Operation Management-Aggregate Planning

Allan Gunawan-Bram Manuel-Dewi Annisa Yakin-Teddy Hartanto

Our team decides that the best method from all those three (level, chase, level with
subcontract) is level with subcontract. Our decision is based on efficiency referring to total cost
that the company needs to pay where the method with the lowest cost will be chosen. Thus, among
three strategies, implementation of level combined with subcontract is the chosen one due to their
low number in total which is at Rp. 15,816,000. If we have to rank the second and third strategy,
it will be the level strategy which cost the company Rp. 22,688,000, followed by chase strategy
with total cost of Rp. 44,475,000 at the third place. Total cost of chase strategy is very high in this
case due to the high hire & layoff cost. Below are shown table of each strategy:
LEVEL STRATEGY
Juli Agustus September Oktober November December Total
Resources
Regular Workers 20 20 20 20 20 20
Units Produced 200 200 200 200 200 200 1200
Demand Projection 100 110 130 180 400 250 1170
Inventory (end of month) 100 190 260 280 80 30
Cost
Regular worker time Rp3,000,000 Rp3,000,000 Rp3,000,000 Rp3,000,000 Rp3,000,000 Rp3,000,000 Rp18,000,000
Hire/Layoff Rp1,500,000 Rp0 Rp0 Rp0 Rp0 Rp0 Rp1,500,000
Inventory Carrying Rp20,000 Rp38,000 Rp52,000 Rp56,000 Rp16,000 Rp6,000 Rp188,000
Material Cost Rp500,000 Rp500,000 Rp500,000 Rp500,000 Rp500,000 Rp500,000 Rp3,000,000
Total Cost Rp22,688,000

CHASE STRATEGY
Juli Agustus September Oktober November December Total
Resources
Regular Workers 10 11 13 18 40 25
Units Produced 100 110 130 180 400 250 1170
Demand Projection 100 110 130 180 400 250 1170
Inventory (end of month) 0 0 0 0 0 0
Cost
Regular worker time Rp1,500,000 Rp1,650,000 Rp1,950,000 Rp2,700,000 Rp6,000,000 Rp3,750,000 Rp17,550,000
Hire/Layoff Rp3,750,000 Rp300,000 Rp600,000 Rp1,500,000 Rp6,600,000 Rp11,250,000 Rp24,000,000
Inventory Carrying Rp0 Rp0 Rp0 Rp0 Rp0 Rp0 Rp0
Material Cost Rp250,000 Rp275,000 Rp325,000 Rp450,000 Rp1,000,000 Rp625,000 Rp2,925,000
Total Cost Rp44,475,000

LEVEL STRATEGY (W/ SUBCONTRACT)

Juli Agustus September Oktober November December Total
Resources
Regular Workers 15 15 15 15 15 15
Units Produced 150 150 150 150 150 150 900
Demand Projection 100 110 130 180 400 250 1170
Inventory (end of month) 50 90 110 80 0 0
Amount of Subcontract 0 0 0 0 170 100 270
Cost
Regular worker time Rp2,250,000 Rp2,250,000 Rp2,250,000 Rp2,250,000 Rp2,250,000 Rp2,250,000 Rp13,500,000
Hire/Layoff Rp0 Rp0 Rp0 Rp0 Rp0 Rp0 Rp0
Inventory Carrying Rp10,000 Rp18,000 Rp22,000 Rp16,000 Rp0 Rp0 Rp66,000
Material Cost Rp375,000 Rp375,000 Rp375,000 Rp375,000 Rp375,000 Rp375,000 Rp2,250,000
Subcontract Cost Rp0 Rp0 Rp0 Rp0 Rp595,000 Rp350,000 Rp945,000
Total Cost Rp15,816,000