BIT 3414 Lecture Notes - Lecture 8: Production Planning

• School: Virginia Tech
• Department: Business Information Technology
• Course: BIT 3414
• Professor: L L Clark

Document Summary

Part of s&op : sales and operations planning. Develops a production strategy for meeting demand 6 months to 12 months in advance. Strategies for adjusting capacity send to inventory pull from inv. Level production use inventory to absorb fluctuations in demand. Chase demand change workforce levels so that production matches demand. Overtime time time increase working hours extra cost: overtime pay. Backordering customer waits for product to be extra cost: compensate customer for produced in a later time period waiting. Production plans can be developed with several tools: trial and error, transportation method, linear programming. Production/employee = 1000 units /qtr regular production cost = /unit. Subcontract capacity = 20,000 units/qtr subcontract cost = /unit. Inventory carrying cost per unit per period = . This company does not want to use backorders. Subcontracting capacity = 1000 units/qtr subcontracting cost = /unit. Given the following demand forecasts, production costs, and constraints for a company.