‘‘hiring and firing’’ is a
management issue. Mathematical cost balancing
exercises never influence such crucial decisions.
Although many Australian companies adjust their
workforce to match seasonal sales they do not
incur a double cost penalty. Instead, various
standing arrangements are invoked. By and large
these depend on the individual circumstances.
Factors like the magnitude of the required volume
flexibility and the length of the job training are
especially germane. Short-term contracts are rife,
for both full and part time employees. A typical
seasonal contract lasts for three months. Beyond
this period trade union agreements dictate that
casual employees must be converted to permanent
staff.
Seasonal employment appears to be a viable
proposition, provided a maximum of 3 weeks
training applies. Many companies maintain a
register, and ask experienced staff (housewives,
retirees, students, etc.) to return at the same time
each year. Some foods are perishable, like meat
pies and crumpets. Their sales also exhibit
significant daily fluctuations, which repeat over
a 1-week cycle. The corresponding production
 ARTICLE IN PRESS
340 G. Buxey / Int. J. Production Economics 85 (2003) 331–346
schedules are based on delivering customers’
orders the very next day. To achieve such a high
degree of flexibility, part of the casual workforce
may be called in at extremely short notice for just a
few hours of continuous work. The nail plate firm
circumvents its training barrier by using a specia-
list employment contractor. For a small premium,
it can obtain the required number of appropriately
skilled workers on a shift-by-shift basis. A single
day of advance notice must be given to the agency.
Firms must attempt to retain their skilled
workers. Nevertheless, during sales troughs they
may not replace any personnel that depart of their
own volition. Slack periods can be utilised for
further training, retooling for new models, main-
tenance and other indirect operations. A popular
ploy is to selectively close the plant down for
holidays (Australia’s winter weather is quite
clement). Several operations share a site with a
much bigger (non-seasonal) department. Recently
hired workers, who would otherwise be surplus to
requirements, are simply transferred at the end of
the peak seasonal period. Thus, due to combined
labour turnover, there is no need to hire staff on
short-term contracts. When all else fails, a
moderate amount of idle time may be acceptable
for skilled workers. Especially when production is
capital-intensive.
Overtime is never deployed in a cost-balancing
role. Rather, it helps production to chase predicted
demand in a flexible manner. Furthermore, sales
forecasts are far from perfect, and unplanned
overtime facilitates a quick response to unforeseen
events. This means setting a reasonable limit to
planned overtime. There comes a point where it is
better to augment capacity by hiring additional
workers. The need to leave room for flexible late
adjustments to capacity is particularly apposite for
products with volatile, weather-dependent sales.
Prime examples are pharmaceuticals, garden
hoses, lawn mowers, fertilisers, wetsuits, ice cream,
meat pies and beer.
Another legitimate tactic that has been mis-
construed is subcontracting. In a ‘‘make to order’’
environment it provides enough flexibility to
absorb sudden demand spikes and rush jobs.
Some firms avoid purchasing expensive duplicate
machinery by allowing subcontractors to deal with
peak overloads. At the same time, a high utilisa-
tion factor is guaranteed for the existing equip-
ment. A manufacturer of bulky pine garden
products licenses several inter-state subcontrac-
tors, including sheltered workshops. It even
supplies these organisations with cheaper, but less
efficient, capital equipment. The subcontractors
are strategically located and service the more
distant customers. This saves a considerable sum
on order delivery costs. If they are a practical
proposition, outworkers or sheltered workshops
may actually represent the cheapest form of
labour. A multinational toy corporation minimises
full product costs by outsourcing the entire
production function. Another justification is that
each year this enterprise designs and markets a
number of vastly different product ranges. Such
uninhibited product variety calls for extreme
process flexibility.
Firms that are experts in casting, stamping,
enameling, and moulding seek to become subcon-
tractors themselves. The main objectives for
soliciting such work are to maximise revenue and
keep skilled operatives fully occupied throughout
the year. On the other hand, lowering the marginal
costs of seasonal production is not really a relevant
issue.
11. Developing the master production schedule
The companies in the sample tailor the MPS
format to suit their own purposes. None construct
an ‘‘optimum’’ aggregate plan first. Many of the
cases must cope with extremely high product
variety and a fluctuating sales mix. Unit labour
and materials costs can vary significantly across
the different items as well. Thus, it would be
virtually impossible to convert an aggregate plan
into a feasible model-based schedule, while pre-
serving a specific balance of monthly labour and
inventory costs. Further methodological discre-
pancies are apparent when discrete summer and
winter product ranges must be scheduled. The
critical decisions are not so much about the size of
the workforce as the exact timing of the product
changeovers.
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G. Buxey / Int. J. Production Economics 85 (2003) 331–346
When a full 12 months planning horizon is used
a major portion of the MPS is speculative. The
more distant months may be couched in terms of a
few product groups. As each time bucket advances
towards the current date further decisions are
taken. Ideally, specific product identities do not
evolve until firm orders or accurate (model-based)
sales forecasts become available. The MPS triggers
the timely acquisition of labour and raw materials.
However, for certain derived activities on long lead
times (e.g. overseas purchase orders) the plan may
be forced to rely on aggregate forecasts. Modular
design helps here. Later on these pre-existing
commitments may constrain the composition of
the plan’s front end. A pure chase strategy, along
with preferred ways to implement it, streamlines
the entire planning process. In the absence of
stockpiling, the MPS needs to stretch just far
enough to incorporate the longest cumulative
(resources) lead time. The most detailed part of
the plan is even shorter. Relatively few calculations
and decisions are involved, although the schedule
is frequently regenerated.
The processed food factory produces 300
different items (Buxey, 1988). A complex, heuristic
computer algorithm compiles the MPS. Four
customers take 85% of sales and the planning
system is ‘‘make for stock’’. The ingredients are
prepared, blended and cooked in bulk on the first
floor of the plant. After that the required mixture
is piped downstairs to 6 high-speed, automated
filling/packaging lines, each dedicated to cans, jars,
or herb/spice containers. The designated batch
quantities equate to a whole number of shifts. So a
change of food contents does not halt production.
Notwithstanding, it can take up to 2 shifts to
adjust the equipment to accommodate a different
sized vessel. This setup process also causes
considerable wastage of raw materials.
Mostly, a chase (sales) philosophy prevails. This
outlook is modified in order to run certain
products whenever seasonal crops are picked.
The 52-weeks MPS is revised at 4-weekly intervals.
It obeys a set of constraints, which include
maintaining designated safety stock levels and
not making products during their particular sales
troughs. The objective is to minimise the combined
costs of finished goods inventories plus packaging
341
line setups. Accordingly, the algorithm schedules
‘‘clusters’’ of compatible products. Often the
production of some inexpensive items is pulled
forward, in order to avoid a premature change of
containers.
Quarterly workforce planning relies on a trial
and error approach. Labour allocations are
modified over the furthest 9 months of the
planning horizon until the MPS algorithm yields
a satisfactory result. The output is augmented in
discreet weekly steps as sales start to rise, initially
via overtime and then by recruiting extra day and
evening shift crews. These casual workers are
contracted for a stipulated minimum period, since
most jobs merely entail surveillance, removing
misaligned containers, and packing. Usually, there
is excess plant capacity, and the new crews can be
assigned to any line that is still free on their
particular shift. The planners convert the MPS’s
front 2 weeks into a daily production plan. This
procedure entails manipulating batch sequences
until all of the ‘‘upstairs’’ constraints are satisfied.
12. Conclusions
An up to date article on aggregate planning
(Piper and Vachon, 2001) acknowledges the fact
that the overwhelming trend throughout industry
is to follow the chase strategy. This phenomenon
has been fuelled by the spread of JIT production.
The authors go on to warn that the regulation
aggregate planning model is inadequate, and its
outputs seriously flawed. Any chase plan has
unstable labour inputs, which they believe are
associated with significant productivity and capa-
city losses. Moreover, these effects are overlooked
in regulation aggregate planning. A new LP model
rectifies the deficiency and promulgates a better
(mixed strategy) solution for a benchmark pro-
blem. Naturally enough, it leans more towards a
pure level plan. This paper serves a perfect
illustration of the mindset that continues to dog
the aggregate planning literature.
A chase plan is clearly the best policy. It impacts
positively on a wide range of costs and improves
a company’s overall cash flow situation. Most
importantly, it minimises the firm’s financial
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342 G. Buxey / Int. J. Production Economics 85 (2003) 331–346
exposure. Also, there is less reliance on distant
sales forecasts, and management is forced to
explore flexible avenues to adjust factory capacity.
In the field, a chase strategy is a realistic option,
provided that the production tasks are fairly easy
to master. Alternatively, an enterprise may be able
to attract, on a temporary basis, various categories
of suitably experienced people. Despite all this
there are plenty of cases that call for extensive
training of any new employees. Then the real
remedy is to implement a different, yet predeter-
mined, non-chase strategy.
No obvious guidelines exist for selecting another
strategy. The choice depends on a business’s
unique amalgam of fixed costs, training times
and degree of seasonal bias. Management plumps
for the alternative that it expects will be most
effective in their particular environment. The
‘‘modified chase’’ strategy is the most appealing
fall back option. This substantiates the view that a
pure ‘‘chase’’ policy is the best. A modified chase
regime bows to certain labour or equipment
constraints. Thereafter, it attempts to chase the
demand profile to the fullest extent that is still
possible. All non-chase plans necessitate a certain
amount of stockpiling, and in general the planning
horizons are longer than they would be for chase.
This does not mean that manufacturers simply
tolerate the negative consequences of carrying
smoothing stocks. Rather, only specific types of
item are stored. The particular categories are
designed to eliminate or contain most of the
attendant financial risks.
In this kind of planning there are three prime
considerations. Productivity and costs are taken
care of by selecting the right overarching medium-
term strategy. At the same time, suitable tactics
(for adjusting labour inputs and accumulating
smoothing stocks) are evaluated and laid down in
advance. The enterprise satisfies the demands of
the customers via the composition of the MPS.
Future sales are uncertain, so schedules are
designed to be reliable, robust and flexible. All of
this leads to the stark realisation that the theory of
aggregate planning is fundamentally wrong. It
makes unwarranted assumptions about strategy
and focuses on the tactics instead. Tinkering
around the edges of this model with extra
constraints, penalties, etc. will not put matters to
right, although some mathematical models are
germane for lower level batching problems in
process type industries. For a manufacturer,
the correct response to a seasonal sales profile
is to implement the most appropriate production
strategy.
Very few actual real life examples that are
relevant to seasonal production seem to appear in
the literature, although a pair of ‘‘aggregate
planning’’ vignettes is featured in one textbook.
In addition, a journal article describes how an
American company uses a suite of sophisticated
computer models to plan the production of
garments. Happily, those practical details that
are given tend to coincide with many of the
findings of this case-based research, and therefore
lend their support to its radical proposition.
Appendix A
The case studies: Unless stated the plant runs on
5 days per week and each shift lasts around
8 hours. Summary information for each operation
covers product portfolio; product variety; produc-
tion mode; minimum labour input; main means of
achieving volume flexibility (where appropriate);
and germane comments regarding the feasibility of
the chase option.
A.1. Chase strategy
Bulk/bagged cement; none; for stock, but big
contracts to order; continuous production; spare
capacity at final milling stage; level production of
clinker intermediate ensures maximum utilisation
of the most capital intensive stage (kilns).
Petrol and oils; 10 products from common crude
feedstock; for stock; continuous production; none;
export sales (15–20%) maintain critical production
units at full utilisation. Product mix is adjusted to
match individual seasonal demand patterns.
Industrial paints and varnishes; approximately
400 types; to unique order; 2 shifts; overtime;
production of some orders pulled forwards.
Domestic paints and finishes; 417 SKUs from
28 types, colour range, and 5 can sizes; for stock;
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G. Buxey / Int. J. Production Economics 85 (2003) 331–346
1 shift; increased manning levels, overtime, then
second shift; JIT production and purchasing.
Beer; 2 types; for stock; 2 shifts; normal capacity
sufficient for predictable summer weather and
overtime available during a heat wave; some idle
time accepted as labour costs are insignificant.
Ice cream; 102 SKUs including flavours and
packaging; for stock; 1 shift but not all lines
running; increased manning levels, overtime,
second shift, then weekend overtime; some idle
time accepted for small core workforce.
35 mm photographic films; 21 families and 150
packages; to intra-company order (unique packa-
ging); 3 shifts; weekend overtime; customers will
accept orders a month early-domestic and various
export sales patterns tend to cancel out; JIT
production.
Ladies’ wear; 500 styles compounded by
fabrics and sizes; to unique order; 1 shift but not
all lines manned; parallel 6 hours shift with
workforce increased in steps; counter seasonal
styles and modifications—order book priority
juggling—some idle time accepted for regular
workforce.
Ladies’ footwear; winter range 287 styles,
summer range 100 styles, in 60 colours, 8 materials
and different sizes; to order; 1 shift; orders pulled
forward, overtime, up to 4 subcontractors for
stitching; no room to expand capacity—natural
attrition reduces workforce slightly in troughs and
some idle time accepted.
Tumble dryers; 10 domestic models; for stock; 10
(low volume) export ‘specials’; to order; 1 shift;
increased manning levels; excess workers trans-
ferred to larger, (non-seasonal) washing machine
facility—JIT purchasing and production.
Lawnmowers, edgers, outdoor vacuum cleaners; 8
models; for stock; 1 shift plus a small, selective
second shift; increased manning levels, overtime,
second shift; JIT purchasing and production.
Refrigerators; many models, based on 15 cabinet
sizes, 3 brands, and 3 colours; for stock; 1 shift;
increased manning levels; JIT purchasing and
production.
Electric wall heaters; 30 models; for stock; 1
shift; increased manning levels, overtime, second
shift in assembly; subcontracting maintains level
workload in engineering workshops.
343
Nail plate products for the building industry; 800
items in 60 family groups; for stock; specials (and
exports); to order; 1 shift; increased manning
levels; core workforce supplemented by skilled
packers from labour hire company.
Jewellery; 1200 standard items approx. plus
occasional custom orders; majority of items to
order, higher-volume, cheaper lines for stock; 1
shift; increased manning levels and (home based)
subcontractors.
Greetings cards and related products: everyday
cards; 2500 designs; for stock; seasonal cards; 1000
designs for Xmas alone; for stock, but 95% pre-
sold; specials; to order; 2 shifts; overtime; everyday
card sales 2–2.5 times greater than seasonal cards.
Specials are 30% of total workload.
Crumpets and scones; 1 type each, some custo-
mised wrappers; to order; 1 shift  2 days, not all
lines running; increased manning levels, overtime,
up to 3 shifts  6 days; shelf life 5 days, sales
depend on day of the week.
Meat pies, pasties and sausage rolls; 30 items; to
order; 2 shifts  6.5 hours  6 days, staggered for
different processes; increased manning levels and
flexible shift lengths; short shelf life, sales depend
on day of the week.
Toys; typically, 25–30 items made locally but
most are imported; for stock; local production
subcontracted out; contract arrangements provide
process and volume flexibility; main problem is to
get sales forecasts right.
A.2. Modified chase strategy
Reinforced garden and industrial hoses; 50 types;
small orders supplied ex stock and major custo-
mers supplied to order; 1 shift, not all lines
running; increased manning levels, overtime, up
to 3 shifts  7 days; limited stockpiling in own
warehouse preferred to Sunday working, renting
outside storage space is a last resort.
Ice cream; 240 SKUs including flavours and
packs, 30–50 families; for stock; 2 shifts but not all
lines running; increased manning levels, overtime;
limited stockpiling necessary due to training
capacity restrictions.
Processed foods; 300 items, including sizes; for
stock; 1 shift, not all lines running; increased
 ARTICLE IN PRESS
344 G. Buxey / Int. J. Production Economics 85 (2003) 331–346
manning levels, overtime, second shift; stockpiling
necessary for products derived from seasonal
crops.
Chocolate Easter eggs, Xmas novelties, etc.; 300
items, 75% are customer specific (usually packa-
ging); mix of make for stock (70–80% of forecast
annual sales) in an initial run and make to order
(the balance) in a second batch; 2 shifts, not all
lines running; increased manning levels, 3 shifts in
critical areas; stockpiling necessary due to equip-
ment constraints, but all production scheduled as
late as possible.
Pine landscaping products (borders, pavers);
4 types, 9 products; for stock; 1 shift; overtime,
second shift  6 hours, more overtime, subcontrac-
tors top up supplies to interstate distribution
centres; subcontracting saves on capital equipment
and transport costs; stockpiling required to cope
with sales spike at beginning of peak season.
Surfer’s wetsuits; 50 models in 12 sizes; for
stock, but 45–70% pre-sold (indents); 1 shift;
labour turnover trims workforce in troughs,
(a little) overtime; counter-seasonal product mod-
ifications—indent orders pulled forward to main-
tain labour productivity.
Boardshorts; 5 types, 40 fabrics and 20 sizes; to
order; 1 shift; labour turnover trims workforce in
troughs, overtime; JIT production—indent orders
pulled forward to maintain labour productivity—
counter-seasonal styles and products, exports to
northern hemisphere.
Pharmaceuticals (cremes, liquids and sterile
products); 600 items including packaging, 400
product types; own products for stock, contract
manufacture (35–40%) to order; 1 shift, not all
lines running; increased manning levels, overtime;
60 seasonal items do not peak in same months—
level production over initial 3 months after
juggling contract order priorities; forecast errors
a bigger problem than seasonal bias.
Bulk/bagged fertilisers; blends 3000 products
from 1 manufactured and 1 imported type; to
order; 2 shifts  12 hours  3 days in production
and 1  8 hours shift in mix/dispatch; up to 6 days
in production via overtime, and up to 3 shifts in
mix/dispatch by increasing workforce; stockpiling
of manufactured fertilizer type due to capacity
constraints.
Bicycle safety helmets; 10 models, 5 colours, 3
sizes; for stock; 1 shift; increased manning levels;
stockpiling avoids second shift—2 models depend
on mould shop for a component but jobs easily
accommodated (this facility runs continuously,
producing non-seasonal, contract orders for
parts).
Garden tools, axes and block splitters, and non-
seasonal hardware; 2500 items; for stock; 2 shifts;
overtime, increased manning levels in assembly;
chase MPS but stockpiling of forged components
due to skilled labour constraint.
Ammunition; 260 items, belonging to a smaller
number of families; 2 or 3 shifts depending on
process; mainly for stock, but approximately 40%
to order (exports and low volume industrial
range); overtime; capital-intensive facilities kept
fully loaded by pulling long lead time orders
forward.
A.3. Level production strategy
Motor vehicle batteries; 4 sizes; for stock;
2  12 hours shifts on 6 days; marketing discounts
prices to achieve sales targets; lengthy training and
high plant utilisation.
Colour television sets; 12 models; for stock; 1
shift; overtime during pre-Xmas peak to counter
forecasting errors; lengthy training.
Cricket balls; 4 models; for stock; 1 shift;
customer credit extended for early orders; lengthy
training for stitching operation.
Motor car radiators; 6 OE models; to order;
1200 catalogue items for general aftermarket
(mainly cores); for stock; 300–400 older model
cores; to order; 1 full shift plus 1 very small shift;
flexible second shift relieves bottlenecks; signifi-
cant training for welding operations.
A.4. Demand management strategy
Cooling fans and electric strip heaters; 6 models
each; for stock but >60% pre-sold to major
customers; 1 shift; whenever regular employees
switch to heaters line a temporary shift mans fans
line; JIT purchasing and production.
Gas barbecues; 70 types expands to 200 with
finishes and options; solid fuel heaters; 10 models;
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G. Buxey / Int. J. Production Economics 85 (2003) 331–346
for stock; 1 shift plus constant overtime; more
overtime, tooling gradually switched to other
product range; retail chain stimulates sales via
discounts and promotions.
Evaporative air conditioners and radiant gas
heaters; 5 ranges each, 165 model variations; for
stock; 2/3 shifts in components production and
1 full plus 1 part time assembly shift; increased
manning levels occupy up to 6 assembly lines,
2 lines switch between air conditioners/heaters to
chase demand; JIT purchasing and production.
Lawn bowls; 650 models with 2000 decorative
patterns; domestic models for stock, exports and
Australian ‘specials’ to order; 1 shift; level
production; 85% share of world market and
exports smooth demand (plus very modest antici-
pation stocks for Australia and UK); significant
training and difficulties recruiting staff.
A.5. Other strategies
Marine distress flares and fireworks; 2 flares
types; for stock; 1 shift; increased manning levels;
stable (core) workforce policy implemented by
scheduling fireworks (20% of total production) in
the slack period and making maximum use of
limited storage capacity; lengthy training for
certain tasks.
Wood heaters; 12 models in 2 colours; for stock;
1 shift; overtime and enhanced performance rate,
some press work subcontracted out; stable work-
force policy with insufficient warehouse capacity
to level production; some idle time accepted-
welded cabinets stockpiled with final assembly
scheduled during peak season (components like
the electric fan are expensive); significant training
for welding.
School uniforms and club/corporate wear (ties
and tie fabrics, scarves, pullovers, tunics, blazers);
custom designed; to order; 1 shift in labour-
intensive areas (cutting, making, finishing) and 2
overlapping shifts in capital-intensive areas (weav-
ing, knitting); varying the degree of shift overlap
so equipment runs longer; encourage (school)
indent orders and level production as far as
possible—reduce workforce via labour turnover,
operatives assigned to training and non-produc-
tion tasks; very long training.
345
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