BU395 - Final ExamAID Slides Winter 2011

BU395 - Final ExamAID Slides Winter 2011 - BU395 –...

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Unformatted text preview: BU395 – Operations Management II Final Exam Review Tutor: Tim Savini Tutor: Tim Savini Provided by: Laurier SOS Provided by: Laurier SOS 1 Aggregate Planning 3 Overall Concept • Game plan to meet demand over the intermediate time horizon (1-18 months) – Goal: Make as much \$\$\$ as possible ow uch o we want to influence demand or • How much do we want to influence demand or change capacity and how? – Should we vary output to match demand or hold it constant? – Should we offer discounts when sales are slow? 4 Things to consider… • Smoothing Costs – changing size of the workforce – changing number of units produced olding Costs • Holding Costs – Mainly the opportunity cost of investment • Shortage Costs – Cost of demand exceeding the stock on hand • Other Costs: payroll, overtime, subcontracting 5 Short Example • Taylor Tool is trying to decide how many bolts they should produce to meet the next 3 quarters of demand. Is it cheaper to vary demand or hold it constant? Quarter Sales Forecast Summer 70,000 6 Fall 60,000 Winter 110,000 Hiring Cost Firing Cost Inventory cost Production Cost Output per Employee Current Workforce size =\$500 per worker =\$1800 per worker =\$1 per bolt/quarter =\$3 per bolt =2000 per worker =40 workers Solution Quarter Sales Production Plan Ending Inventory Workers Needed Workers Hired Workers Laid Off Summer 70,000 80,000 10,000 40-- Fall 60,000 80,000 30,000 40-- Winter 110,000 80,000- 40-- Level Production: 7 Quarter Sales Production Plan Ending Inventory Workers Needed Workers Hired Workers Laid Off Summer 70,000 70,000- 35- 5 Fall 60,000 60,000- 30- 5 Winter 110,000 110,000- 55 25- Chasing Demand: Total Costs = 240,000x\$3 + 10,000x\$1 + 30,000x\$1 = \$760,000 Total Costs = 240,000x\$3 + 5x\$500 + 5x\$500 + 25x\$1800 = \$770,000 Modeling Aggregate Planning • Create an objective function which minimizes relevant costs: – Hiring, Firing, Regular Production, Overtime Production, Subcontracted Production, Idle time, Inventory Holding asic Constraints: • Basic Constraints: – Workers : Current period = last period + hired – laid off – Inventory : Current period = opening quantity + internal production + subcontracted production – safety stock – Production : Internal production= worker production rate x workers + units produced in overtime – units not produced due to idle time 8 Available to Promise • Going back to the earlier example how many units are there available to promise of beg. inventory is 10,000 Quarter Production ATP Actual Orders Summer 80,000 90,000 50,000 9 Fall 80,000 120,000 100,000 Winter 80,000 100,000 Yield Management • How much should you overbook the airplane considering there’s always no-shows • How many tickets should be full price vs discounted?...
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This note was uploaded on 10/15/2011 for the course BUSINESS bu393 taught by Professor - during the Spring '11 term at Wilfred Laurier University .

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BU395 - Final ExamAID Slides Winter 2011 - BU395 –...

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