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CHAPTER 11
AGGREGATE PLANNING AND MASTER SCHEDULING
Teaching Notes
In the earlier chapters, we have looked at certain problems that involve long range planning such as
facility location, layout and major equipment purchase decisions. Aggregate planning involves medium
range planning. The planning horizon for medium range plans varies from a couple of months to 18
months. A major component of aggregate planning is to plan aggregate production and inventory levels to
achieve a desired level of customer service. In preparing the aggregate plan, a major consideration is to
check the desired production plan against the estimated capacity. On the other hand, in determining the
estimated capacity, we must take into account the expected demand and the resulting medium range
production plan.
We use the term aggregate plan in lieu of medium range production plan for two reasons:
1. It generally involves the production plan for a group or a family of products (aggregation of
products).
2. It aggregates daily or weekly (short-range) demand and the resulting production plan
(aggregation of time periods).
Even though the aggregate plan is a function of many different factors, the key factor is the forecasted
demand over the length of the medium-range planning horizon. After developing an aggregate plan
consistent with the forecasted demand and capacity, it is disaggregated into shorter time periods. The
process of disaggregation is the beginning of short range planning using master scheduling and operations
scheduling. Both master scheduling and operations scheduling are designed to implement the medium
range plan on the shop floor.
In determining the aggregate plan, integration and communication between various functions of the firm
are vital. Expected changes in the work force levels need to be communicated to the human resources
department, while any major equipment purchases, layout changes and capacity additions must involve
the approval of the finance department. On the other hand, changes in anticipated inventory levels and
especially, expected stockouts must be discussed with the marketing department.
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Chapter 11 - Aggregate Planning and Master Scheduling
3. Aggregate planning involves developing a general plan for employment, output, and
inventory levels. The goal is to develop a plan which makes efficient use of the resources of an
organization. Planners attempt to determine the best way to meet forecasting demand
requirements within the constraints imposed by long-term decisions.
4. The need for aggregate planning is to begin to translate long-term decisions into short-
term operating plans. Aggregate planning constitutes the intermediate step in this process.
5. In both manufacturing and service, managers can vary the size of the workforce and
subcontract work. Manufacturers have the additional option of varying the size of inventories.
6. The difficulty relates to finding a common unit on which to base aggregate plans when
there are a variety of products or services to contend with.
7. a. Maintaining a constant workforce has the advantage of making estimation of labor costs
relatively easy, is good for morale, and minimizes hiring and layoff costs. However, inventory
carrying costs tend to be high.
b. Since labor force has to be continually adjusted, hiring and layoff costs tend to be high. Due
to the instability of the labor force, employee morale is low. However, the inventory carrying
costs are very low because production is matched with demand, resulting in little or no
inventory.
c. Varying the workforce can cause morale problems. Moreover, working overtime
generally is less productive, increases quality problems, and increases the risk of accidents.
8. Informal techniques are visual, easy to comprehend, and enable planners to compare
alternatives. Their chief limitation is that they do not necessarily produce optimum solutions.
9. a. Spreadsheets are intuitively appealing and easy to understand, but solutions are not
necessarily optimal.
b. Linear Programming (LP): LP approach is a method of obtaining optimal solutions to problems
involving allocation of limited resources. The objective of linear programming is either
maximization of profit or minimization of cost. In Aggregate Planning, the objective is usually
the minimization of costs related to labor time (regular and overtime), inventory carrying, hiring
and layoffs. LP is a valid approach if the cost and variable relationships and assumptions are
linear and demand can be treated as deterministic. Even for fairly small problems, LP approach
requires computerization due to massive data manipulation and calculations.
c. Simulation: It is a highly flexible computerized trial-and-error approach that provides
testing of the model under different conditions, assumptions or scenarios. It provides a what-
if capability to identify possible options to a given aggregate planning problem based on
trial-and-error. Simulation requires the use of the computer. Therefore, computer
programming and customization of different conditions and scenarios may be time
consuming.
10. The master schedule has three inputs: the beginning inventory, forecasts for each period
of the schedule, and customer outputs. Its outputs are projected inventory, production
requirements, and uncommitted (available-to-promise) inventory.
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Chapter 11 - Aggregate Planning and Master Scheduling
11. Aggregate planning helps managers establish plans for inputs and outputs and employment level
and budgets for the intermediate term. The plans involve collaboration among finance,
operations, marketing, sales, and human resources personnel. It helps to get everyone on the
same page. And, it establishes a basic framework for the intermediate term, which is
particularly important when changes are called for because changes typically take time to
implement.
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Chapter 11 - Aggregate Planning and Master Scheduling
Taking Stock
1. When we freeze a portion of the master schedule, we make the schedule more stable and reduce the
nervousness of the schedule. However, freezing the schedule also leads to inflexibility and
reduced customer service because we will not be able to respond to the demands of the customers
in a timely fashion.
2. Purchasing agents, production planning and control manager, planners, schedulers, and marketing
personnel need to interface with the master schedule. Purchasing agents, planners and schedulers
need direct information from the MPS to order the parts, manage the inventories of the parts and
schedule the machines in producing the parts going into the end items master scheduled. The
production planning and control manager needs the MPS information to determine capacity needs of
the labor, machinery and equipment. Marketing personnel need this information so that they could let
their customers know if there is a delay in the completion of an order. In the case of capacity
constrained manufacturing, marketing personnel also need to provide the master scheduler with key
information as to which orders to delay and which orders are crucial to try to complete on time.
3. The new communication tools made it easier to communicate changes in the master schedule.
Therefore, when a change is necessary in the master schedule (addition or a deletion of an order,
change in the due date or the quantity of an order), it can be communicated to the master
scheduler faster through new communication tools (e-mail, fax, etc.). The master scheduler can
take this information, and through the utilization of a computerized production planning and
control system, incorporate the changes to the schedule (assuming the changes are feasible). After
incorporating the changes and making sure that the MPS is feasible he/she can disseminate the
information to the appropriate parties and to the shop floor very quickly so that the manufacturing
system can respond to the changes in a timely fashion.
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Chapter 11 - Aggregate Planning and Master Scheduling
Aggregate Planning determines the level of output for a given service or product by managing the
capacity using different production strategies. After it is developed, Aggregate Planning is
disaggregated into separate products and shorter time periods. An important feature of Aggregate
Planning is that the Master Schedule is formed by disaggregating it. In other words, it serves as
the basis of the Master Schedule (MRP) and the resulting detailed shop floor schedule. The
absence of a clear aggregate plan can cause serious problems in capacity planning, workforce
scheduling, customer service and production efficiency.
2. Chase strategy matches production with varying demand rates. This strategy involves
either varying the workforce levels or varying the capacity by using either overtime or
subcontracting. The primary advantage of using Chase strategy is that inventory carrying cost is
minimized. The main disadvantage is the additional cost of changing the workforce level (hiring,
layoffs and employee morale) or the cost of overtime/subcontracting.
Level strategy maintains a constant workforce and constant production. It has the advantage of
minimizing hiring and layoff costs and keeping employee morale high. However, inventory
carrying costs tend to be high.
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Chapter 11 - Aggregate Planning and Master Scheduling
Solutions
1.
From example 1.
Period 1 2 3 4 5 6 Total
Forecast 200 200 300 400 500 200 1,800
Output
Regular 300 300 300 0 450 450 1,800
Overtime
Subcontract
Output-
Forecast 100 100 0 (400) (50) 250
Inventory
Beginning 0 100 200 200 0 0
Costs:
Output
Regular $600 600 600 0 900 900 3,600
Overtime
Subcontract
Inventory 50 150 200 100 0 0 500
Backorder @ 5 0 0 0 1,000 1,250 0 2,250
Costs:
Regular @ 2 $580 580 580 580 580 580 $3,480
Overtime @ 3 0 0 60 60 60 0 180
Inventory @ 1 45 135 185 145 50 0 560
Backorder @ 5 0 0 0 0 450 0 450
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Costs:
Regular @ 2 $580 580 580 580 580 580 $3,480
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Chapter 11 - Aggregate Planning and Master Scheduling
3.
Period 1 2 3 4 5 6 Total
Forecast 200 200 300 400 500 200 1,800
Output
Regular 280 280 280 280 280 280 1,680
Overtime 0 0 40 40 40 0 120
Subcontract 0 0 0 0 0 0 0
Output-
Forecast 80 80 20 (80) (180) 80
Inventory
Beginning 0 80 160 180 100 0
Ending 80 160 180 100 0 0
Average 40 120 170 140 50 0 520
Backlog 0 0 0 0 80 0 80
Costs:
Output
Regular @ 2 $560 560 560 560 560 560 $3,360
Overtime @ 3 0 0 120 120 120 0 360
Subcontract @ 6 0 0 0 0 0 0 0
Inventory @ 1 40 120 170 140 50 0 520
Backorder @ 5 0 0 0 0 400 0 400
Costs:
Regular @ 2 $560 560 560 560 560 560 $3,360
Subcontract @ 6 0 0 120 300 300 0 720
Inventory @ 1 40 120 160 125 45 0 490
Backorder @ 5 0 0 0 0 400 0 400
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5. a.
Period 1 2 3 4 5 6 7 8 Total
Forecast 120 135 140 120 125 125 140 135 1,040
Output
Regular 120 130 130 120 125 125 130 130 1,010
Overtime 5 10 10 5 30
Subcontract
Output - Forecast 0 (5) (10) 0 0 0 (10) (5)
Inventory
Beginning
Ending
Average
Backlog
Costs:
Output
Regular @ 60 $7,200 7,800 7,800 7,200 7,500 7,500 7,800 7,800 $60,600
Overtime @ 90 450 900 900 450 2,700
Subcontract
Inventory @ 5
Backorder
Total 7,200 8,250 8,700 7,200 7,500 7,500 8,700 8,250 $63,300
b.
Period 1 2 3 4 5 6 7 8 Total
Forecast 120 135 140 120 125 125 140 135 1,040
Output
Regular 130 130 130 130 130 130 130 130 1,040
Overtime
Subcontract
Output - Forecast 10 (5) (10) 10 5 5 (10) (5)
Inventory
Beginning 0 10 5 0 5 10 15 5
Ending 10 5 0 5 10 15 5 0
Average 5 7.5 2.5 2.5 7.5 12.5 10 2.5
Backlog 5
Costs:
Output
Regular @ 60 $7,800 7,800 7,800 7,800 7,800 7,800 7,800 7,800 $62,400
Overtime
Subcontract @ 50
Inventory @ $2 10 15 5 5 15 25 20 5 100
Backorder @ $90 450 450
Total $7,810 7,815 8,255 7,805 7,815 7,825 7,820 7,805 $62,950
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Chapter 11 - Aggregate Planning and Master Scheduling
6. a.
Period 1 2 3 4 5 6 7 Total
Forecast 250 300 250 300 280 275 270
Output
Regular 250 275 250 275 275 275 250 1,850
Overtime 25 25 5 20 75
Subcontract
Output - Forecast
Inventory
Beginning
Ending
Average
Backlog
Costs:
Output
Regular @ 40 $10,000 11,000 10,000 11,000 11,000 11,000 10,000 $74,000
Overtime @ 60 1,500 1,500 300 1,200 4,500
Subcontract
Inventory
Backorder
Total $10,000 12,500 10,000 12,500 11,300 11,000 11,200 $78,500
b.
Period 1 2 3 4 5 6 7 Total
Forecast 250 300 250 300 280 275 270 1,925
Output
Regular 275 275 275 275 275 275 250 1,900
Overtime
Subcontract 5 20 25
Output - Forecast 25 25 25 25 0 0 0
Inventory
Beginning 0 25 0 25 0 0 0
Ending 25 0 25 0 0 0 0
Average 12.5 12.5 12.5 12.5 0 0 0 50
Backlog 0 0 0 0 0 0 0 0
Costs:
Regular 11,000 11,000 11,000 11,000 11,000 11,000 10,000 76,000
Overtime 0
Subcontract 250 1,000 1,250
Inventory 25 25 25 25 100
Backorder 0
Total 11,025 11,025 11,025 11,025 11,250 11,000 11,000 77,350
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b. Level strategy
Period Mar. Apr. May Jun. July Aug. Sep. Total
Forecast 50 44 55 60 50 40 51 350
Output
Regular 40 40 40 40 40 40 40 280
Overtime 8 8 8 8 8 8 8 56
Subcontract 2 2 2 2 2 2 2 14
Output - Forecast 0 6 5 10 0 10 1
Inventory
Beginning 0 0 6 1 0 0 1
Ending 0 6 1 0 0 1 0
Average 0 3 3.5 .5 0 .5 .5 8
Backlog 0 0 0 9 9 0 0 18
Costs:
Regular 3,200 3,200 3,200 3,200 3,200 3,200 3,200 22,400
Overtime 960 960 960 960 960 960 960 6,720
Subcontract 280 280 280 280 280 280 280 1,960
Inventory 30 35 5 0 5 5 80
Backlog 180 180 360
Total 4,440 4,470 4,475 4,625 4,620 4,445 4,445 31,520
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Chapter 11 - Aggregate Planning and Master Scheduling
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Chapter 11 - Aggregate Planning and Master Scheduling
We should choose the plan generated in part a because $350,800 < 353,700 < 356,200.
9.
Period 1 2 3 4 5 6 Total
Forecast 160 150 160 180 170 140 960
Output
Regular 150 150 150 150 160 160 920
Overtime 10 10 0 10 10 10 50
Subcontract 0 0 10 10 0 0 20
Output- Forecast 0 10 0 10 0 0
Inventory
Beginning 0 0 10 10 0 0
Ending 0 10 10 0 0 0
Average 0 5 10 5 0 0 20
Backlog 0 0 0 0 0 0 0
Costs:
Regular 7,500 7,500 7,500 7,500 8,000 8,000 46,000
Overtime 750 750 0 750 750 750 3,750
Subcontract 0 0 800 800 0 0 1,600
Inventory 20 40 20 80
Backlog 0 0 0 0 0 0
Total 8,250 8,270 8,340 9,070 9,050 8,750 51,430
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Chapter 11 - Aggregate Planning and Master Scheduling
Costs:
Output
Regular @ 6 $1,260 1,260 1,260 1,260 1,260 1,260 1,260 1,260 1,260 $11,340
Overtime
Subcontract @ 8 80 160 160 0 0 0 0 0 0 $400
Inventory @ 5 75 150 75 0 0 0 50 50 0 $400
Backorder @ 10 0 0 0 700 700 300 0 300 0 $2,000
Total $1,415 1,570 1,495 1,960 1,960 1,560 1,310 1,610 1,260 $14,140
The total cost for Plan B is $14,140 plus $200 to hire one additional worker. Total = $14,340.
Plan C: No additional workers are to be hired. It is assumed that the present workforce is retained. Only
subcontracting is to be used with a maximum of 20 per period.
Period 1 2 3 4 5 6 7 8 9 Total
Forecast 190 230 260 280 210 170 160 260 180 1,940
Output
Regular 200 200 200 200 200 200 200 200 200 1,800
Overtime
Subcontract 20 20 20 20 20 20 0 20 0 140
Output-
Forecast 30 (10) (40) (60) 10 50 40 (40) 20
Inventory
Beginning 0 30 20 0 0 0 0 20 0
Ending 30 20 0 0 0 0 20 0 0
Average 15 25 10 0 0 0 10 10 0 70
Backlog 0 0 20 80 70 20 0 20 0 210
Costs:
Output
Regular @ 6 $1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 $10,800
Overtime
Subcontract @ 8 160 160 160 160 160 160 0 160 0 $1,120
Inventory @ 5 75 125 50 0 0 0 50 50 0 $350
Backorder @ 10 0 0 200 800 700 200 0 200 0 $2,100
Total $1,435 1,485 1,610 2,160 2,060 1,560 1,250 1,610 1,200 $14,370
Plan Total Cost Rank
A $14,290 3
B 14,370 2
C 14,370 1
The lowest cost is for Plan A = $14,290.
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Chapter 11 - Aggregate Planning and Master Scheduling
11. Assume that the $5 cost per unit for the temporary workers is in addition to $6 per unit for regular
time cost. Part-time workers are to be hired to produce at least 170 units.
Period 1 2 3 4 5 6 7 8 9 Total
Forecast 190 230 260 280 210 170 160 260 180 1,940
Output
Regular 200 200 200 200 200 200 200 200 200 1,800
Part-Time 50 50 50 150
Subcontract
Output-
Forecast 10 20 (10) (30) (10) 30 40 (60) 20
Inventory
Beginning 0 10 30 20 0 0 10 50 0
Ending 10 30 20 0 0 10 50 0 10
Average 5 20 25 10 0 5 30 25 5 125
Backlog 0 0 0 10 20 0 0 10 0 40
Costs:
Output
Regular @ 6 $1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 $10,800
Part-Time @ 11 550 550 550 $1,650
Subcontract
Inventory @ 5 25 100 125 50 0 25 150 125 25 $625
Backorder @ 10 0 0 0 100 200 0 0 100 0 $400
Total $1,225 1,850 1,875 1,900 1,400 1,225 1,350 1,425 1,225 $13,475
20 x 9 = 180 The same number of part-time workers must be used in any period where they are used.
30 x 6 = 180 It is assumed that a worker (part-time) will work for the entire period producing 10 units.
40 x 5 = 200 With these constraints it is necessary to produce more than 170 units by using part-time
50 x 4 = 200 workers. Employ 5 temporary workers during periods 2, 3, and 4 with a total cost of
60 x 3 = 180
70 x 3 = 210 $13,475.
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Chapter 11 - Aggregate Planning and Master Scheduling
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Chapter 11 - Aggregate Planning and Master Scheduling
Period 1 2 3 4 5 6 7 8 9 Total
Forecast 190 230 260 280 210 170 160 260 180 1,940
Output
Regular 210 210 210 210 210 180 180 180 180 1,770
Overtime 10 25 25 10 70
Subcontract 20 20 20 20 20 100
Output-
Forecast 20 10 (5) (25) 0 10 40 (50) 0
Inventory
Beginning 0 20 30 25 0 0 10 50 0
Ending 20 30 25 0 0 10 50 0 0
Average 10 25 27.5 12.5 0 5 30 25 0 135
Backlog 0 0 0 0 0 0 0 0 0
Costs:
Output
Regular @ 6 $1,260 1,260 1,260 1,260 1,260 1,080 1,080 1,080 1080 $10,620
Overtime @ 9 0 90 225 225 0 0 0 90 0 $630
Subcontract @ 8 0 160 160 160 0 0 160 160 0 $800
Hiring @ 200 200 0 0 0 0 0 0 0 0 $200
Layoff-firing @100 0 0 0 0 0 300 0 0 0 $300
Inventory @ 5 50 125 137.5 62.5 0 25 150 125 0 $675
Backorder @ 10 0 0 0 0 0 0 0 0 0 $0
Total 1,510 1,635 1,782.5 1,707.5 1,260 1,405 1,390 1,455 1,080 $13,225
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Chapter 11 - Aggregate Planning and Master Scheduling
14.
1 0 1 91
Period 1 2 3 Unused Cap Total
+1 Beg. Inv. 0 1 2 0
100 0 0 90 100
61 Reg. 60 61 62 0
450 50 0 30 500
81 1 Over. 80 81 82 0
0 50 0 10 50
91 Sub. 90 91 92 0
0 30 0 90 120
60 Reg. 63 60 61 0
4 500 0 31 500
80 2 Over. 83 80 81 0
4 50 0 11 50
90 Sub. 93 90 91 0
4 20 100 1 120
59 Reg. 66 63 60 0
8 4 500 32 500
79 3 Over. 86 83 80 0
8 4 50 12 50
89 Sub. 96 93 90 0
8 4 100 2 100
Demand 550 700 750 90 2,090
15.
2 0 2 92 Total
Period 1 2 3 4 Cap.
21 Beg. Inv. 0 2 4 0
100 0 0 +90 100
62 Reg. 60 62 64 0
450 50 0 +30 500
82 1 Over. 80 82 84 0
0 50 0 +10 50
92 Sub. 90 92 94 0
0 0 30 90 120
60 Reg. 63 60 62 0
5 500 0 +32 500
80 2 Over. 83 80 82 0
5 50 0 +12 50
90 Sub. 93 90 92 0
5 50 70 +2 120
58 Reg. 66 63 60 0
10 5 500 +34 500
78 3 Over. 86 83 80 0
10 5 50 +14 50
88 Sub. 96 93 90 0
10 5 100 +4 100
Demand 550 700 750 90 2,090
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Chapter 11 - Aggregate Planning and Master Scheduling
16.
Number of sources: 10 Number of destinations: 4
Destinations
1 2 3 4 Supply
1 0 1 2 0 100
2 60 61 62 0 500
3 80 81 82 0 50
4 90 91 92 0 120
5 63 60 61 0 500
Sources 6 83 80 81 0 50
7 93 90 91 0 120
8 66 63 60 0 440
9 86 83 80 0 50
10 96 93 90 0 100
Demand 550 700 750 30
Iteration: 3 Total cost: $126,650
Destinations
1 2 3 4 Supply
1 ( 100 ) 0 0 90 100
2 ( 450 ) ( 50 ) 0 30 500
3 0 ( 50 ) 0 10 50
4 0 ( 90 ) 0 ( 30 ) 120
5 4 ( 500 ) 0 31 500
Sources 6 4 ( 10 ) ( 40 ) 11 50
7 4 0 ( 120 ) 1 120
8 8 4 ( 440 ) 32 440
9 8 4 ( 50 ) 12 50
10 8 4 ( 100 ) 2 100
Optimal solution:
Iteration: 3
Total shipping cost : $126,650
Ship 100 units from source 1 to dest. 1
Ship 450 units from source 2 to dest. 1
Ship 50 units from source 2 to dest. 2
Ship 50 units from source 3 to dest. 2
Ship 90 units from source 4 to dest. 2
Ship 500 units from source 5 to dest. 2
Ship 30 units from source 4 to dest. 4
Ship 40 units from source 6 to dest. 3
Ship 120 units from source 7 to dest. 3
Ship 440 units from source 8 to dest. 3
Ship 50 units from source 9 to dest. 3
Ship 100 units from source 10 to dest. 3
Ship 10 units from source 6 to dest. 2
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Chapter 11 - Aggregate Planning and Master Scheduling
17.
Number of sources: 10 Number of destinations: 4
Destinations
1 2 3 4 Supply
1 0 2 4 0 100
2 60 62 64 0 500
3 80 82 84 0 50
4 90 92 94 0 120
5 63 60 62 0 500
Sources 6 83 80 82 0 50
7 93 90 92 0 120
8 66 63 60 0 440
9 86 83 80 0 50
10 96 93 90 0 100
Optimal solution:
Iteration: 3
Total shipping cost: $127,00
Ship 100 units from source 1 to dest. 1
Ship 450 units from source 2 to dest. 1
Ship 50 units from source 2 to dest. 2
Ship 50 units from source 3 to dest. 2
Ship 90 units from source 4 to dest. 2
Ship 500 units from source 5 to dest. 2
Ship 30 units from source 4 to dest. 4
Ship 40 units from source 6 to dest. 3
Ship 120 units from source 7 to dest. 3
Ship 440 units from source 8 to dest. 3
Ship 50 units from source 9 to dest. 3
Ship 100 units from source 10 to dest. 3
Ship 10 units from source 6 to dest. 2
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18. a. Initially, David should develop one aggregate plan for the next six months in
order to determine his output rate, employment levels and changes, inventory levels and changes,
back orders, and subcontracting. This will help him to achieve a plan that will more effectively
and efficiently utilize the organizations resources to satisfy expected demand. For the first two
months though, David will need to disaggregate his plan into a short-run master schedule for each
size wheel. Adjustments will be made in the planning process as needs arise over time and the
planning horizon gets shorter.
b. and c.
Nov. Dec. Jan. Feb. Mar. April Total
Forecast 1,500 1,400 900 1,200 1,500 1,700 8,200
Output Reg. 1,400 1,400 1,400 1,400 1,400 1,400 8,400
Output
17 17 17 17 17 15 100
Overtime
Output
Minus (83) 17 517 217 (83) (285) 300
Forecast
Inventory
0 0 0 451 668 585 300
Begin
Ending 0 0 451 668 585 300
Average 0 0 225.5 559.5 626.5 442.5 1,854
Backlog 83 66 0 0 0 0 149.0
Cost Reg. 7,000 7,000 7,000 7,000 7,000 7,000 42,000
Overtime 127.50 127.50 127.50 127.50 127.50 112.50 750
Inventory 0 0 225.50 559.5 626.5 442.5 1,854
Backorders $498 396 0 0 0 0 894
Personnel
800.00 800
Layoffs
Totals $8,425.50 $7,523.50 $7,353.00 $7,687 $7,754 $7,555 $46,298
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21.
June July
1 2 3 4 5 6 7 8
Forecast 50 50 50 50 50 50 50 50
Customer
52 35 20 12
Orders
Projected
on-hand 23 48 73 23 48 73 23 48
inventory
MPS 75 75 75 75 75 75
ATP 23 40 43 75 75 75
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Chapter 11 - Aggregate Planning and Master Scheduling
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Chapter 11 - Aggregate Planning and Master Scheduling
Since $4,660 < $4,680 < $4,740, the company should choose the third strategy.
2. Suppliers would need to know projections of initial demand and demand growth over time, and
product characteristics that would relate to new materials and new methods so they could prepare for
the new line. They, in turn, would need to collaborate with their suppliers. Transportation partners
would need to be made aware of changes in transportation requirements. Information sharing is
important to be sure supply partners can adjust to the changes. However, ideally, supply chain
partners should be consulted prior to committing to a new line so they can contribute ideas and any
cautions.
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