Costs in Aggregate Planning (1)Smoothing cost:Occurs as result of changing the production level from one period to the next. Cost for changing size of workforce-advertise positions; interview prospective employees,and training new hires; Assumed to be linear; Fig 3-2 Cost of 豆 Changing the Size of the Workforce Slope =CH Slope =CF 一f,=Numbers of fires H,=Number of hires
Costs in Aggregate Planning (1) Smoothing cost: Occurs as result of changing the production level from one period to the next. • Cost for changing size of workforce-advertise positions; interview prospective employees, and training new hires; • Assumed to be linear; Fig 3-2 Cost of Changing the Size of the Workforce
Aggregate Units of Production (2)Holding costs:Occurs as a result of having capital tied up in inventory. Always assumed to be linear in the number of units being held at a particular point in time; For aggregate planning,it is expressed in terms of dollars per unit held per planning period;(e.g.100 $/month for one item) Charged against the inventory remaining on hand at the end of the planning period; •At the beginning:50 蓝 Slope=C .Week 1:In 100 A .Week 2:Out 130 Slope=Cp .Week 3 In 30 .Week 4 Out 30 Negative--Back-orders Positive--Inventory Fig.3-3 Holding and Back-Order Costs .Charge only 20
Aggregate Units of Production (2) Holding costs: Occurs as a result of having capital tied up in inventory. • Always assumed to be linear in the number of units being held at a particular point in time; • For aggregate planning, it is expressed in terms of dollars per unit held per planning period; (e.g. 100 $/month for one item) • Charged against the inventory remaining on hand at the end of the planning period; Negative--Back-orders Slope = CP Slope = Ci $ Cost Positive--Inventory Fig.3-3 Holding and Back-Order Costs •At the beginning: 50 •Week 1: In 100 •Week 2: Out 130 •Week 3 In 30 •Week 4 Out 30 •Charge only 20
⑧ Aggregate Units of Production Slope=C Slope=Cp Negative--Back-orders Positive--Inventory Fig.3-3 Holding and Back-Order Costs (3)Shortage costs- .Shortage occurs when demands are higher than anticipated; .For aggregate planning,it is assumed that excess demand is backlogged and filled in a future period; .In a highly competitive situation,the excess demand may be lost--- lost sales; Generally considered to be linear
Aggregate Units of Production (3) Shortage costs- •Shortage occurs when demands are higher than anticipated; •For aggregate planning, it is assumed that excess demand is backlogged and filled in a future period; •In a highly competitive situation, the excess demand may be lost--- lost sales; •Generally considered to be linear. Negative--Back-orders Slope = CP Slope = Ci $ Cost Positive--Inventory Fig.3-3 Holding and Back-Order Costs
Aggregate Units of Production (4)Regular time costs:Involve the cost of producing one unit of output during regular working hours; .Actual payroll cost of regular employees working on regular time; Direct and indirect costs of materials; .Other manufacturing expense; (5)Overtime and subcontracting costs:Costs of production units not produced on regular time; Overtime-production by regular-time employees beyond work day; Subtracting-the production of items by an outside supplier; .Assumed to be linear; (6)Idle time costs:Underutilization of workforce; .In most contexts,the idle time cost is zero; .Idle time may have other consequences for the firm,e.g.if the aggregate units are input to another process,idle time on the line could result in higher costs to subsequent processes
Aggregate Units of Production (4) Regular time costs: Involve the cost of producing one unit of output during regular working hours; •Actual payroll cost of regular employees working on regular time; •Direct and indirect costs of materials; •Other manufacturing expense; (5) Overtime and subcontracting costs: Costs of production units not produced on regular time; •Overtime-production by regular-time employees beyond work day; •Subtracting-the production of items by an outside supplier; •Assumed to be linear; (6) Idle time costs: Underutilization of workforce; •In most contexts, the idle time cost is zero; •Idle time may have other consequences for the firm, e.g. if the aggregate units are input to another process, idle time on the line could result in higher costs to subsequent processes
A Prototype Problem Example 3.2 Densepack is to plan workforce and production level for six-month period Jan.to June.The firm produces a line of disk drives for mainframe computers.Forecast demand over the next six months for a particular line of drives in a plant are 1,280,640,900,1,200,2,000 and 1,400.There are currently (end of Dec.)300 workers employed in the plant.Ending inventory in Dec.is expected to be 500 units,and the firm would like to have 600 units on hand at the end of June
A Prototype Problem Example 3.2 Densepack is to plan workforce and production level for six-month period Jan. to June. The firm produces a line of disk drives for mainframe computers. Forecast demand over the next six months for a particular line of drives in a plant are 1,280, 640, 900, 1,200, 2,000 and 1,400. There are currently (end of Dec.) 300 workers employed in the plant. Ending inventory in Dec. is expected to be 500 units, and the firm would like to have 600 units on hand at the end of June