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5-Aggregate_Planning_Part_III

# 5-Aggregate_Planning_Part_III - A GGREGATE PLANNING(AP...

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AGGREGATE PLANNING (AP) / SALES & OPERATIONS PLANNING (S&OP) PART III

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AP by Linear Programming Objective function: Cost minimization LP Model: subject to { } = + + + + + + T 1 t t S t U t O t R t I t F t H S c U c O c R c I c F c H c minimize T t 1 F H W W t t 1 t t - + = - T t 1 D - S P I I t t t 1 t t + + = - T t 1 U - O R P T t 1 W n K R t t t t t t t + = = T t 1 0 U , S , O , R , P , I , F , H , W t t t t t t t t t Spring 2010 2 IE 324 – AP / S&OP
AP by Linear Programming Extensions of the model: Minimium inventory level Production capacity Backorders allowed .. - + - = t t t I I I required) ock (safety st ss I t t t t C P Spring 2010 3 IE 324 – AP / S&OP

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AP by Linear Programming Extensions of the model: Convex piece-wise linear cost function can also be accepted. Example: unit overtime cost per hour increases after a certain number of overtime hours (O L ) C O1 < C O2 . Spring 2010 4 IE 324 – AP / S&OP  O L O t Total overtime cost, \$ C O2 C O1 Two new decision variables are to be introduced: O 1t and O 2t . Additional constraints: O t = O 1t + O 2t 0 O 1t O L 0 O 2t In the objective function: .... + Σ (C O1 O 1t + C O2 O 2t )+ ......
AP by Transportation Formulation Transportation formulation of the AP, when backorders are not permitted when backorders are permitted Spring 2010 5 IE 324 – AP / S&OP

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Disaggregating Aggregate Plans Aggregate planning is a top-down approach. Hence, to arrive at individual item plans, the AP is to be disaggregated into m aster p roduction s chedules (MPSs).
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5-Aggregate_Planning_Part_III - A GGREGATE PLANNING(AP...

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