Kindly, explaining is needed via solving it manually and in excel :
Solve this Aggregate Planning Problem by minimizing the cost of mathcing the capacity vaious options in various periods to the future demand?
Find inventory cost, regular time cost, overtime cosr and subcontract cost, and the total cost?
Sales Period 

Mar 
Apr 
May 

Demand 
700 
700 
1100 
Capacity: 

Regular Time 
700 
700 
700 
OverTime 
100 
100 
100 
Subcontracting 
200 
200 
100 
Begening inventory is zero 
0 
Cost 

Regular Time 
$50 
per tire 
OverTime 
$60 
per tire 
Subcontracting 
$80 
per tire 
Carrying Cost 
$5 
per tire per month 
Answer
Demand 

Supply From 
Period 1 ( Mar) 
Period 2 ( Apr) 
Period 3 ( may) 
Unused Capacity ( Dummy) 

Beginning Inventory 
0 

Period 1 
Regular Time 
700 
200 

OverTime 

Subcontracting 

Period 2 
Regular Time 

OverTime 

Subcontracting 

Period 3 
Regular Time 

OverTime 

Subcontracting 

Total Demand 
PERIOD 1 
PERIOD 3 
PERIOD 3 

Inventoy Cost 

Regular Time Cost 

Overtime Cost 

Subcontracting 

Total 
Period 1 
Period 2 
Period 3 
Excess Capacity 
Row Total 

Beginning inventory 
0 
0 
0 
0 
0 
Period 1 reg time 
700 
0 
300 
0 
1000 
Period 1 overtime 
0 
0 
0 
100 
100 
Period 1 subcontracting 
0 
0 
0 
200 
200 
Period 2 reg time 
0 
700 
0 
0 
700 
Period 2 overtime 
0 
0 
0 
100 
100 
Period 2 subcontracting 
0 
0 
0 
200 
200 
Period 3 reg time 
0 
0 
700 
0 
700 
Period 3 overtime 
0 
0 
100 
0 
100 
Period 3 subcontracting 
0 
0 
0 
100 
100 
Column Total 
700 
700 
1100 
700 
3200 
* Inventory Carring Cost = 300* (5+5)
= 3000
* Regular Cost = 700*50+300*50+700*50+700*50
= 1,20,000
* Overtime Cost = 100 *60
= 6000
* Subcontracting Cost = 0
Total Cost = 3000+1,20,000 +6000+ 0
=1,29,000
Please please Upvote if you like the answer.
Get Answers For Free
Most questions answered within 1 hours.