Interactions of long-term planning and short-term planning

Abstract

Sales Mix Problem (SMP) is concerned with the maximization of profit for the current period. In this study, we consider the impact of the sales mix on the long-term profit. To formulate this problem, we adopt the framework of Post Model Analysis (PMA). The problem is named as Extended SMP (ESMP). PMA approach supports the trade-offs between the quantified profit of current period and non-quantified long-term profit. To do this, the opportunity cost of considering qualitative long-term profit is computed. The evaluation of alternative solutions from the long-term profit``s point of view is supported by graphical display schemes developed in the strategic planning arena. Expert system is also used to help the integrated usage of qualitative information. A decision support system (DSS) which helps the solution process of ESMP by PMA approach is designed, and a prototype DSS, named SAM (Sales Mix DSS) is developed in the microcomputer. SAM has the components of optimization models, data base, graphs and knowledge base.