The ABC Company is a hypothetical manufacturer that purchases  raw materials and converts them through the manufacturing chain into end products for sales.  The strategic objective is to model the company's supply and demand planning process to provide realizable demand and supply plans that maximize profits.

The company manufactures and sells six products: 20PS, 30CS, 40PCS, A, B, and C with the manufacturing chain starting at Purchasing for the raw materials and goes through the manufacturing stages or processes of  Materials,  Process 4,  Process3,  Process2,  Process1 into Sales.  Each of these processes have their definitions of products, machine types, product constructions, standards, and resources. The resource functions or variables have been defined as variable margin (Var Marg), variable cost (Var Cost), and sales volume (Sales). 

The current plan is to produce and sell the products A, B, and C in the quantities shown below.   An analysis of  schedules and resources needed, summarized in the following table,  determines that  full capacity utilization is required for this plan.

An optimum criteria must be selected by the user such as:  maximum variable margin, minimum variable cost, maximum volume,  minimum direct labor, etc., where these functions to be maximized or minimized are defined by the user as production-related variables.  The Strategic Demand Constraints option must be also selected by the user for use in determining the optimum plan.  Resource constraints can also be placed on  variable cost, volume,  direct labor, etc.

The following example, using the maximum variable margin criteria and the No Maximum - No Minimum strategic plan, is summarized in the table below.   The optimum solution  determines that the products 30CS, B, and C in the quantities shown could be  produced and sold and give the maximum profit possible.  The plan has a variable margin that is maximized within the constraints of customer demand and available resources across the manufacturing chain. A comparison of this optimum plan with the current plan indicates a potential variable margin increase of  6.7 or potential profit gain of $6,700 per period. 

This model illustrates how the OSP software product is designed to provide a company with the means to determine realizable demand and supply plans that maximize profits while staying within the constraints of customer demand and available resources.