Aggregate planning

Plans
1. Chase strategy (zero inventory)
We will consume the entire purchased inventory by the end of the month (i.e. at the beginning of each
month the inventory is zero).
2. Uniform strategy (constant workforce).
3. Mixed strategy.

Tutorial 3 problem 1
Toy

Assembly Time (min) fraction

1
3 0.076923
2
8 0.205128
3
6 0.153846
4
4 0.102564
5
8 0.205128
6
10 0.25641
sum
39
1
Assembly time for one aggregate unit is 39 minutes
t
D(t)

x
(

t
D(t)

1
460

2
466.7

)
3

460.5

4
534.87

Another approach is based on thinking of the aggregate unit as an average product at an average assembly time

Assembly time of aggregate unit is 6.5 minute

Toy
1
2
3
4
5
6
Average

t
D(t)

Assembly Time (min)

3
8
6
4
8
10
6.5

1
2750
(

2
2800

fraction
0.461538
1.230769
0.923077
0.615385
1.230769
1.538462
6

3
2763

4
3209

Problem 2
We first calculate the average selling price per unit and use this measure to represent the selling price of the
aggregate unit. Then we calculate the equivalent units for each product as the ratio between its selling price and the
selling price of the aggregate units.

Toy
1
2
3
4
5
6

Equivalent
Assembly Time (min) selling price unit
3
10
0.260869565
8
40
1.043478261
6
20
0.52173913
4
20
0.52173913
8
60
1.565217391
10
80
2.086956522
Sum
230
Average
38.33333333

Selling price of one aggregate unit = LE 38.33

t
1
2
D(t)
2749
2911
The demand of aggregate units at

3
2885.2

4
3307

Average demand of aggregate unit=

Since the assembly is not proportional to the unit selling price per unit of aggregate product will be evaluated for
each quarter separately. This is done by multiplying the demand of each product by its assembly time then summing
up the results for all products and dividing the summation by the demand value in aggregate units in the given
period.

t
Assembly time

1
6.52

2
6.25

3
6.22

4
6.31

Problem 4
mont deman cumulative
h
d
demand
1
30
2
60
3
55
4
55
5
50
6
45
7
40
8
70
9
95
10
260
11
240
12
200

30
90
145
200
250
295
335
405
500
760
1000
1200

Productio cumulative
n
production
30
60
55
55
50
45
40
70
95
260
240
200

30
90
145
200
250
295
335
405
500
760
1000
1200

I_ Number of
t
workers
0
0
0
0
0
0
0
0
0
0
0
0

10
20
19
19
17
15
14
24
32
87
80
67

hire fire
d
d
0
10
10
0
0
1
0
0
0
2
0
2
0
1
10
0
8
0
55
0
0
7
0
13

Cost plan

For 1200/12=100
month demand cumulative demand Production cumulative production
1
30
30
100
100
2
60
90
100
200
3
55
145
100
300
4
55
200
100
400
5
50
250
100
500
6
45
295
100
600
7
40
335
100
700
8
70
405
100
800
9
95
500
100
900
10
260
760
100
1000
11
240
1000
100
1100
12
200
1200
100
1200

I_t No of workers
hired fired
70
34
14
0
110
34
0
0
155
34
0
0
200
34
0
0
250
34
0
0
305
34
0
0
365
34
0
0
395
34
0
0
400
34
0
0
240
34
0
0
100
34
0
0
0
34
0
0

Mixed strategy
1400
1200
1000
800

commulative demand

600

Uniform stategy
Mixed Cumulative

400
200
0
0

Production period 1 to 8 =
Production period 8 to 12 =
Cost=655600

10

12

14