ADM 3301 Lecture Notes - Lecture 16: Carrying Cost, Full-Time Equivalent, Linear Programming

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lilachippopotamus32

1 Aug 2018

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> trial and error using spreadsheet and graphs: very popular and easy to understand but does not guarantee an optimal solution ! > mathematical models: linear programming, mixed integer programming. 2. determine capacities available for each period (regular time, overtime, etc. ) 3. identify company or departmental policies that are pertinent (i. e. maintain reasonable stable workforce ) 4. determine unit costs for available capacity options (cost of regular time, overtime, etc. ) 5. develop alternative plans and compute total cost for each. > planners for a company that makes several models of skateboards are about to prepare the aggregate plan that will cover six periods. They have assembled the following information about the forecast and the costs: > they now want to evaluate a plan that calls for a steady rate of regular-time (level) output, mainly using inventory to absorb the uneven demand but allowing some backlog. The is no on hand inventory in the first period, and the planned ending inventory is zero.

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(A.)

SBS, a company that manufactures several models of skateboards,are about to prepare an aggregate plan that will cover six months.Their forecasted demand for the following six months is asfollows:

Forecast 200 200 300 400 500 200

Month 1 2 3 4 5 6

In addition, the production costs for SBS are summarized in thetable below:
Regular time cost Overtime cost Inventory cost Backorder cost
$2 per skateboard $3 per skateboard $2 per skateboard/mo $5 perskateboard/mo

SBS wants to develop a level workforce plan that allows a steadyrate of regular-time output, mainly using inventory to absorbuneven demand, but also allowing for backordering. In this plan,they do not want to use overtime. They currently have 15 workers,each producing up to 20 skateboards per month. In addition, theycurrently have zero inventory and want to finish with zeroinventory and zero backlogs. Note that SBS wants a more realisticcalculation of their inventory cost that assumes that theirinventory for a given month is equal to the average between theirstarting and ending inventories for that month. Also, SBS does notwant to hire or fire any of their current laborers. ï¨Prepare anaggregate plan and determine its cost based on the aboveinformation.

(B.)

While reviewing the plan developed in Part A, the SBS managementhas learned that one worker has submitted her resignation. Ratherthan replacing the person, they have asked you to modify your planby staying with the smaller workforce and use overtime to make upfor the lost output. Develop a plan and compare it to the previousone.

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ADM 3301 Lecture Notes - Lecture 16: Carrying Cost, Full-Time Equivalent, Linear Programming

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