DE

Demand forecast
Number of working days

Inventory holding cost

Marginal cost of stockout
Hiring and training cost
Layoff cost
Labor hours required
Straight time cost (first eight hours each day)
Overtime Cost ( up to 2 hours each day

INV
Beginning Inventory
Safety Stock

Agregate Production
Beginning inventory
Demand Forecast
ss
Production Requirement ( Demand Forecast +Safety Stock- Beginning Inventory)
Ending Inventory (Beginning Inventory + Production Requirement- Demand Forecast)

PRODUCTION PLAN 1: EXACT PRODUCTION, VARY WORKFORCE

Production Requirement
Production hours required
Working days per quarter
Hours per quarter line (Working days x 7,5 hrs/day)
Lines required
Workers required
New workers hired (assuming opening workforce equal to first month's reqiurement of 10 workers)
Hiring ( New workers hired x $5000)
Workers laid off
Layoff Cost
Straight time cost (production cost required x $20)

PRODUCTION PLAN 2: CONSTANT WORKFORCE; VARY INVENTORY AND STOCKOUT

Beginning Inventory

Working days per quarter

Prodution hours available (working days per quarter x 8hr/ day x 10.614 line)*
Actual Production ( Production hours available/ 0,002381 hr/unit)
Demand Forecast
Ending Inventory
Shortage Cost (Units short x $2.40)
Safety Stock
Units Excess
Inventory Cost (Units excess x 0,25)
Straight time cost

* Sum of production requirement (line)

PRODUCTION PLAN 3: CONSTANT WORKFORCE; OVERTIME

Beginning Inventory
Working days per quarter
Prodution hours available (working days per quarter x 7,5 hr/ day x line)
Regular shift Production
Demand Forecast
Units available before overtime ( beginning inventory + regular shift production -demand forecsat)
Units overtime
Overtime cost
Safety stock
Unit excess
Inventory cost
Straight time cost

Number of line*
Line determined by solver

AND WORKING DAYS

1st Quarter
2000000
65

2nd Quarter
2200000
65

3rd Quarter
2500000
65

4th Quarter
2650000
66

per case per year

per case
per worker
per worker
per unit
per hour
per hour

$0.25

per case per quarter

`
COSTS
$1
$2.40
$5,000
$3,000
0.0022222222
$20
$30

Y
200000
0

Sales forecast is perfect

ng Reqiurements
1st Quarter
200000
2000000
307693
2107693
338000

2nd Quarter
338000
2200000
338462
2200462
385000

3rd Quarter
385000
2500000
384616
2499616
408000

4th Quarter
408000
2650000
407693
2649693
338000

1st Quarter
2138000
4751.111
65
487.5
9.746
58
0
$0
0
$0
$95,022

2nd Quarter
2247000
4993.333
65
487.5
10.243
61
3
$15,000
0
$0
$99,867

3rd Quarter
2523000
5606.667
65
487.5
11.501
69
8
$40,000
0
$0
$112,133

4th Quarter
2580000
5733.333
65
487.5
11.761
71
2
$10,000
0
$0
$114,667
Total Cost

1st Quarter
200000

2nd Quarter
338000

3rd Quarter
385000

4th Quarter
408000

65
5174.542
2328544
2000000
528544
$0
0
528544
$132,136
$103,491

65
5174.542
2328544
2200000
466544
$0
0
466544
$116,636
$103,491

65
5174.542
2328544
2500000
213544
$0
0
213544
$53,386
$103,491

65
5174.542
2328544
2650000
86544
$0
0
86544
$21,636
$103,491
Total Cost

2nd Quarter
641502
65
5426
2441502
2200000
883005
0
0
0
883005
$220,751
$108,511

3rd Quarter
883005
65
5426
2441502
2500000
824507
0
0
0
824507
$206,127
$108,511

4th Quarter
824507
66
5509
2479064
2650000
653571
0
0
0
653571
$163,393
$110,181
Total Cost

10.614

1st Quarter
200000
65
5426
2441502
2000000
641502
0
0
0
641502
$160,376
$108,511

11.1293559569

Total
9350000
261
better customer service
llower inventory
shorten customer lead times
stabilize production rates
give management a handle to the bsiness

307693

Total

$65,000
$0
$421,689
$486,689

Total

338462

384616

407693

$0

$323,794
$413,963
$737,757

Total

$750,647
$435,714
$1,186,361

Costs
Hiring
Layoff
Excess inventory
Shortage
Subcontract
Overtime
Straight time

Comparison of three plan

Plan 1
Plan 2
$65,000
$0
$0
$0
$0
$323,794
$0
$0
$0
$0
$0
$0
$421,689
$413,963
$486,689
$737,757

Plan 3
$0
$0
$750,647
$0
$0
$0
$435,714
$1,186,361