Capacity-Constrained Supply Plan with Component Shortage

The two recommendations address different constraints, so treating them as alternatives would miss the real bottleneck.

• Component supply limits the build even if assembly capacity exists. The 6-week lead time means the 1,800-unit expedite is the only way to close part of the near-term component gap. Transferring more production to Plant B does not create components.
• Assembly capacity limits Plant A to roughly 8,000 units per week. The gap between 12,000 demand and 9,200 achievable is 2,800 units. Plant B has 5,000 units of unused capacity, but the plan moves only 600 because the 4-day transit and different routing make additional transfers infeasible within the response window or too costly relative to the component constraint.
• The plan is therefore solving a multi-constraint problem: expedite relieves the component constraint, while a limited transfer relieves the capacity constraint. If the planner canceled the transfer, Plant A would still be capacity-bound; if the planner canceled the expedite, Plant B would still be component-starved.

The correct judgment is to validate the expedite cost against the value of priority-A demand and to confirm that Plant B can actually build the routed variant before releasing either recommendation.

Start by converting tier percentages into units: A = 8,400, B = 2,400, C = 1,200. With 9,200 available, a priority-based allocation fully covers A (8,400) and leaves 800 for B; C receives zero unless supply improves.

That arithmetic is only the starting point. The planner should check firm orders versus forecast within each tier. If A's 8,400 includes forecast but only 7,000 is firm, the planner should not reserve phantom demand ahead of firm B orders. The allocation rule should use demand priority and firm-order status, not tier percentage alone.

Safety stock of 1,200 is already inside the plan. Releasing it would raise available supply to 10,400, but it also raises the risk of missing A's later orders. A defensible judgment is to release safety stock only for confirmed A orders with penalties, and to keep the rest as buffer because the component lead time is 6 weeks.

Finally, the planner should document the allocation and communicate it to sales. A plan that silently starves C is acceptable only if the business has explicitly decided that spot demand is the shock absorber.

The missing tier-level consumption prevents the planner from seeing which priority class actually has unfilled demand. The planner should introduce a demand class at the sales order and forecast level so that forecast consumption and allocation can be evaluated by tier rather than only by item.

Specific changes to consider:

• Assign demand classes A, B, and C to customers or order types, then use demand priority rules in the plan so that constrained supply is allocated in the intended sequence.
• Set forecast consumption to respect the demand class; otherwise a C order can consume A forecast and distort the shortage picture.
• Review the sourcing rule for Plant B. If transfers are intended as a regular lever, the rule needs the correct transfer lead time and routing so the plan does not understate the 4-day transit.
• Revisit component safety stock. A 6-week lead time and a single approved supplier justify a higher buffer than 1,200 units if expedite premiums are unacceptable.
• Add a plan exception for capacity overload at Plant A and for component shortage so the planner sees both constraints separately.

The test is whether the next plan run can answer 'how much A demand is at risk?' without manual spreadsheet work. If not, the configuration is still too coarse.