Problem on Aggregate Planning

Problem on Aggregate Planning Problem-1: Planners for a company that makes several models of skateboard models are about to  prepare the aggregate plan that will cover six periods. they have assembled the following: Period

1

2



!

"

#

Total

Forecast

2$$

2$$

$$

!$$

"$$

2$$

1%$$

&osts: 'utput (egu (egula larr time time ) *k. *k. 2+s 2+ska kate tebo boar ard d ,ubco ,ubcont ntra ract ct ) *k. *k. #+sk #+skat ateb eboa oard rd

'ver 'verti time me ) *k. *k. +s +ska kate tebo boar ard d nve nvent ntor ory y ) *k. *k. 1+s 1+ska kate tebo boar ard d per per peri period od on on aver averag agee inventory ackorders ) tk. "+skateboard per period.

*hey now want to evaluate a plan that calls for a steady rate of regular time output/ mainly mainly using using invent inventory ory to absorb absorb the uneven uneven demand demand but allowing allowing some some backlo backlog. g. 'vertime and subcontracting are not used because they out steady output. *hey intend to start with 0ero inventory on hand in the first period. Prepare an aggregate plan and determine its cost using the information given above. Assume a level output of $$ units skateboards per period with regular time i.e./ 1%$$+# ) $$ 3ote that the planned ending inventory is 0ero. *here are 1" workers and each can produce 2$ skateboards per  period.

,olution: Period

1

2



!

"

#

*otal

4orecast 'utput: (egular 'vertime ,ubcontract 'utput-forecast nventory: eginning 5nding Average acklog

2$$

2$$

$$

!$$

"$$

2$$

1/%$$

$$ 1$$

$$ 1$$

$$ $

$$ 1$$

$$ 2$$

$$ 1$$

1/%$$ $

$ 1$$ "$ $

1$$ 2$$ 1"$ $

2$$ 2$$ 2$$ $

2$$ 1$$ 1"$ $

1$$ $ "$ 1$$

$ $ $ $

#$$ 1$$

P+2

Period

1

2



!

"

#

#$$ -

#$$ "$ $ 7"$

#$$ 1"$ $ %$$

#$$ 2$$ $ 7"$

#$$ #$$ 1"$ "$ "$$ $ 11"$ #$$

*otal

&ost:*aka 'utput: (egular 'vertime ,ubcontract 6ire+layoff nventoryaverage ackorders *otal

$ #"$

#$$

$

#$$ "$$ !7$$

 3ote: *he total regular time output of 1%$$ units e8uals the total expected demand.

Problem 2: A manager is attempting to put together an aggregate plan for the coming nine months. ,he has obtained a forecast of expected demand for the planning hori0on. *he plan must deal with highly seasonal demand9 demand is relatively high in periods  and ! and again in period %/ as can be seen from the following forecasts:

Period 4orecast

1 1$

2 2$

 2#$

! 2%$

" 21$

# 17$

7 1#$

% 2#$

 1%$

*otal 1!$

*he department now has 2$ full-time employees/ each of whom can produce 1$ units of output per period at a cost of tk. # per unit. nventory carrying cost is tk. " per unit per  period and backlog cost is tk. 1$ per unit per period. *he manager is considering a plan that would involve hiring two people to start working in period 1/ one on a temporary  basis who would work only through period ". this would cost tk. "$$ in addition to unit  production costs. a. ;hat is the rationale for this plan<  b. =etermine the total cost of the plan/ including production/ inventory and back order costs. ,olution:

a. ;ith the current workforce of 2$ people each producing 1$ units per period/ regular capacity is 1%$$ units. *hat is 1!$ units less than expected demand. Adding one worker would increase regular capacity to 1%$$ > $ ) 1%$ units. *hat would still be "$ units short/ or ?ust the amount one temporary worker could  produce in five periods. ,ince one of the two seasonal peaks is 8uite early/ it would make sense to start the temporary worker right away to avoid some of the  back order cost.  b. *he production plan for this strategy is as follows:

Period 4orecast 'utput:

1 1$

2 2$

 2#$

! 2%$

" 21$

# 17$

7 1#$

% 2#$

 1%$

*otal 1!$

(egular 'utput-fore nventory eginning 5nding Average acklog

22$ $

22$ 1$

22$ !$

22$ #$

22$ 1$

21$ !$

21$ "$

21$ "$

21$ $

1!$ $

$ $ 1" $

$ 2$ 2" $

2$ $ 1$ 2$

$ $ $ %$

$ $ $ 7$

$ $ $ $

$ 2$ 1$ $

2$ $ 1$ $

$ $ $ $

7$ 2$

12$ 7" $ 1"

12$ 12" $ 1!!"

12$ "$ 2$$ 1"7$

12$ $ %$$ 212$

12$ $ 7$$ 2$2$

12#$ $ $$ 1"#$

12#$ "$ $ 11$

12#$ 12#$ 11#!$ "$ $ "$ $$ $ 2$$ 1#1$ 12#$ 1!2$

&osts: *k 'utput (egular nventory ackorder *otal

*he total cost for this plan is 1!2$ taka/ plus the "$$ taka cost for hiring and fot the layoff/ giving a total of 1!7$.