AGGREGATE PLANNING

SALES AND OPERATION PLANNING Mrs. Domiguez, the owner of Wash Quarters, aim to increase their profit. Also, the goal of the business is to make it bigger and to expand it. For them to attain these missions, she is planning to create branches in other places, especially in Bacood, Sta.Mesa in Manila City. The business should enhance their competitive advantage to increase their customer number. They should also have advertising and promotion. Wash Quarters attracts customers by reducing prices lower than the average and giving the service that customers want. The Wash Quarters gives importance to the quality of service they provide. Employees are improved through the use of job rotation. They are trained to the most efficient and pleasing way in serving the customers. They also acquire high-tech machine, which is the automatic washing machine and a dryer which helps improve the service process. Wash Quarters produces exactly what is needed to satisfy the demand during the period. They hire and fire employees every time the demand changes. Wash Quarters uses Chase Aggregate Planning and a Capacity-Based Option. The production rate changes in response to the demand fluctuations.

Developing an Aggregate Plan

STEP 1: Choose the kind of aggregate plan. Wash Quarters use a Chase Aggregate Plan. They produce exactly what is needed to satisfy demand during each period. The workforce is taking overtime and under time. STEP 2: Calculate the production rate. The Regular time hours available each period is 1 080 hours (4 employees x 270 hours per employee). The overtime is needed depending on the number of expected

demand. For each period, we calculate the service hours needed each period by multiplying the demand by the standard time. In fair weather we need 3519 hours to meet the demand (1836 kilograms multiply by the 115 minutes or 1.916666667 standard). STEP 3: Calculate the workforce. The beginning workforce of 4 employees and a 270 regular time available. STEP 4: Test and cost the plan. We calculate the regular time labor cost of 129 600 by multiplying the total regular time capacity of 12 960 by the labor cost of 10.00 per hour. STEP 5: Evaluate the plan. The per unit cost in this plan is P10.00 (129 600/12 960). This plan proposed to have a more efficient labor work time. Due to this efficiency, we have reduced the labor cost of the operation.

Cost Data: Regular-time labor cost per hour Overtime cost per hour Capacity Data: Beginning Workforce (employees) Standard Time (hours) Regular time available (hours) Demand Data (kilograms) Fair Weather Summer Season Rainy Season Total Number of Period

10 10

4 1.916666667 270

1836 2384 732 12

Chase Aggregate Planning Using Overtime and Undertime

Beginning Number of Employee
Detail Plan Computation

4 PERIOD
Jan. (Fair) Feb. (Fair) Mar. (Fair Apr.
(sumner)

May
(Summer)

Jun. (Fair)

Jul. (Fair)

Aug (rainy)

Sept. (rainy)

Oct. (Fair)

Nov. (Fair)

Dec. (Fair)

Total

Demand (kilogram) Service Hours Needed Regular Time hours of capacity Overtime hours Under time hours Cost calculation Regular time labor cost Overtime cost Under time cost Total cost

1836 3519

1836 3519

1836 3519

2384 4569.33

2384 4569.33

1836 3519

1836 3519

732 1403

732 1403

1836 3519

1836 3519

1836 3519

20920 400096. 66 12960

1080

1080

1080

1080

1080

1080

1080

1080

1080

1080

1080

1080

2439 0

2439 0

2439 0

3489.33 0

3489.33 0

2439 0

2439 0

323 0

323 0

2439 0

2439 0

2439 0

27136.6 6 0

129 600 271 366.60 0 400 966.60