IE 3265 Production Operations Planning

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IE 3265 Production & Operations Planning Ch. 3 – Aggregate Planning R. Lindeke UMD

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Aggregate Planning Strategies Should inventories be utilized to ingest changes sought after amid arranging period? Ought to request changes be obliged by shifting the span of the workforce? Ought to part-clocks be utilized, or ought to extra time as well as machine sit out of gear time be utilized to assimilate vacillations? Ought to subcontractors be utilized on fluctuating requests so a steady workforce can be kept up? Ought to costs or different elements be changed to impact request?

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Introduction to Aggregate Planning Goal: To arrange net work constrain levels and set expansive creation arranges Concept is predicated on the possibility of a " total unit " of generation as we will see later

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Overview of the Aggregation Problem Suppose that D 1 , D 2 , . . . , D T are the conjectures of interest for total units over the arranging skyline (T periods.) The issue is to decide both work drive levels (W t ) and creation levels (P t ) to minimize add up to costs over the T time frame arranging skyline.

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Important Issues Smoothing. Alludes to the expenses and interruptions that come about because of rolling out improvements starting with one period then onto the next Bottleneck Planning . Issue of taking care of pinnacle demand notwithstanding limit confinements Planning Horizon . Expected given (T), yet what is "correct" esteem? Moving skylines and end of skyline impact are both imperative issues Treatment of Demand . Accept request is known. Overlooks vulnerability to concentrate on the anticipated or precise varieties popular, for example, regularity

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Relevant Costs Smoothing Costs changing size of the work compel changing number of units delivered Holding Costs essential segment: opportunity cost of speculation $'s tied up in stock Shortage Costs Cost of interest surpassing stock close by. Why ought to deficiencies be an issue if request is known? Different Costs: finance, extra time, subcontracting

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Aggregate Units The strategy is (in a general sense) in light of idea of total units. They might be: Actual units of creation Weight (huge amounts of steel) Volume (gallons of fuel) Dollars (Value of offers) Fictitious collected units they are a composite that gauges a substantial 'info steady'

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Developing total units (Example 3.1) One plant delivered 6 models of clothes washers: Model # hrs. Cost % deals A 5532 4.2 285 32 K 4242 4.9 345 21 L 9898 5.1 395 17 L 3800 5.2 425 14 M 2624 5.4 525 10 M 3880 5.8 725 06 Question: How would we characterize a total unit here?

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Example (proceeded with) Notice: Price is not really relative to specialist hours (i.e., cost): why? For totaling, we can utilize singular item request estimates changed with a weighted normal (deals weights) of individual thing figures to build up a total creation conjecture

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This Aggregate Units needs a quantifiable Labor Input: Thus, Agg. Request = .32*(D A5532 ) + .21(D K4242 ) + … + .06(D M3880 ) This technique for characterizing a total unit focuses to a total work necessity (/Agg. Unit) of: .32(4.2) + .21(4.9) + . . . + .06(5.8) = 4.8644 specialist hours

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Prototype Aggregate Planning Example The clothes washer plant is occupied with deciding work constrain and creation levels for the following 8 months. Guage total requests for Jan-Aug. are: 420, 280, 460, 190, 310, 145, 110, 125. Beginning stock toward the end of December is 200 and the firm might want to have 100 units close by toward the end of August. Discover month to month creation levels.

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Step 1: Determine "net" request. (subtract beginning inv. from period. 1 figure and include finishing inv. to per. 8 gauge.) Month Net Predicted Cum. Net Demand Demand 1(Jan) 220 220 2(Feb) 280 500 3(Mar) 460 960 4(Apr) 190 1150 5(May) 310 1460 6(June) 145 1605 7(July) 110 1715 8(Aug) 225 1940

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Step 2. Diagram Cumulative Net Demand to Find Plans Graphically Cum. Net Demand

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Constant Work Force Plan Suppose that we are occupied with deciding a generation plan that doesn't change the extent of the workforce over the arranging skyline. How might we do that? One strategy: In past picture, draw a straight line from source to 1940 units in month 8: The slant of the line is the quantity of units to deliver every month.

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Monthly Production = 1940/8 = 242.2 or adjusted to 243/month. In any case, see: there are stockouts!

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How Can We Have A Constant Work Force Plan With No Stockouts? Reply: utilizing the chart, locate the straight line that experiences the starting point and lies totally over the aggregate net request bend!

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From The Previous Graph, We See That Cum. Net Demand Curve Is Crossed At Period 3: Use month to month generation of 960/3 = 320. Finishing stock every month is found from: C. Nudge – C.N. Dem. Month Cum. Net. Dem. Cum. Goad. Imagine. 1(Jan) 220 320 100 2(Feb) 500 640 140 3(Mar) 960 960 0 4(Apr.) 1150 1280 130 5(May) 1460 1600 140 6(June) 1605 1920 315 7(July) 1715 2240 525 8(Aug) 1940 2560 620

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But - This Solution May Not Be Realistic For Several Reasons: It may not be conceivable to accomplish the creation level of 320 unit/mo with a whole number of specialists Since all months don't have a similar number of workdays, a consistent generation level may not mean a similar number of laborers every month!

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To Overcome These Shortcomings: Assume number of workdays every month is given (sensible!) Compute a "K calculate" given by: K = number of total units delivered by one laborer in one day

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Finding K Suppose that we are informed that over a time of 40 days, the plant had 38 specialists who created 520 units. It takes after then that: K= 520/(38*40) = .3421 normal number of units delivered by one specialist in one day.

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Computing Constant Work Force - Realistically Assume we are given the accompanying # working days every month: 22, 16, 23, 20, 21, 22, 21, 22. Walk is still the basic month. Cum. net request through March = 960. Cum # working days = 22+16+23 = 61. We find that: 960/61 = 15.7377 units/day 15.7377/.3421 = 46 specialists required Actually 46.003 – here we truncate on the grounds that we are set to fabricate stock so the low number ought to work (look at for March stock) – anyway we should utilize mind and normally 'round up' any fragmentary laborer computations in this way assembling more stock

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Why again did we single out March? Inspecting the chart we see that that was the "Trigger point" where our consistent generation line crossed the total request line guaranteeing NO STOCKOUTS! Could we "demonstrate" this is ideal?

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Tabulate Days/Production Per Worker Vs. Request To Find Minimum Numbers

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What Should We Look At? Combined Demand says March needs most laborers – yet will mean building inventories in Jan + Feb to satisfy the more noteworthy March request If we keep this number of specialists we will keep on building stock through whatever is left of the arrangement!

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Constant Work Force Production Plan: Mon # wk days Pr. Cum Cum N. End Level Prod Dem Inv Jan 22 346 346 220 126 Feb 16 252 598 500 98 Mar 23 362 960 960 0 Apr 20 315 1275 1150 125 May 21 330 1605 1460 145 Jun 22 346 1951 1605 346 Jul 21 330 2281 1715 566 Aug 22 346 2627 1940 687

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Lets Add a few Costs Holding Cost (per unit every month): $8.50 Hiring Cost per specialist: $800 Firing Cost per laborer: $1,250 Payroll Cost: $75/laborer/day Shortage Cost: $50 unit short/month

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Cost Evaluation for Constant Work Force Plan Assume that the work compel at end of Dec was 40 Cost to contract 6 laborers: 6*800 = $4800 Inventory Cost: aggregate completion stock: (126+98+0+. . .+687) = 2093. Include 100 units netted out in Aug = 2193. Henceforth Inv. Taken a toll = 2193*8.5=$18,640.50 Payroll cost: ($75/specialist/day)(46 laborers )(167days) = $576,150 Cost of plan: $576,150 + $18,640.50 + $4800 = $599,590.50

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An Alternative is known as the "Pursuit Plan" Here, we contract and terminate (cutback) laborers to keep stock low! We would utilize just the quantity of specialists required every month to take care of demand Examining our outline (prior) we require: Jan: 30; Feb: 51; Mar: 59; Apr: 27; May: 43 Jun: 20; Jul: 15; Aug: 30 Found by: (month to month request)  ( month to month pr. /specialist)

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An Alternative is known as the "Pursuit Plan" So we contract or Fire (lay-off) month to month Jan (begins with 40 laborers): Fire 10 (cost $8000) Feb: Hire 21 (cost $16800) Mar: Hire 8 (cost $6400) Apr: Fire 31 (cost $38750) May: Hire 15 (cost $12000) Jun: Fire 23 (cost $28750) Jul: Fire 5 (cost $6250) Aug: Hire 15 (cost $12000) Total Personnel Costs: $128950

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An Alternative is known as the "Pursuit Plan" Inventory cost is basically 165*8.5 = $1402.50 Employment costs: $428325 Chase Plan Total: $558677.50 Betters the "Consistent Workforce Plan" by: 599590.50 – 558677.50 = 40913 But will this be useful for your picture? Can we locate a superior arrangement?

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Before We look for an Optimal … Lets attempt this approach In your building groups, do: Problem 31, page 147

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Cost Reduction in Constant Work Force Plan & Chase Plan In the first C. N. request bend, consider making diminishments in the work drive (at least one times) over the arranging skyline to decline stock venture.

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Cost Evaluation of Modified Plan The altered arrangement calls for decreasing the workforce to 36 toward the begin of April and making another lessening to 22 toward the begin of June. The extra cost of cutbacks is $30,000 But, here the holding expenses are diminished to just $4,250 Here then the aggregate cost of the adjusted arrangement is (just) $467,450.

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Optimal Solutions to Aggreg