Case: KT Beverage Inc.

Aggregate Planning

Scenario 1: Mixed Strategy in which certain levels of workers are used to produce the demand along with hiring and firing options.

Month

Forecast
(units)

Production
days

1
2
3
4
5
6
7
8
9
10
11
12

3,196,000
3,833,000
4,437,000
4,853,000
4,619,000
4,656,000
4,527,000
4,223,000
4,016,000
3,581,000
3,256,000
2,997,000

26
24
26
20
26
26
26
26
26
26
26
24

Cumulative
Production
Forecast
per worker
(Units)
3,196,000
7,029,000
11,466,000
16,319,000
20,938,000
25,594,000
30,121,000
34,344,000
38,360,000
41,941,000
45,197,000
48,194,000

130,000
120,000
130,000
100,000
130,000
130,000
130,000
130,000
130,000
130,000
130,000
120,000

Cumulative
production
per worker
(Units)

Worker
required
(cumulative
)

Number
of
worker
used

130,000
250,000
380,000
480,000
610,000
740,000
870,000
1,000,000
1,130,000
1,260,000
1,390,000
1,510,000

25
29
31
34
35
35
35
35
34
34
33
32

34
34
35
35
35
35
35
32
31
28
25
25

Production
by worker Cumulative
at Regular Production
time
(units)
(units)
4,420,000
4,420,000
4,080,000
8,500,000
4,550,000 13,050,000
3,500,000 16,550,000
4,550,000 21,100,000
4,550,000 25,650,000
4,550,000 30,200,000
4,160,000 34,360,000
4,030,000 38,390,000
3,640,000 42,030,000
3,250,000 45,280,000
3,000,000 48,280,000

Ending
Inventory
(Units)
1,224,000
1,471,000
1,584,000
231,000
162,000
56,000
79,000
16,000
30,000
89,000
83,000
86,000

Hiring

Firing

0
1
0
0
0
0
0
0
0
0
0

0
0
0
0
0
0
3
1
3
3
0

Scenario 1: Cost
Month

Salary

Hiring

Firing

Inventory
cost

1
2
3
4
5
6
7
8
9
10
11
12

272,000
272,000
280,000
280,000
280,000
280,000
280,000
256,000
248,000
224,000
200,000
200,000

0
0
30,000
0
0
0
0
0
0
0
0
0

0
0
0
0
0
0
0
150,000
50,000
150,000
150,000
0

122,400
147,100
158,400
23,100
16,200
5,600
7,900
1,600
3,000
8,900
8,300
8,600

Total
394,400
419,100
468,400
303,100
296,200
285,600
287,900
407,600
301,000
382,900
358,300
208,600
4,113,100

Scenario 2: Mixed Strategy in which certain levels of workers are used to produce the demand along with hiring and firing options.

Month

Forecast
(units)

Production
days

1
2
3
4
5
6
7
8
9
10
11
12

3,196,000
3,833,000
4,437,000
4,853,000
4,619,000
4,656,000
4,527,000
4,223,000
4,016,000
3,581,000
3,256,000
2,997,000

26
24
26
20
26
26
26
26
26
26
26
24

Cumulative
Production
Forecast
per worker
(Units)
3,196,000
7,029,000
11,466,000
16,319,000
20,938,000
25,594,000
30,121,000
34,344,000
38,360,000
41,941,000
45,197,000
48,194,000

130,000
120,000
130,000
100,000
130,000
130,000
130,000
130,000
130,000
130,000
130,000
120,000

Cumulative
production
per worker
(Units)

Worker
required
(cumulative
)

Number
of
worker
used

130,000
250,000
380,000
480,000
610,000
740,000
870,000
1,000,000
1,130,000
1,260,000
1,390,000
1,510,000

25
29
31
34
35
35
35
35
34
34
33
32

33
35
35
35
35
35
35
32
31
28
25
25

Production
by worker Cumulative
at Regular Production
time
(units)
(units)
4,290,000
4,290,000
4,200,000
8,490,000
4,550,000 13,040,000
3,500,000 16,540,000
4,550,000 21,090,000
4,550,000 25,640,000
4,550,000 30,190,000
4,160,000 34,350,000
4,030,000 38,380,000
3,640,000 42,020,000
3,250,000 45,270,000
3,000,000 48,270,000

Ending
Inventory
(Units)
1,094,000
1,461,000
1,574,000
221,000
152,000
46,000
69,000
6,000
20,000
79,000
73,000
76,000

Hiring

Firing

2
0
0
0
0
0
0
0
0
0
0

0
0
0
0
0
0
3
1
3
3
0

Scenario 2: Cost
Month
1
2
3
4
5
6
7
8
9
10
11
12

Salary
264,000
280,000
280,000
280,000
280,000
280,000
280,000
256,000
248,000
224,000
200,000
200,000

Hiring
0
60,000
0
0
0
0
0
0
0
0
0
0

Firing
0
0
0
0
0
0
0
150,000
50,000
150,000
150,000
0

Inventory
cost
109,400
146,100
157,400
22,100
15,200
4,600
6,900
600
2,000
7,900
7,300
7,600

Total
373,400
486,100
437,400
302,100
295,200
284,600
286,900
406,600
300,000
381,900
357,300
207,600
4,119,100

Scenario 3: Mixed Strategy in which certain levels of workers are used to produce the demand along with hiring and firing options.

Month

Forecast
(units)

Production
days

1
2
3
4
5
6
7
8
9
10
11
12

3,196,000
3,833,000
4,437,000
4,853,000
4,619,000
4,656,000
4,527,000
4,223,000
4,016,000
3,581,000
3,256,000
2,997,000

26
24
26
20
26
26
26
26
26
26
26
24

Cumulative
Production
Forecast
per worker
(Units)
3,196,000
7,029,000
11,466,000
16,319,000
20,938,000
25,594,000
30,121,000
34,344,000
38,360,000
41,941,000
45,197,000
48,194,000

130,000
120,000
130,000
100,000
130,000
130,000
130,000
130,000
130,000
130,000
130,000
120,000

Cumulative
production
per worker
(Units)

Worker
required
(cumulative
)

Number
of
worker
used

130,000
250,000
380,000
480,000
610,000
740,000
870,000
1,000,000
1,130,000
1,260,000
1,390,000
1,510,000

25
29
31
34
35
35
35
35
34
34
33
32

33
35
35
35
35
35
35
33
30
28
25
25

Production
by worker Cumulative
at Regular Production
time
(units)
(units)
4,290,000
4,290,000
4,200,000
8,490,000
4,550,000 13,040,000
3,500,000 16,540,000
4,550,000 21,090,000
4,550,000 25,640,000
4,550,000 30,190,000
4,290,000 34,480,000
3,900,000 38,380,000
3,640,000 42,020,000
3,250,000 45,270,000
3,000,000 48,270,000

Ending
Inventory
(Units)
1,094,000
1,461,000
1,574,000
221,000
152,000
46,000
69,000
136,000
20,000
79,000
73,000
76,000

Hiring

Firing

2
0
0
0
0
0
0
0
0
0
0

0
0
0
0
0
0
2
3
2
3
0

Scenario 3: Cost
Month
1
2
3
4
5
6
7
8
9
10
11
12

Salary
264,000
280,000
280,000
280,000
280,000
280,000
280,000
264,000
240,000
224,000
200,000
200,000

Hiring
0
60,000
0
0
0
0
0
0
0
0
0
0

Firing
0
0
0
0
0
0
0
100,000
150,000
100,000
150,000
0

Inventory
cost
109,400
146,100
157,400
22,100
15,200
4,600
6,900
13,600
2,000
7,900
7,300
7,600

Total
373,400
486,100
437,400
302,100
295,200
284,600
286,900
377,600
392,000
331,900
357,300
207,600
4,132,100

Scenario 4: Mixed Strategy in which certain levels of workers are used to produce the demand along with hiring and firing options.

Month

Forecast
(units)

Production
days

1
2
3
4
5
6
7
8
9
10
11
12

3,196,000
3,833,000
4,437,000
4,853,000
4,619,000
4,656,000
4,527,000
4,223,000
4,016,000
3,581,000
3,256,000
2,997,000

26
24
26
20
26
26
26
26
26
26
26
24

Cumulative
Production
Forecast
per worker
(Units)
3,196,000
7,029,000
11,466,000
16,319,000
20,938,000
25,594,000
30,121,000
34,344,000
38,360,000
41,941,000
45,197,000
48,194,000

130,000
120,000
130,000
100,000
130,000
130,000
130,000
130,000
130,000
130,000
130,000
120,000

Cumulative
production
per worker
(Units)

Worker
required
(cumulative
)

Number
of
worker
used

130,000
250,000
380,000
480,000
610,000
740,000
870,000
1,000,000
1,130,000
1,260,000
1,390,000
1,510,000

25
29
31
34
35
35
35
35
34
34
33
32

34
34
35
35
35
35
35
33
30
28
25
25

Production
by worker Cumulative
at Regular Production
time
(units)
(units)
4,420,000
4,420,000
4,080,000
8,500,000
4,550,000 13,050,000
3,500,000 16,550,000
4,550,000 21,100,000
4,550,000 25,650,000
4,550,000 30,200,000
4,290,000 34,490,000
3,900,000 38,390,000
3,640,000 42,030,000
3,250,000 45,280,000
3,000,000 48,280,000

Ending
Inventory
(Units)
1,224,000
1,471,000
1,584,000
231,000
162,000
56,000
79,000
146,000
30,000
89,000
83,000
86,000

Hiring

Firing

0
1
0
0
0
0
0
0
0
0
0

0
0
0
0
0
0
2
3
2
3
0

Scenario 4: Cost
Month
1
2
3
4
5
6
7
8
9
10
11
12

Salary
272,000
272,000
280,000
280,000
280,000
280,000
280,000
264,000
240,000
224,000
200,000
200,000

Hiring
0
0
30,000
0
0
0
0
0
0
0
0
0

Firing
0
0
0
0
0
0
0
100,000
150,000
100,000
150,000
0

Inventory
cost
122,400
147,100
158,400
23,100
16,200
5,600
7,900
14,600
3,000
8,900
8,300
8,600

394,400
419,100
468,400
303,100
296,200
285,600
287,900
378,600
393,000
332,900
358,300
208,600
4,126,100

Scenario 5: Mixed Strategy in which certain levels of workers are used to produce the demand along with outsourcing options.

Month

Forecast
(units)

Production
days

1
2
3
4
5
6
7
8
9
10
11
12

3,196,000
3,833,000
4,437,000
4,853,000
4,619,000
4,656,000
4,527,000
4,223,000
4,016,000
3,581,000
3,256,000
2,997,000

26
24
26
20
26
26
26
26
26
26
26
24

Cumulative
Production
Forecast
per worker
(Units)
3,196,000
7,029,000
11,466,000
16,319,000
20,938,000
25,594,000
30,121,000
34,344,000
38,360,000
41,941,000
45,197,000
48,194,000

130,000
120,000
130,000
100,000
130,000
130,000
130,000
130,000
130,000
130,000
130,000
120,000

Cumulative
production
per worker
(Units)

Worker
required
(cumulative
)

Number
of
worker
used

130,000
250,000
380,000
480,000
610,000
740,000
870,000
1,000,000
1,130,000
1,260,000
1,390,000
1,510,000

25
29
31
34
35
35
35
35
34
34
33
32

32
32
32
32
32
32
32
32
32
32
32
32

Production
by worker Cumulative
at Regular Production
time
(units)
(units)
4,160,000
4,160,000
3,840,000
8,000,000
4,160,000 12,160,000
3,200,000 15,360,000
4,160,000 19,520,000
4,160,000 23,680,000
4,160,000 27,840,000
4,160,000 32,000,000
4,160,000 36,160,000
4,160,000 40,320,000
4,160,000 44,480,000
3,840,000 48,320,000

Ending
Inventory
(Units)

Shortage
(Units)

964,000
971,000
694,000
0
0
0
0
0
0
0
0
126,000

0
0
0
959,000
1,418,000
1,914,000
2,281,000
2,344,000
2,200,000
1,621,000
717,000
0

Scenario 5: Cost
Month
1
2
3
4
5
6
7
8
9
10
11
12

Salary
256,000
256,000
256,000
256,000
256,000
256,000
256,000
256,000
256,000
256,000
256,000
256,000

Shortage
cost
0
0
0
239,750
354,500
478,500
570,250
586,000
550,000
405,250
179,250
0

Inventory
cost
96,400
97,100
69,400
0
0
0
0
0
0
0
0
12,600

Total
352,400
353,100
325,400
495,750
610,500
734,500
826,250
842,000
806,000
661,250
435,250
268,600
6,711,000

Cost Comparison:
Scenario

Mixed Strategy with

Total Cost

Scenario 1

Hiring & Firing

4,113,100

Scenario 2

Hiring & Firing

4,119,100

Scenario 3

Hiring & Firing

4,132,100

Scenario 4

Hiring & Firing

4,126,100

Scenario 5

Outsourcing

6,711,000

A better Plan

Cost Comparison:
Scenario

Mixed Strategy with

Total Cost

Scenario 1

Hiring & Firing

4,113,100

Scenario 2

Hiring & Firing

4,119,100

Scenario 3

Hiring & Firing

4,132,100

Scenario 4

Hiring & Firing

4,126,100

A better Plan