The optimum planning interval

The paper considers the issue of establishing an optimum planning interval on the basis of a trade-off between the costs of the planning activity and the costs of error in the results of the planning. Since the annual cost of planning declines but the amount of error increases as the planning period is lengthened, it is found to be possible to define, mathematically, an optimum planning period, based upon four principal variables. The derivation of an optimum planning period is detailed, under the assumption of a single goal for planning, and a set of tables is provided for calculating this period for various assumptions or situations for the four key variables. The four key variables include three variables which would not normally be known. It is shown that two of these three do not influence significantly the optimum planning period, and rules are suggested for estimating the remaining one on the basis of known information. Extensions to the demonstrated method are put forward to deal with multi-goal situations. In addition, a number of variations are suggested on the basic assumptions used in the derivation.