Aayush Garg(G19051)

Syed Mohammad Haider Abbas Zaidi(G19097)

Rahul Udainia(G19083)
Debanu Mahapatra(G19061)

OOMM
ASSIGNMENT
Q1. Construct an aggregate plan better than the ones shown in the case. What do
you mean by a better plan?

The three alternatives given in the case, has its own merits and demerits, however we would like to
provide an intermediately solution as an optimum solution:-

The strategies discussed by Linda had their own advantages and disadvantages:

The first plan of holding production level and the workforce constant throughout the year at a sufficient
level although helps in providing a protection against unforeseen demand changes, It leads to high
inventory costs as well as outdated inventoried product.

The second plan of stable workforce and variable & fluctuating work time would solve the issue of not
dealing with inventory costs but it will result in lower efficiency as well as no unforeseen demands of the
product.

The third option of fluctuating workforce and constant rehiring and layoff will result in limited labor
market for the company as well as extra cost to deal with.

We suggest a mixed strategy to be adopted by the company of a level production with a stable working
force introducing variable working hours to meet the demand with the lowest cost possible.
This will include Forecasting production to anticipate unforeseen demand as well as a balancing act
between a stable workforce with distributed working hours.

Extra Labor Costs

Hiring Cost 109 * 1800 = $195750

Layoff Costs 124 * 1200 = 148500
Inventory Holding Costs 21460 * 8 = 171680
Labor Costs
Regular 2384*2400 = 5721600
Overtime 0 * 3300 = 0
Total Cost = 6237530

Q2. What criteria and assumptions did you use in constructing your plan?
Considering the business environment, the assumptions that need to be made in
order to analyze the system and solve the problem. These assumptions are listed
as follows:
○ Forecasts of the next year are reliable and correctly represent the
following year’s situation.
○ These reliable forecasts are reflected in the aggregate plan of the firm
correctly, in aggregate units.
○ Raw materials are available when they are required and acquisition of them is
not going to be a problem in the future.
○ Worker-hours are directly and fully contribute to production hours.

There are no special allowances for the training of new workers and all of the related
ones are considered in the related costs.

Q3. How flexible is your plan?

As our constraints are few, our plan is quite consistent as all our parameters have come
from formulae and the solver’s solution. We consider our solution to be flexible for all
made to order situations which can be made by adding constraints as necessary.
Q4. How would your plan change if MacPherson produced to order rather than to
stock?

As the objective would still be reduce total costs, we would focus on minimizing costs by reducing
overtime man hrs as it is the most expensive and also hire enough workers( minimize hiring and
layoff costs) to produce at full capacity at optimum times to minimize inventory holding costs also.