Capacity Planning

Capacity Planning Example

Expected Monetary Value (EMV) and Minimax Regret Criteria
Payoff Table (Profits)
('000)

Decision

Probabilities
Build New Store
Expand Old Store
Do Nothing

Market
Upturn
50%
$19
$15
$5

State
Stable
Market
Market Downturn
30%
20%
$4
($4)
$5
($3)
$1
($1)

EMV
$9.90
$8.40
$2.60

Market
Upturn
$0
$4
$14

State
Stable
Market
Market Downturn
$1
$3
$0
$2
$4
$0

Max
Regret
$3
$4
$14

Regret Table

Decision

Build New Store

Expand Old Store
Do Nothing

POM97pre

Best

Best

Aggregate Planning Example

Data
Beginning Inventory
Beginning Workers
St. Time Hrs. per worker per month
Max. OT Hours per worker per month
Hiring Cost per worker
Layoff Cost per worker
St. Time Pay per worker per hour
OT Pay per worker per hour
Labor Hours per unit produced
Raw Materials Cost per unit
Holding cost per unit per month
Shortage Cost per unit per month
Subcontracting Cost per unit
Staffing Plan
Month
Workers from Previous Month
Workers Hired
Workers Laid Off
Workers after Hire and Layoff

0
518
160
40
$4,000
$5,000
$18
$25
4
$10
$2
$5
$120

1
518
0
0
518
>=
0

2
518
0
0
518
>=
0

3
518
0
0
518
>=
0

4
518
0
0
518
>=
0

Max OT Labor Hrs Available

82880
<=
82880
0
<=
20720

82880
<=
82880
0
<=
20720

82880
<=
82880
0
<=
20720

82880
<=
82880
7280
<=
20720

82880
82880
<=
<=
82880
82880
13840 -2.274E-013
<=
<=
20720
20720

Total Production Hours Used

82880

82880

82880

90160

96720

Production Plan
Month
Units Produced on St. Time
Units Produced on OT
Total Units Produced

1
20720
0
20720

2
20720
0
20720

3
20720
0
20720

4
20720
1820
22540

5
6
20720
20720
3460 -5.684E-014
24180
20720

11000

15500

31500

26700

30300

11600

126600

9720
0
9720
=
9720

14940
0
14940
=
14940

4160
0
4160
=
4160

0
0
0
=
0

0
6120
-6120
=
-6120

3000
0
3000
=
3000
>=
3000

1
$0
$0
$1,491,840
$0
$207,200
$19,440
$0
$0
$1,718,480

2
$0
$0
$1,491,840
$0
$207,200
$29,880
$0
$0
$1,728,920

3
$0
$0
$1,491,840
$0
$207,200
$8,320
$0
$0
$1,707,360

4
$0
$0
$1,491,840
$182,000
$225,400
$0
$0
$0
$1,899,240

5
$0
$0
$1,491,840
$346,000
$241,800
$0
$30,600
$0
$2,110,240

6
$0
$0
$1,491,840
$0
$207,200
$6,000
$0
$0
$1,705,040

Minimum Workers
St. Time Hours Used
St. Time Hours Available
Overtime Hours Used

Units Subcontracted
Demand
Held in Inventory
Shortage
Net Left
Ending Inventory

5
518
0
0
518
>=
0

Meet End Inv. Requirement

Cost Summary
Month
Hiring Cost
Layoff Cost
St. Time Labor Cost
OT Labor Cost
Raw Material Cost
Holding Cost
Shortage Cost
Subcontracting Cost
Totals by Month
Grand Total Cost

$10,869,280

6
518
0
0
518
>=
0

82880

Totals
124320
5280
129600

Totals
$0
$0
$8,951,040
$528,000
$1,296,000
$63,640
$30,600
$0
$10,869,280