Three approaches to aggregate planning

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Reference no: EM13816114

3.  Aggregate planning.   

Joy Manufacturing problem.  Use Joy Manufacturing file spreadsheet for this option.

Joy Manufacturing is considering three approaches to aggregate planning: level production strategy, chase strategy, and constrained chase strategy.  The level production volume is set at 4000 units per month.  The chase strategy will involve matching demand with production required to meet the demand on a month by month basis.  The constrained chase strategy will work like the chase strategy except it has limits of a maximum of 125% of normal production and a minimum of 75% of normal production.  Costs per unit are listed below.

 

            Production cost                                    50

            Inventory holding cost                 2

            Cost of lost sales                                  75

            Overtime cost                                       30

            Under time cost                                    10

            Rate of production change cost   5

Monthly demand

            January                         2600

            February                                  3000

           March                                      3300

            April                                         3900

            May                                         4400

            June                                         4900

            July                                          5400

            August                                      5600

            September                                5100

            October                                   4500

            November                                4000

            December                                3300

                                    Total              50000

 

They are starting the year with an inventory of 3000 units (ending from previous period) and would like to have 1000 units at the end of the year.

Students will need to input the data above in the appropriate cells on the spreadsheet and then develop plans for the Chase and Constrained Chase options, in other words, the yellow cells.

A spreadsheet is provided for your use in the Lesson page.  The yellow-filled cells are those with missing items; the remaining cells are calculated by "formula."Remember finding the optimal solution for each option will require trial and error effort.

Reference no: EM13816114

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