Sheet1

Aggregate Planning
Demand Forecast
Month
January
February
March
April
May
June

Demand Forecast
100,000
110,000
130,000
180,000
250,000
300,000

Costs
Item
Materials cost/unit
Inventory holding cost/unit/month
Marginal cost of stockout/unit/month
Hiring and training cost/worker
Layoff cost/worker
Labor hours required/unit
Regular time cost/hour
Over time cost/hour
Marginal subcontracting cost/unit

Cost
$
$
$
$
$
$
$
$

12.00
2.00
10.00
3,000.00
5,000.00
0.25
15.00
22.50
18.00

Page 1

pricing

Aggregate Plan Decision Variables

Ht
# Hired

Period
0
1
2
3
4
5
6

Lt
# Laid off

0
0
0
0
0.00
0
0

0
8
0
0
0
0
0

Wt
Ot
It
St
# Workforce Overtime Inventory Stockout
300
0
50,000
292
0
0
292
0
0
292
0
56,240
292
0
63,120
292
0
0
292
11,680
0
1669
24194

Ct
Subcontract
0
0
0
0
0
0
0
0

Regular time Overtime Inventory Stockout

700,800
0
0
700,800
0
0
700,800
0
112,480
700,800
0
126,240
700,800
0
0
700,800
262,800
0

0
0
0
0
0
0

0
0
0
0
0
0
66,400
9486

Pt
Production
0
50,000
110,000
186,240
186,880
186,880
233,600

Aggregate Plan Costs

Period

Hiring
1
2
3
4
5
6

Lay off
0
0
0
0
0
0

40,000
0
0
0
0
0

Total Cost =

$ 17,384,720

Total Revenue =
Profit =

$ 53,500,000
$ 36,115,280

Page 2

Subcontract
0
0
0
0
0
1,195,200

Material
600,000
1,320,000
2,234,880
2,242,560
2,242,560
2,803,200

Demand
100,000
110,000
130,000
180,000
250,000
300,000

Price
50
50
50
50
50
50

Aggregate Plan
350,000

300,000

250,000

Inventory

200,000

Production
Demand
Stockout

150,000

Subcontracting

100,000

50,000

4
Period

Comparison at $5 discount

Ht

Lt

Wt

Ot

It

St

Ct

Pt

# Hired # Laid off # Workforce Overtime Inventory Stockout Subcontract Production

Base Case

31

19

2,050

25,000

50,000

50,000

970,000

Sandra

2,100

24,000

149,000

45,000

1,040,000

Bill

19

1,988

18,750

50,000

225,000

905,000

Ot

It

St

Ct

Pt

Comparison at $10 discount

Ht

Lt

Wt

# Hired # Laid off # Workforce Overtime Inventory Stockout Subcontract Production

Base Case

31

19

2,050

25,000

50,000

50,000

970,000

Sandra

2,100

24,000

149,000

45,000

1,040,000

Bill

19

1,988

18,750

50,000

225,000

905,000

Comparison at $5 discount and $22 marginal subcontracting Costs

Ht

Lt

Wt

Ot

It

St

Ct

Pt

# Hired # Laid off # Workforce Overtime Inventory Stockout Subcontract Production

Base Case

94

19

2,175

17,500

50,000

1,020,000

Sandra

30

2,165

25,294

168,111

1,085,000

Bill

94

2,383

15,778

246,444

1,130,000

Demand
1,070,000
1,135,000
1,180,000

Demand
1,070,000
1,135,000
1,180,000

Demand
1,070,000
1,135,000
1,180,000

Total Cost Total Revenues

$ 17,490,000 $ 53,500,000
$ 18,546,000 $ 55,130,000
$ 19,745,625 $ 57,425,000

Total Profit
$ 36,010,000
$ 36,584,000
$ 37,679,375

Total Cost Total Revenues

$ 17,490,000 $ 53,500,000
$ 18,546,000 $ 53,510,000
$ 19,745,625 $ 55,100,000

Total Profit
$ 36,010,000
$ 34,964,000
$ 35,354,375

Total Cost Total Revenues

$ 17,508,750 $ 53,500,000
$ 18,626,486 $ 55,130,000
$ 20,306,416 $ 57,425,000

Total Profit
$ 35,991,250
$ 36,503,514
$ 37,118,584

Sheet4

Subcontractor price does

not have a big
impact on action taken.

80
70
% Growth in Consumption

Sucontractor Price % Growth in Consumption

16
24
17
24.5
18
25.5
19
28
20
30.5
21
30.5
22
31.5

60
50

Implement Bill'
40
30
25.5

24.5

24
20

No Promotion

10
0
15

16

17

18

Subcontractor Pr

80
70
% Growth in Consumption

No Limit on Subcontractor Capacity

Discount Offered
% Growth in Consumption
5
25
6
33
7
41
8
49
9
57
10
65

60

Implement Bill's Plan

50
40
33

30
25
20
10
0
4

Page 6

Sheet4

Discount offere

80
70
% Growth in Consumption

Subcontractor capacity limited to 50,000

Discount Offered
% Growth in Consumption
5
29
6
37
7
44
8
52
9
61
10
74

60

Implement Bill's Plan

50
40

37

30

29

20
10
0
4

Discount Offere

Page 7

Sheet4

Implement Bill's Plan

30.5

28

25.5

31.5

30.5

No Promotion
19

20

21

22

23

Subcontractor Price

65
57

nt Bill's Plan
49
41

No Promotion

10

11
Page 8

Sheet4

10

11

Discount offered

74
61

Bill's Plan

52

44

No Promotion

10

11

Discount Offered

Page 9