Run-out time production planning (RUNOUT)

The aim is to give each inventory item the same run-out time, defined as the number of weeks the inventory will last at current demand rates. Of course, the demand forecasts change weekly, so run-out time is updated weekly. Management controls the model by specifying the number of hours to be worked next week on stock production. Other inputs, include the item description, the production hours required to produce 1 unit, the inventory on-hand in units, and the demand forecast for the next week in units.

It is easy to do what-if analysis with the RUNOUT model. To illustrate, Brookshire management wants to schedule overtime to get run-out time up to 1 week of stock for every item. How many hours of stock production are needed? Increase cell F4 until you get run-out time of 1 week. A total of 46 hours are required.