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Case:
Abhay Kant 043001 Anirudh Singh 043010 Sonakshi Gulati 043053 Sumeet Anand 043056 Carole Pauquet fy1101
Aggregate Planning
Aggregate Planning is a process by which a company determines ideal levels of capacity, production, subcontracting, inventory, stock outs, and even pricing over a specified time horizon. The goal is to satisfy demand while maximizing profit.
Constraints:
Table 8-2
Material Cost Inventory holding cost Marginal cost of stockout/backlog Hiring and training costs Layoff cost Labor hours required Regular time cost Overtime cost Cost of subcontracting
Then, min cost and max profit gives the same optimal plan.
Min TC !
6
640W 2I
t! 1 t
t! 1
6O
t! 1 6 t
5S
t! 1
10 P
t! 1
30 C
t! 1
Stockout Cost
Production Cost
Subcontraction Cost
Lt
St-1
Dt
St
T 1 1 T 1 1 1 Average Inventory ! ( I t 1 I t ) ! ( I 0 I T ) I t T t !1 2 T 2 t !1
Average Flow Time for Red Tomato=895/2,667=0.34 months ?? What happens to Average Flow Time if uncertainty in demand increases?
Scenarios
Increased demand fluctuation Increase in holding cost (from $2 to $6) Overtime cost drops to $4.1 per hour
Table 8-3
Total No.Hire No. Laid Workforc Overtime, Inventory Stockout, Subcontract Production, Pt Period,t d, Ht Off, Lt e Size, Wt Ot , It St , Ct
0 1 2 3 4 5 6
0 0 0 0 0 0 0
0 15 0 0 0 0 0
80 65 65 65 65 65 65
0 0 0 0 0 0 0
0 0 0 0 267 0 0
Demand Forecast
1000 3000 3800 4800 2000 1400
Table 8-5
Total No.Hired No. Laid Workforc Overtime, Inventory, Stockout, Subcontract Production, Period,t Pt , Ht Off, Lt e Size, Wt Ot It St , Ct
0 1 2 3 4 5 6
0 0 0 0 0 0 0
0 15 0 0 0 0 0
80 65 65 65 65 65 65
0 0 0 0 0 0 0
0 0 0 0 1267 683 0
Analysis
Optimal aggregate plan is shown in Table 8-5. Monthly production remains the same but both inventories and stock outs (backlogs) go up compared to the aggregate plan in Table 8-3 for the demand profile in Table 8-1. The cost of meeting the new demans profile in Table 8-4 is higher at $432,858 (compared to $422,275 for the previous deamd profile in Table 8-1). The seasonal inventory during the planning horizon is given by: Seasonal Inventory:- 6450/6= 1075 The average flow time for this aggregate plan over the planning horizon (using equation 8.6) is given by: Average Flow Tim:- 1075/2667= 0.40 Months
Thank You