Aggregate Planning Green Mills2

SUMMARY
Cost
SPOT MARKET
CHASE - 1
US Spot Market
7,760,000
Regular Time
Overtime
Holding
Hiring
30,000
Layof
17,000
Shipping
970,000
TOTAL COST
3,927,000
7,760,000
2,910,000
CHASE - 2
$
LEVEL
-
2,602,500 $
410,000 $
MIXED
-
2,430,000 $
2,910,000
80,000
88,750
21,000
30,000
12,500
17,000
795,000 $
970,000
970,000 $
4,016,000
3,393,750
3,927,000
CHASE STRATEGY (MATCH DEMAND, VARYING WORK FORCE

No Overtime
Cost / 1000
board feet
JAN
Estimated
Demand
1,000,000
Worker
20
Regular Production
50,000
1,000,000
Shortage / Surplus
Additional / Layof Workers
50,000
Worker
20
Actual
Regular Production
Production Cost
50,000
$
150
1,000,000
$
150,000
Hiring cost / new employee
1,000 $
Layoff cost / employee
500 $
Shipping cost
50
TOTAL COST
US SPOT MARKET
400
50,000
200,000
400,000
RYING WORK FORCE)
FEB
MAR
APR
MAY
1,100,000
1,300,000
1,500,000
1,800,000
20
22
26
30
1,000,000
1,100,000
1,300,000
1,500,000
(100,000)
(200,000)
(200,000)
(300,000)
22
26
30
36
1,100,000
1,300,000
1,500,000
1,800,000
165,000
195,000
225,000
270,000
2,000
4,000
4,000
6,000
55,000
65,000
75,000
90,000
222,000
264,000
304,000
366,000
440,000
520,000
600,000
720,000
JUN
JUL
AUG
2,200,000
2,500,000
2,400,000
2,000,000
36
44
50
48
1,800,000
2,200,000
2,500,000
2,400,000
100,000
400,000
(400,000)
(300,000)
(2)
(8)
44
50
48
40
2,200,000
2,500,000
2,400,000
2,000,000
330,000
375,000
8,000
6,000
SEP
360,000
-
$
$
300,000
-
1,000
4,000
110,000
125,000
120,000
100,000
448,000
506,000
481,000
404,000
880,000
1,000,000
960,000
800,000
OCT
$
$
NOV
DEC
1,600,000
1,200,000
800,000
40
32
24
2,000,000
1,600,000
1,200,000
400,000
400,000
400,000
(8)
(8)
(8)
32
24
16
1,600,000
1,200,000
800,000
240,000
-
$
$
180,000
-
$
$
120,000
-
2,910,000.0
30,000.0
4,000
4,000
4,000
17,000.0
80,000
60,000
40,000
970,000.0
324,000
244,000
164,000
3,927,000.0
640,000
480,000
320,000
7,760,000
CHASE STRATEGY (MATCH DEMAND, VARYING WORK FORCE

With Overtime
Cost / 1000
board feet
JAN
Demand
1,000,000
Worker
20
Regular Production
50,000
1,000,000
Shortage / Surplus
Estimated
Overtime Production Capacity
25%
250,000
Can covered by overtime?
No Need
Overtime Production
Remaining Shortage / Surplus
Need additional workers?
No
Additional Workers Needed
Need to layoff?
No
Total layof
Worker
20
Regular Production
Production Cost
50,000
$
150
1,000,000
$
Actual
Shortage / Surplus
Overtime Capacity
25%
250,000
Overtime Production
Overtime Production Cost
150,000
200 $
1,000 $
500 $
Shipping cost
50
TOTAL COST
US SPOT MARKET
400
50,000
200,000
400,000
RYING WORK FORCE)
FEB
MAR
APR
1,100,000
1,300,000
1,500,000
1,800,000
20
20
21
25
1,000,000
1,000,000
1,050,000
1,250,000
(100,000)
(300,000)
(450,000)
(550,000)
250,000
250,000
262,500
312,500
Yes
No
No
No
100,000
250,000
262,500
312,500
(50,000)
(187,500)
(237,500)
Yes
Yes
Yes
No
No
No
No
20
21
25
30
1,000,000
1,050,000
1,250,000
1,500,000
No
-
MAY
150,000
157,500
187,500
225,000
(100,000)
(250,000)
(250,000)
(300,000)
250,000
262,500
312,500
375,000
100,000
250,000
250,000
300,000
20,000
50,000
50,000
60,000
1,000
4,000
5,000
55,000
65,000
75,000
90,000
225,000
273,500
316,500
380,000
440,000
520,000
600,000
720,000
JUN
JUL
AUG
2,200,000
2,500,000
2,400,000
2,000,000
30
37
41
41
1,500,000
1,850,000
2,050,000
2,050,000
(700,000)
(650,000)
(350,000)
375,000
462,500
512,500
512,500
No
No
Yes
No Need
375,000
462,500
350,000
(325,000)
(187,500)
50,000
Yes
Yes
No
50,000
No
No
No
No
Yes
37
41
41
40
1,850,000
2,050,000
2,050,000
2,000,000
277,500
307,500
307,500
(350,000)
(450,000)
(350,000)
462,500
512,500
512,500
350,000
450,000
350,000
70,000
90,000
7,000
4,000
$
$
SEP
70,000
300,000
500,000
-
500
110,000
125,000
120,000
100,000
464,500
526,500
497,500
400,500
880,000
1,000,000
960,000
800,000
OCT
NOV
1,600,000
1,200,000
800,000
40
32
24
2,000,000
1,600,000
1,200,000
400,000
400,000
400,000
500,000
400,000
300,000
No Need
No Need
No Need
DEC
400,000
400,000
400,000
No
No
No
Yes
Yes
Yes
32
24
16
1,600,000
1,200,000
800,000
240,000
180,000
400,000
2,602,500.0
300,000
120,000
200,000
410,000.0
21,000.0
4,000
4,000
4,000
12,500.0
80,000
60,000
40,000
970,000.0
324,000
244,000
164,000
4,016,000.0
640,000
480,000
320,000
7,760,000
LEVEL STRATEGY (CONSTANT WORK FORCE, VARYING INVEN

Maximize Inventory Capacity by Maximize Overtime in Early Year
Average Actual Demand / Month
1,325,000
Shipping Limitation
1,500,000
Average Worker / Month
27
Additional Worker
Hiring Cost
7
$
7,000
Cost / 1000
board feet
JAN
Demand
1,000,000
Shipping
1,000,000
Beginning Inventory
Regular Production
50,000
1,350,000
Overtime Production
Total Available Product
1,350,000
Ending Inventory
350,000
Regular Production Cost
150
200 $
Holding Cost
25
8,750
Shipping cost
50
50,000
261,250
400,000
TOTAL COST
US SPOT MARKET
400
202,500
-
FORCE, VARYING INVENTORY)

Early Year
FEB
MAR
MAY
1,100,000
1,300,000
1,500,000
1,800,000
1,100,000
1,300,000
1,500,000
1,500,000
350,000
600,000
650,000
500,000
1,350,000
1,350,000
1,350,000
1,350,000
APR
1,700,000
1,950,000
2,000,000
1,850,000
600,000
650,000
500,000
350,000
202,500
-
$
$
202,500
-
$
$
202,500
-
$
$
202,500
-
15,000
16,250
12,500
8,750
55,000
65,000
75,000
75,000
272,500
283,750
290,000
286,250
440,000
520,000
600,000
600,000
JUN
JUL
SEP
2,200,000
2,500,000
2,400,000
2,000,000
1,500,000
1,500,000
1,500,000
1,500,000
350,000
200,000
50,000
1,350,000
1,350,000
1,350,000
1,350,000
100,000
150,000
1,500,000
1,500,000
AUG
1,700,000
1,550,000
200,000
50,000
202,500
-
$
$
202,500
-
202,500
202,500
20,000
30,000
5,000
1,250
75,000
75,000
75,000
75,000
282,500
278,750
297,500
307,500
600,000
600,000
600,000
600,000
OCT
NOV
1,600,000
1,200,000
800,000
1,500,000
1,200,000
800,000
1,350,000
1,350,000
1,500,000
$
202,500
30,000
150,000
1,350,000
150,000
DEC
1,350,000
1,500,000
150,000
700,000
202,500
-
$
$
202,500
-
2,430,000
80,000
3,750
17,500
88,750
75,000
60,000
40,000
795,000
307,500
266,250
260,000
3,400,750
600,000
480,000
320,000
6,360,000
LEVEL STRATEGY (CONSTANT WORK FORCE, VARYING INVEN

Maximize Inventory Capacity by Maximize Overtime in Early Year
Average Actual Demand / Month
1,325,000
Shipping Limitation
1,500,000
Average Worker / Month
27
Additional Worker
Hiring Cost
7
$
7,000
Cost / 1000
board feet
JAN
Demand
1,000,000
Shipping
1,000,000
Beginning Inventory
Regular Production
50,000
1,350,000
Overtime Production
Total Available Product
1,350,000
Ending Inventory
350,000
Regular Production Cost
150
200 $
Holding Cost
25
8,750
Shipping cost
50
50,000
261,250
400,000
TOTAL COST
US SPOT MARKET
400
202,500
-
FORCE, VARYING INVENTORY)

Early Year
FEB
MAR
MAY
1,100,000
1,300,000
1,500,000
1,800,000
1,100,000
1,300,000
1,500,000
1,500,000
350,000
600,000
650,000
500,000
1,350,000
1,350,000
1,350,000
1,350,000
APR
1,700,000
1,950,000
2,000,000
1,850,000
600,000
650,000
500,000
350,000
202,500
-
$
$
202,500
-
$
$
202,500
-
$
$
202,500
-
15,000
16,250
12,500
8,750
55,000
65,000
75,000
75,000
272,500
283,750
290,000
286,250
440,000
520,000
600,000
600,000
JUN
JUL
SEP
2,200,000
2,500,000
2,400,000
2,000,000
1,500,000
1,500,000
1,500,000
1,500,000
350,000
200,000
50,000
1,350,000
1,350,000
1,350,000
1,350,000
100,000
150,000
1,500,000
1,500,000
AUG
1,700,000
1,550,000
200,000
50,000
202,500
-
$
$
202,500
-
202,500
202,500
20,000
30,000
5,000
1,250
75,000
75,000
75,000
75,000
282,500
278,750
297,500
307,500
600,000
600,000
600,000
600,000
OCT
NOV
1,600,000
1,200,000
800,000
1,500,000
1,200,000
800,000
1,350,000
1,350,000
1,500,000
$
202,500
30,000
150,000
1,350,000
150,000
DEC
1,350,000
1,500,000
150,000
700,000
202,500
-
$
$
202,500
-
2,430,000
80,000
3,750
17,500
88,750
75,000
60,000
40,000
795,000
307,500
266,250
260,000
3,400,750
600,000
480,000
320,000
6,360,000
MIXED STRATEGY (VARYING INVENTORY, VARYING WORK FO

Beginning Worker
New Hire Cost
20
$
Cost / 1000
board feet
JAN
Estimated
Demand
1,000,000
Worker
20
Beginning Inventory
Regular Production
50,000
Overtime
1,000,000
25%
Shortage / Surplus
Additional / Layof Workers
50,000
Worker
20
Beginning Inventory
Regular Production
Production Cost
50,000
1,000,000
150
200 $
150,000
Actual
Overtime Production
Surplus
Holding Cost
25 $
1,000 $
500 $
Shipping cost
50
TOTAL COST
US SPOT MARKET
400
50,000
200,000
400,000
VARYING WORK FORCE)
FEB
MAR
1,300,000
1,500,000
1,800,000
20
22
26
30
1,100,000
(100,000)
$
$
1,500,000
(200,000)
(300,000)
22
26
30
36
165,000
1,300,000
$
1,300,000
(200,000)
1,100,000
MAY
1,100,000
1,000,000
APR
2,000
-
195,000
1,500,000
$
$
$
$
4,000
-
225,000
1,800,000
$
$
$
$
4,000
-
270,000
$
$
$
6,000
-
55,000
65,000
75,000
90,000
222,000
264,000
304,000
366,000
440,000
520,000
600,000
720,000
JUN
JUL
2,500,000
2,400,000
2,000,000
36
44
50
48
2,200,000
(400,000)
(300,000)
44
2,200,000
330,000
$
$
8,000
-
$
$
2,400,000
100,000
400,000
(8)
50
48
40
375,000
2,400,000
$
2,500,000
(2)
2,500,000
SEP
2,200,000
1,800,000
AUG
6,000
-
360,000
2,000,000
$
300,000
1,000
4,000
110,000
125,000
120,000
100,000
448,000
506,000
481,000
404,000
880,000
1,000,000
960,000
800,000
OCT
NOV
1,600,000
1,200,000
800,000
40
32
24
2,000,000
1,600,000
1,200,000
400,000
400,000
400,000
(8)
(8)
(8)
32
24
16
1,600,000
$
DEC
240,000
1,200,000
$
180,000
800,000
$
120,000 $
2,910,000.0
30,000.0
4,000
4,000
4,000 $
17,000.0
80,000
60,000
40,000 $
970,000.0
324,000
244,000
164,000 $
3,927,000.0
640,000
480,000
320,000 $
7,760,000

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SUMMARY

CHASE STRATEGY (MATCH DEMAND, VARYING WORK FORCE

Additional / Layof Workers

Hiring cost / new employee

Layoff cost / employee

RYING WORK FORCE)

CHASE STRATEGY (MATCH DEMAND, VARYING WORK FORCE

Overtime Production Capacity

Can covered by overtime?

Remaining Shortage / Surplus

Need additional workers?

Additional Workers Needed

Hiring cost / new employee

Layoff cost / employee

RYING WORK FORCE)

LEVEL STRATEGY (CONSTANT WORK FORCE, VARYING INVEN

Average Worker / Month

Total Available Product

Regular Production Cost

Overtime Production Cost

FORCE, VARYING INVENTORY)

LEVEL STRATEGY (CONSTANT WORK FORCE, VARYING INVEN

Average Worker / Month

Total Available Product

Regular Production Cost

Overtime Production Cost

FORCE, VARYING INVENTORY)

MIXED STRATEGY (VARYING INVENTORY, VARYING WORK FO

Additional / Layof Workers

Hiring cost / new employee

Layoff cost / employee

VARYING WORK FORCE)

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