Professional Documents
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Rohit kapoor
APP Exercise
A manufacturer of electrical switchgears is in the process of
preparing the aggregate production plan for the next year. Let
us assume that a good measure of capacity is the number of
working hours available per month. Table 1 presents details
pertaining to the forecast demand for the equivalent model of
switchgears and the number of working days available during
the planning horizon. The following relevant details are also
available:
Inventory carrying costs are INR 1000 per switchgear per month
and unit shortage/backlogging costs are 200 percent of unit
carrying cost.
Table 1
Month
April
May
June
July
August
September
October
November
December
January
February
March
Number of WorkingDays
23
22
21
24
22
22
19
23
21
23
20
24
Part II
Consider the previous example. Assume the switchgear
manufacturer has no opening stock of inventory and
chooses to devise a chase production strategy. The
following additional information is available:
Overtime costs are INR 40 per hour and under-time costs
are INR 20 per hour
Hiring and training expenses are INR 7500 per worker
and laying-off costs are INR 5000 per worker
Part III
Consider Part II example. Assume that on the basis of
these computations, the switchgear manufacturer has
come up with a plan that employs the following
alternatives:
Hire 25 more workers at the beginning of April.
Lay off the 25 workers at the end of August.
Maintain constant working hours (1 shift of 8 hours)
throughout the year.
Absorb the demand-supply mismatch by building
inventory during periods of lean demand and by
resorting to OT during periods of excess demand.
Evaluate the cost of this plan and compare it with the
earlier alternatives. What are the key inferences?