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Tutorial - Aggregate Planning

This document provides information about aggregate planning for two different companies. The first case outlines demand forecasts and costs for Raymond Apparel to plan production over 12 months using different strategies including regular time, overtime, and subcontracting. The second case provides similar information for a medical supply manufacturer to develop a 6-month production plan using either a chase demand strategy or a mixed strategy of regular time supplemented by overtime and subcontracting while maintaining workforce.

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Shibani Shashin
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59 views2 pages

Tutorial - Aggregate Planning

This document provides information about aggregate planning for two different companies. The first case outlines demand forecasts and costs for Raymond Apparel to plan production over 12 months using different strategies including regular time, overtime, and subcontracting. The second case provides similar information for a medical supply manufacturer to develop a 6-month production plan using either a chase demand strategy or a mixed strategy of regular time supplemented by overtime and subcontracting while maintaining workforce.

Uploaded by

Shibani Shashin
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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ME 307 - Principles of Industrial Engineering

Tutorial 02 – Aggregate planning

1. Raymond Apparel needs help planning production for next year. Demand for
certain line of clothing follows a seasonal pattern, as shown here. Given the
following costs and demand forecasts, test these four strategies for meeting
demand:
Month Demand Forecast
January 1000
February 500
March 500
April 2000
May 3000
June 4000
July 5000
August 3000
September 1000
October 500
November 500
December 3000

Beginning workforce 8 workers


Subcontracting capacity unlimited
Overtime capacity 2000 units/month
Production rate per worker 250 units/month
Regular wage rate Rs.150 per unit
Overtime wage rate Rs.250 per unit
Subcontracting cost Rs.300 per unit
Hiring cost Rs.1000 per worker
Firing cost Rs.2000 per worker
Holding cost Rs.10 per unit/month
Backordering cost Rs.100 per unit/month

2. A manufacturer of medical supplies uses aggregate planning to set labour and


inventory levels for the year. While a variety of items are produced, a
standard kit composed of basic supplies is used for planning purposes.
Demand varies with seasonal illnesses and the quarterly ordering policies of
hospitals. The average worker at factory can produce 1000 kits a month at a
cost of Rs.100 per kit during regular production hours and Rs.150 a kit during

IIT Indore
overtime production. Completed kits can also be purchased from outside
suppliers at Rs.200 each. Inventory carrying costs are Rs.20 per kit per month.
Overtime is limited to regular production, but subcontracting is unlimited.
Due to high quality standards and extensive training, hiring, and firing costs
are Rs.15000 per worker. The manufacturer currently employs 25 workers.
Given the demand forecast below, develop a six-month aggregate production
plan for Manufacturer using (a) chase demand and (b) a mixed strategy where
the current workforce is kept for April through August, and supplemented
with overtime and subcontracting as needed.
Month Demand
April 60000
May 22000
June 15000
July 46000
August 80000
September 15000

IIT Indore

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