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9/19 Agenda
6:00 7:15: Discuss cases (7-11, Guinness) and Ch. 4 7:15 7:30: Crash course on Linear Programming 7:30 8:15: Aggregate Production Planning example 8:30 9:30: Using Excels LP Solver for Aggregate Planning 9:30 10:00: Aggregate Planning investigation/experimentation Due next class (10/1): Case readings: World Co. & Wal-Mart Group Project: Specialty Packaging Corporation, Parts A&B
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Time
1 hr
1 hr
32 hr
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2 x y 60 x 2 y 50 x y 32 x, y 0
50 Time 32 25 String
Feasible Region
30
Wood
32
60
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50 Time 32 25 2 String
Feasible Region
30 32
Wood
60
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32
25
2 x y 60 x y 32 x 14, y 18
60
Feasible Region
30 32
Wood
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max 2 x 3 y st 2 x y 60 x 2 y 50 x y 32 x, y 0
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Inventory Backlog
/ lost sales
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in demand
Hire/layoff workforce
Buy/sell machinery/facilities
Low High
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low demand
Low inventory/stockout cost High overhead due to lower average utilization Need flexible/skilled workforce
S. Chopra / Demand Planning 11
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Maintain capacity and high utilization Manipulate Inventory/Stockout levels to meet changing
demand
High inventory/stockout cost Low operating costs due to efficiency (high utilization)
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12
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13
500 Lt 6 Ot 2 I t
t 1 6 t 1 t 1
5 S t 10 Pt 30 C t
t 1 t 1 t 1
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W W
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W t 1 H t Lt,
or
t 1
H t Lt W t 0
0
capacity
Ot 10 W t, 10 W t Ot 0, for t 1,..., 6.
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19
Scenarios
Increase
in holding cost (from $2 to $6) Overtime cost drops to $4.1 per hour Increased demand fluctuation
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20
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21
Supply
Manage capacity
Time flexibility from workforce (OT and otherwise) Use of seasonal workforce Use of subcontracting Flexible processes Counter cyclical products
Manage inventory
Component commonality Seasonal inventory of predictable products
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22
Discount of $1 increases period demand by 10% and moves 20% of next two months demand forward
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Demand Management
Pricing
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26
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27
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28
planning Supply and demand management during aggregate planning with predictable demand variation
Supply management levers Demand management levers
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29
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30
Inventory/Capacity tradeoff
Leveling
capacity forces inventory to build up in anticipation of seasonal variation in demand low levels of inventory requires capacity to vary with seasonal variation in demand or enough capacity to cover peak demand during season
Carrying
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31
Peak (April) Discount: 100% increase in consumption, sale price = $40 ($39)
Month January February March April May June Demand Forecast 1,600 3,000 3,200 8,480 1,760 1,760