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Aggregate planning Translates business plans into rough labor schedules and production plans
FEB
1,500 19
MAR APR
1,100 21 900 21
MAY
1,100 22
JUN
1,600 20
Total
8,000 125
Costs
Inventory holding Backorders $1.50/unit/month $5.00/unit/month
Inventory
Beginning Inventory 400 units
$200.00/worker
$250.00/worker 0.20 units/hour $4.00/hour
Labor
Beginning Labor 40 workers
Outsourcing
$20.00/unit
FEB
MAR
APR
MAY
JUN
Demand Forecast
Production requirement Ending Inventory
1,800
1,500
1,100
900
1,100
1,600
Production requirement = Forecast Beginning Inventory Ending Inventory = Beginning Inventory + Production Requirement Forecast
FEB
0
MAR
0
APR
0
MAY
0
JUN
0
Demand Forecast
Production requirement Ending Inventory
1,800
1,400 0
1,500
1,500 0
1,100
1,100 0
900
900 0
1,100
1,100 0
1,600
1,600 0
Production requirement
1,400
Workers required
Workers hired Hiring cost Workers laid off Layoff cost Labor cost
Production requirement
1,400
7,000
22 176
7,500
19 152
5,500
21 168
4,500
21 168
5,500
22 176
8,000
20 160
Workers required
Workers hired Hiring cost Workers laid off Layoff cost Labor cost
40
0 0 0 0 28,000
49
9 1800 0 0 30,000
33
0 0 16 4,000 22,000
27
0 0 6 1,500 18,000
31
4 800 0 0 22,000
50
19 3,800 0 0 32,000
Hiring cost
Layoff cost Labor cost Total Cost
6,400
5,500 152,000 163,900
Beginning inventory Working days per month Production hours available Monthly production level Demand Forecast Ending Inventory Shortage Cost Inventory cost Labor cost
400 22 19 21 21 22 20
1,800
1,500
1,100
900
1,100
1,600
400 22
6688
1,338 1,800 -62
5776
1,155 1,500 -407
6384
1,277 1,100 -230
6,384
1,277 900 147
6,688
1,338 1,100 385
6,080
1,216 1,600 1
Shortage Cost
Inventory cost Labor cost
310
0 26752
2035
0 23104
1150
0 25536
0
220.5 25536
0
577.5 26752
0
1.5 24320
Layoff cost
Shortage cost Inventory cost Labor cost Total Cost
500
3,495 798 152,000 156,793
Production requirement Working days per month Monthly production hours Monthly production level Monthly outsourcing level Monthly outsourcing cost Monthly labor cost
1,400 22
Production requirement Working days per month Monthly production hours Monthly production level Monthly outsourcing level Monthly outsourcing cost Monthly labor cost
3,250 44,160
Labor Cost
Total Cost
108,000
155,410
Comparison
Layoff cost Hiring cost Layoff cost 6,400 5,500 Shortage cost 500 3,495 798 152,000 156,793 Layoff Cost Outsourcing Cost Labor cost Total Cost 3,250
Inventory cost
Labor cost Total Cost
44,160
108,000 155,410
Labor cost
Total Cost
152,000
163,900
Chase
Level
Stable
Sensitivity Analysis
WHAT IF