Production planning and control II. The planning horizon problem

A general model of the production planning and control problem based on modern control theory is given, This model is used to develop principles for planning under uncertainty and to illustrate the strong connection between the structure of the production-inventory system, the characteristics of the environment, and the planning horizon. It is shown that the planning horizon is a function of the structure of both the production-inventory system and the market dynamics. Further, it is shown that the planning horizon is independent of the level of uncertainty and that the planning horizon problem is effectively decoupled from the problems of measuring the state of the production-inventory system and market forecasting.