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 Forecast 1 2$$ 2 2$$ $$ ! !$$ " "$$ # 2$$ Total 1%$$

&osts: 'utput (egular time ) *k. 2+skateboard ,ubcontract ) *k. #+skateboard

'vertime ) *k. +skateboard -nventory ) *k. 1+skateboard per period on average inventory .ackorders ) tk. "+skateboard per period. *hey now want to evaluate a plan that calls for a steady rate of regular time output/ mainly using inventory to absorb the uneven demand but allowing some backlog. '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 $$ units 1skateboards2 per period with regular time 1i.e./ 1%$$+# ) $$2 3ote that the planned ending inventory is 0ero. *here are 1" workers and each can produce 2$ skateboards per period. ,olution: Period 4orecast 'utput: (egular 'vertime ,ubcontract 'utput-forecast -nventory: .eginning 5nding Average .acklog 1 2$$ $$ 1$$ $ 1$$ "$ $ 2 2$$ $$ 1$$ 1$$ 2$$ 1"$ $ $ 2$$ 2$$ 2$$ $ $$ $$ ! !$$ " "$$ # 2$$ *otal 1/%$$ 1/%$$ $

$$ $$ $$ 11$$2 12$$2 1$$ 2$$ 1$$ 1"$ $ 1$$ $ "$ 1$$ $ $ $ $

#$$ 1$$

P+2

Period &ost:1*aka2 'utput: (egular 'vertime ,ubcontract 6ire+layoff -nventory1average2 .ackorders *otal

"

*otal

#$$ $ #"$

#$$ "$ $ 7"$

#$$ 1"$ $ %$$

#$$ 2$$ $ 7"$

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

#$$ "$ $ #$$

#$$

#$$ "$$ !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%$ " 21$ # 17$ 7 1#$ % 2#$ : 1%$ *otal 1:!$

2#$

*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: (egular 'utput-fore -nventory .eginning 5nding Average .acklog &osts: 1*k2 'utput (egular -nventory .ackorder *otal

1 1:$ 22$ $ $ $ 1" $

2 2 $ 22$ 11$2 $ 2$ 2" $

2#$ 22$ 1!$2 2$ $ 1$ 2$

! 2%$ 22$ 1#$2 $ $ $ %$

" 21$ 22$ 1$ $ $ $ 7$

# 17$ 21$ !$ $ $ $ $

7 1#$ 21$ "$ $ 2$ 1$ $

% 2#$ 21$ 1"$2 2$ $ 1$ $

: 1%$ 21$ $ $ $ $ $

*otal 1:!$ 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#$ "$ $$ 1#1$

12#$ $ $ 12#$

11#!$ "$ 2 $$ 1!2:$

*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:$.