Bhuvnesh Kumawat

2019PBM5579
QUESTION. Design a production plan that will satisfy demand at minimum cost. Regular
production cost per unit= $80, overtime= $120, subcontracting=$105. Inventory holding cost
$2. Initial inventory 25000.

Quarter Expected Regular Overtime Subcontract

Demand Capacity Capacity Capacity
1 105000 80000 16000 100000
2 57000 80000 16000 100000
3 76000 80000 16000 100000
4 110000 80000 16000 100000

ANSWER: AGGREGATE PRODUCTION PLANNING DESIGN:

Supply
Period 1 Period 2 Period 3 Period 4
Constraints
Initial 0 2 4 6
25,000
Inventory
80 82 84 86
Period 1 RP 80,000

120 122 124 126

Period 1 OP 16,000

105 107 109 111

Period 1 SC 1,00,000

80 82 84
Period 2 RP 80,000

120 122 124

Period 2 OP 16,000

105 107 109

Period 2 SC 1,00,000

80 82
Period 3 RP 80,000

120 122
Period 3 OP 16,000

105 107
Period 3 SC 1,00,000

80
Period 4 RP 80,000

120
Period 4 OP 16,000

105
Period 4 SC 1,00,000

Demand
1,05,000 57,000 76,000 1,10,000
Requirements
How to design the Production Planning Matrix:
1. Given matrix is different from the conventional transportation problem, here the aim
is just to satisfy the demand irrespective of the supply side values. So, we need not
to balance the demand and the supply side.
2. Each column is representing the periods.
3. In the first row, there is a 2$ increase in the prize because as we hold the inventory
each quarter the holding cost $2 would be added in the next quarter. The supply
constraint would be of 25000.
4. For the first quarter in regular production, the unit per cost would be 80 as it would
be consumed in the same period, but if taken to the next one there it would cost 82
as a sum of 2 dollars as the holding cost is added. Here the supply constraint would
be 80000.
5. For the first quarter in overtime production, the unit per cost would be 120 and it
would remain 120 if it is consumed in the same time period, but if taken to next
period then holding cost $2 would be added. The supply constraint would be 16000.
6. For the first quarter in subcontracting production, the unit per cost would be 105 if it
is consumed in the same period, but would increase if the same product is carried to
the next period by 2$ as holding cost.
7. The above is the case for quarter 1, for second quarter, third quarter and fourth
quarter the rules would be same as above.
8. The supply requirements are 105000, 57000, 76000 and 110000 as given in question.

Supply
Period 1 Period 2 Period 3 Period 4
Constraints
Initial 0 2 4 6
25,000
Inventory
80 82 84 86
Period 1 RP 80,000

120 122 124 126

Period 1 OP 16,000

105 107 109 111

Period 1 SC 1,00,000

80 82 84
Period 2 RP 80,000

120 122 124

Period 2 OP 16,000

105 107 109

Period 2 SC 1,00,000

80 82
Period 3 RP 80,000

120 122
Period 3 OP 16,000

105 107
Period 3 SC 1,00,000

80
Period 4 RP 80,000

120
Period 4 OP 16,000

105
Period 4 SC 1,00,000

Demand
1,05,000 57,000 76,000 1,10,000
Requirements