Planning Horizons

The Educational Society for Resource Management (APICS) defines a planning horizon as the amount of time that a plan extends into the future. Planning horizons must be long enough to cover the cumulative lead time for all low-level components. For higher-level planning, the horizon must be long enough to enable increased capacity adjustments, if needed. Changes that extend far into the planning horizon can be managed with little disruption to the planning schedule. Changes closer to the current date or delivery due date might have significant schedule and cost impacts to the existing plan.

Cumulative lead time should include visibility to all aspects of the plan, including:

• Engineering and development time.

• Purchasing lead time.

• Manufacturing lead time.

• Final assembly lead time.

• Delivery time to customer.

This example illustrates a planning horizon:

• Order raw materials: 20 days.

• Produce component items: 20 days.

• Subassembly production: 20 days.

• Final assembly: 20 days.

The planning horizon must be set to include the entire lead time from raw material through final assembly. Therefore, this planning horizon should be no fewer than 80 days in length.