Aggregate Planning

Student’s Name:

Institution:

 LEVEL PRODUCTION STRATEGY

We are going to find the requirements for the entire period of the plan and also produce the average amount that is needed per month in order to meet the plan.

First we are going to determine the total average requirements per month:

Avg. requirements = total number of requirements – opening inv. + closing inv.

Periods

Avg. requirements, therefore = (9000 – 700 + 100)/6 = 1400 units/period

Steps:

Entering the production data

We will then determine the hire/fire rate to get to production level that is desired

All inventory levels will then be updated

We will also check whether the inventory is going to run out – If it does recalculate average production needed and go to step 1

Calculate totals for each category

Calculate costs

Period 1 2 3 4 5 6 Total

Req. 1000 1200 1000+500 1900 1000+800 1600 9000

Prod.              

(700) inv.              

Hire              

Fire              

Sub.              

LEVEL STRATEGY

Costs:

Regular production costs:

Inventory carrying costs:

Hiring Costs:

TOTAL Incurred COSTS: _________

The aggregate planning that we are going to carry out will among other things attempt to match the level of bike supply to demand. It is going to determine the required quantities and the timing of inputs as well as outputs. There will also be making decisions on production, inventory, staffing and backorder levels.

The following are the forecasts for demand to meet:

Month 1 2 3 4 5 6

Demand (number of bikes) 1000 1200 1500 1900 1800 16001600

Relevant Costs:

Regular production cost $35/unit

Lost sales $100/unit

Inventory carrying costs $10/unit/month

Subcontracting costs $60/unit

Hiring costs $1500/worker

Firing costs $3000/worker

Beginning workforce level 20 workers

Capacity per worker 50 units/month

Initial inventory level 700 units

Closing inventory level 100 units

CHASE STRATEGY

We are going to manage to produce what will be duly required in every period.

We will also hire and fire so as to adjust the monthly production to the requirements per month.

The entire of the first and last period production levels are adjusted to account for opening inventory and closing inventory requirements.

Period 1 2 3 4 5 months 6 months Total

Requirement. 1000 1200 bikes 1500 1900 bikes 1800 1600 9000

Prod.              

Inv.(700)              

Hire              

Fire              

Sub.              

Costs:

After all this has been done, the following fields are going to be filled:

Regular production costs:

Inventory carrying costs:

Hiring Costs:

Firing Costs:

TOTAL COSTS: _____________