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70 –
Level production using average
monthly forecast demand
60 –
50 –
40 –
30 –
0 –
Jan Feb Mar Apr May June = Month
22 18 21 21
= Number of 22 20
working days
Conclusion: Produced 50 units per day. Note that in the first three months,
expected demand
© 2014 Pearson isInc.
Education, lower than production, while the expected demand in April,
13 - 4
May and June is above the average production.
Aggregate Planning Example 2
Plan 1: A Constant Workforce
TABLE
• Using data from 13.2 Monthly Forecasts
Example 1 developed DEMAN
PROD D PER
Plan 1: A constant EXPECT UCTIO DAY
MO ED N (COMPU
workforce for the NTH DEMAND DAYS TED)
company. The cost Jan 900 22 41
information is given in Feb 700 18 39
Table 13.3 Mar 800 21 38
Apr 1,200 21 57
May 1,500 22 68
June 1,100 20 55
6,200 124
Roofing Supplier Example 2
TABLE 13.3 Cost Information
Inventory carrying cost $ 5 per unit per month
Subcontracting cost per unit $20 per unit
Average pay rate $10 per hour ($80 per day)
$17 per hour
Overtime pay rate
(above 8 hours per day)
Labor-hours to produce a unit 1.6 hours per unit
Cost of increasing daily production rate $300 per unit
(hiring and training)
Cost of decreasing daily production rate $600 per unit
(layoffs)
70 –
Level production
60 – using lowest
monthly forecast
50 – demand
40 –
30 –
0 –
Jan Feb Mar Apr May June = Month
22 18 21 21 22 20 = Number of
working days
*Maintain production at the minimum demand and subcontract all
other demands.
© 2014 Pearson Education, Inc. 13 - 10
Roofing Supplier Example 3
In-house production = 38 units per day
x 124 days
= 4,712 units
Subcontract units = 6,200 – 4,712
= 1,488 units
COST CALCULATIONS
Regular-time labor $75,392 (= 7.6 workers x $80 per day x
124 days)
Subcontracting 29,760 (= 1,488 units x $20 per unit)
Total cost $105,152
70 –
60 –
50 –
40 –
30 –
0 –
Jan Feb Mar Apr May June = Month
22 18 21 21 22 20 = Number of
working days
Notes: production follows monthly demands. No holding cost
© 2014as
incured Pearson Education, Inc.
production just enough for demands. 13 - 13
Roofing Supplier Example 4
TABLE 13.4 Cost Computations for Plan 3
BASIC
PRODUCTION
COST EXTRA COST OF EXTRA COST OF
DAILY (DEMAND X INCREASING DECREASING
FORECAST PROD 1.6 HRS/UNIT PRODUCTION PRODUCTION TOTAL
MONTH (UNITS) RATE X $10/HR) (HIRING COST) (LAYOFF COST) COST
Jan 900 41 $ 14,400 — — $ 14,400
$1,200
Feb 700 39 11,200 — 12,400
(= 2 x $600)
$600
Mar 800 38 12,800 — 13,400
(= 1 x $600)
$5,700
Apr 1,200 57 19,200 (= 19 x — 24,900
$300)
$3,300
May 1,500 68 24,000 (= 11 x — 24,300
$300)
$7,800
June 1,100 55 17,600 — (= 13 x 25,400
$600)
$99,200 $9,000 $9,600 $117,800
Therefore,
© 2014 the total
Pearson Education, Inc. cost for Plan 3 is $117,800 13 - 14
Comparison of Three Plans
• Remember this is an heuristics method (it
cannot guranttee optimum solution) but
can give a good result.
• The good result can be identified by
comparing such as the developed Plan 1,
Plan 2 and Plan 3.
• The plan with the cheapest cost will be
selected as the good result to be
implemented.
Comparison of Three Plans
TABLE 14.2
Lead Times for Awesome Speaker Kits
(As)
COMPONENT LEAD TIME
A 1 week
B 2 weeks
C 1 week
D 1 week
E 2 week
F 3 weeks
© 2014 Pearson Education, Inc. 13 - 20
G 2 weeks
Determining Gross
Requirements
▶ Starts with a production schedule for the end
item – 50 units of Item A in week 8
▶ Using the lead time for the item, determine the
week in which the order should be released –
a 1 week lead time means the order for 50
units should be released in week 7
▶ This step is often called “lead time offset” or
“time phasing”
B C B C
Master schedule
Lead time = 4 for A Lead time = 6 for S for B
Master schedule for A Master schedule for S sold directly
Periods 5 6 7 8 9 10 11 8 9 10 11 12 13 1 2 3
40 50 15 40 20 30 10 10
Periods 1 2 3 4 5 6 7 8
Therefore, these are
40+10 15+30
Gross requirements: B 10 40 50 20 the gross
=50 =45
requirements for B
© 2014 Pearson Education, Inc. 14 - 22
Determining Gross
Requirements
▶ From the BOM, every Item A requires 2 Item Bs – 100
Item Bs are required in week 7 to satisfy the order
release for Item A
▶ The lead time for the Item B is 2 weeks – release an
order for 100 units of Item B in week 5
▶ The timing and quantity for component requirements
are determined by the order release of the parent(s)
TYPESETTER
JOB A B C
R-34 $11 $14 $ 6
S-66 $ 8 $10 $11
T-50 $ 9 $12 $ 7
Typesetter Typesetter
A B C A B C
Job Job
R-34 $ 5 $ 8 $ 0 R-34 $ 5 $ 6 $ 0
S-66 $ 0 $ 2 $ 3 S-66 $ 0 $ 0 $ 3
T-50 $ 2 $ 5 $ 0 T-50 $ 2 $ 3 $ 0
© 2014 Pearson Education, Inc. 15 - 34
Assignment Method: Example
The smallest uncovered number is 2
Step 2 - Lines so this is subtracted from all other
uncovered numbers and added to
Typesetter numbers at the intersection of lines
A B C
Job
R-34 $ 5 $ 6 $ 0 Step 3 - Subtraction
S-66 $ 0 $ 0 $ 3 Typesetter
T-50 $ 2 $ 3 $ 0 A B C
Job
Smallest uncovered number R-34 $ 3 $ 4 $ 0
Because only two lines are S-66 $ 0 $ 0 $ 5
needed to cover all the zeros, the T-50 $ 0 $ 1 $ 0
solution is not optimal
Subtract the smallest number not covered
by a line from all other uncovered numbers.
Add the same number to any number at the
© 2014 Pearson Education, Inc. 15 - 35
intersection of two lines
Assignment Method: Example
Step 2 - Lines Start by assigning R-34 to worker C as
this is the only possible assignment for
worker C.
Typesetter
A B C Job T-50 must go to
Job worker A as worker C is already
assigned. This leaves S-66 for worker
R-34 $ 3 $ 4 $ 0 B.
S-66 $ 0 $ 0 $ 5
T-50 $ 0 $ 1 $ 0 Step 4 - Assignments
Typesetter
Because three lines are needed,
the solution is optimal and A B C
assignments can be made Job
R-34 $ 3 $ 4 $ 0
S-66 $ 0 $ 0 $ 5
T-50 $ 0 $ 1 $ 0
© 2014 Pearson Education, Inc. 15 - 36
Assignment Method: Example
Typesetter Typesetter
A B C A B C
Job Job
R-34 $11 $14 $ 6 R-34 $ 3 $ 4 $ 0
S-66 $ 8 $10 $11 S-66 $ 0 $ 0 $ 5
T-50 $ 9 $12 $ 7 T-50 $ 0 $ 1 $ 0
Therefore, assign Job R-34 to Typesetter C, Job S-66 to Typesetter B, and Job T-
50 to Pearson
© 2014 Typesetter A with
Education, Inc. expected total cost of $25 15 - 37
Sequencing: Example 9
Five architectural rendering jobs are waiting to be assigned
at Avanti Sethi Architects. Their work (processing) times
and due dates are given in the following table. The firm
wants to determine the sequence of processing according
to (1) FCFS, (2) SPT, (3) EDD, and (4) LPT rules. Apply the
four popular sequencing rules to these five jobs
Summary of Rules
Average
Average Number of Average
Completion Utilization Jobs in Tardiness
Rule Time (Days) Metric (%) System (Days)
FCFS 15.4 36.4 2.75 2.2
Time 0 3 10 20 28 33
WC
1 B E D C A
Idle
WC
2
Job
completed
Using the sequences found before developed the time phased flow of the
job sequences at both machines.
© 2014 Pearson Education, Inc. 15 - 53
Johnson’s Rule Example
WORK CENTER 1 WORK CENTER
JOB (DRILL PRESS) 2 (LATHE)
A 5 2
B 3 6
C 8 4 B E D C A
D 10 7
E 7 12
Time 0 3 10 20 28 33
WC
1 B E D C A
Idle
WC
2 B E D C A
Job
Time 0 1 3 5 7 9 10 11 12 13 17 19 21 22 2325 27 29 31 33 35 completed
B E D C A
© 2014 Pearson Education, Inc. 15 - 54
Therefore, using the schedule the five jobs are completed within 35 hours
The End
Figure 14.6