Aggregate Planning

PGPMW
MPC Groupwork

Samsung has prepred the Sales Opreation Plan for manufacture of cell phones
Number of cells requred.NUMBER IN THOUSAND
Jan Feb Mar Apr May Jun Jul Aug
1000 1100 1000 1200 1500 1600 1600 900

The assebly line is managed by skilled workers and on 31 st Dec has 1200 workers.
Plant operates 20 daysin a month ,8 hour per day.
One person can asseble a phone in 10 minutes.
Workers are paid 20 Euros per hour in normal time and 50% extra for overtime.
Maximum over time is 20 hours in a month. Constraint
The inventory carrying cost of a cell is Euro. 3 per month
On Dec 31, the closing inventory is 50000 and wants to end the year with the same inventory.
The component cost is 20 Euros.There are 3 rd parties who are ready to supply the assebled phone
with material for Euro 26
Samsung can opt for the third party supply any quantity .
Thouh the company does not have a layoff policy for the 1200 permanent employees,thy have a team o
workers ,who,if hired will be paid same remuneration as the permant workers.
but the company will incur an expenditure of 800 euros for hiring and euro 1200 for lay off per person.
Make a mathematical model to find the optimum mix of regular production,overtime production,subcon
and hiring and lay off plan.
Out of the following 2options, which is better
1 Increase the temporary worker pool from 100 to 150
2 Increase the overtime from 20 to 25 hour per month

1
 Group Assignment 01
PGMPW -Group 17

Sep Oct Nov Dec

1100 800 1400 1700

he same inventory.
pply the assebled phone

employees,thy have a team of 100 temporary

(Equation & Constraint)
o 1200 for lay off per person. (Equation & Constraint)
n,overtime production,subcontract
 Increase the temporary worker pool from 100 to 150

On increasing the no of workers from 100-150, there is an decrease in total cost

1 100 worker (20hrs OT) 355236404.79

100 worker (25hrs OT) 355236404.79

150 worker (20hrs OT) 354954129.34

150 worker (25hrs OT) 354954129.34

Increase the overtime from 20 to 25 hour per month

2
There is no substantial impact on overall cost on increasing overtime
282275.4
0
 opening workers 1200
opening stock 50000

Jan Feb Mar Apr May Jun

1000000 1100000 1000000 1200000 1500000 1600000
Regular prod qty 950119.8 1099880 1099162 1100838 1195689 1195689
Overtime prod qty 0 0 0 0 0 0
Sub contract qty 0 0 0 0 304311.4 404311.4
Total qty 950120 1099880 1099162 1100838 1500000 1600000

Temporary Hired workers 0 0 0 1 99 0

Layed off workers 52 0 0 0 0 0
Workers in place 1148 1148 1148 1149 1248 1248
Inventory 119.7605 0 99161.68 0 0 0
Inventory carry forward 119.7605 0 99161.68 0 0 0
Backlog 0 0 0 0 0 0
Regular prod capacity 1099880 1099880 1099880 1100838 1195689 1195689
Overtime prod capacity 137485 137485 137485 137604.8 149461.1 149461.1
Inventory based on dummy 119.7605 0 99161.68 0 0 0
100 100 100 100 100 100
100 100 100 100 100 100

0.166667
 Jul Aug Sep Oct Nov Dec Opening inventory
1600000 900000 1100000 800000 1400000 1700000 14900000 Closing inventory
1195689 900119.8 1099880 1099880 1099880 1099880 13136706.587 262734131.7365 Opening workers
0 0 0 0 0 0 0 0 Working days/month
404311.4 0 0 0 239.521 650119.8 1763293.4132 45845628.74252 No. of hours/working day
1600000 900119.8 1099880 1099880 1100120 1750000 14900000 Regular time wage/hr

0 0 0 0 0 0 100 80000 Overtime wage/hr

0 100 0 0 0 0 152 182400 Max overtime/month
1248 1148 1148 1148 1148 1148 14077 45046400
0 119.7605 0 299880.2 0 50000
0 119.7605 0 299880.2 0 50000 449281.43713 1347844.311377
0 0 0 0 0 0 0 0 Inventory carrying cost
1195689 1099880 1099880 1099880 1099880 1099880 13486946.108 Material cost/unit
149461.1 137485 137485 137485 137485 137485 1685868.2635 Cost of subcontract
0 119.7605 0 299880.2 0 50000 449281.43713 Hiring cost
100 100 100 100 100 100 Layoff cost
100 100 100 100 100 100 TOTAL COST 355236404.7904 Labour hours reqd
Opening inventory 50000
Closing inventory 50000
Opening workers 1200
Working days/month 20days/month
No. of hours/working day 8hrs/day
Regular time wage/hr 20/hr

Overtime wage/hr 30/hr

Max overtime/month 20hr/month

Inventory carrying cost 3/month

Material cost/unit 20/unit
Cost of subcontract 26/unit
Hiring cost 800/person
Layoff cost 1200/person
Labour hours reqd 10/60per unit
 opening workers 1200
opening stock 50000

Jan Feb Mar Apr May Jun

1000000 1100000 1000000 1200000 1500000 1600000
Regular prod qty 950119.8 1099880 1099162 1100838 1195689 1195689
Overtime prod qty 0 0 0 0 0 0
Sub contract qty 0 0 0 0 304311.4 404311.4
Total qty 950120 1099880 1099162 1100838 1500000 1600000

Temporary Hired workers 0 0 0 1 99 0

Layed off workers 52 0 0 0 0 0
Workers in place 1148 1148 1148 1149 1248 1248
Inventory 119.7605 0 99161.68 0 0 0
Inventory carry forward 119.7605 0 99161.68 0 0 0
Backlog 0 0 0 0 0 0
Regular prod capacity 1099880 1099880 1099880 1100838 1195689 1195689
Overtime prod capacity 171856.3 171856.3 171856.3 172006 186826.3 186826.3
Inventory based on dummy 119.7605 0 99161.68 0 0 0
100 100 100 100 100 100
100 100 100 100 100 100

0.166667
 Jul Aug Sep Oct Nov Dec Opening inventory
1600000 900000 1100000 800000 1400000 1700000 14900000 Closing inventory
1195689 900119.8 1099880 1099880 1099880 1099880 13136706.587 262734131.7365 Opening workers
0 0 0 0 0 0 0 0 Working days/month
404311.4 0 0 0 239.521 650119.8 1763293.4132 45845628.74251 No. of hours/working day
1600000 900119.8 1099880 1099880 1100120 1750000 14900000 Regular time wage/hr

0 0 0 0 0 0 100 80000 Overtime wage/hr

0 100 0 0 0 0 152 182400 Max overtime/month
1248 1148 1148 1148 1148 1148 14077 45046400
0 119.7605 0 299880.2 0 50000
0 119.7605 0 299880.2 0 50000 449281.43713 1347844.311377
0 0 0 0 0 0 0 0 Inventory carrying cost
1195689 1099880 1099880 1099880 1099880 1099880 13486946.108 Material cost/unit
186826.3 171856.3 171856.3 171856.3 171856.3 171856.3 2107335.3293 Cost of subcontract
0 119.7605 0 299880.2 0 50000 449281.43713 Hiring cost
100 100 100 100 100 100 Layoff cost
100 100 100 100 100 100 TOTAL COST 355236404.7904 Labour hours reqd
Opening inventory 50000
Closing inventory 50000
Opening workers 1200
Working days/month 20days/month
No. of hours/working day 8hrs/day
Regular time wage/hr 20/hr

Overtime wage/hr 30/hr

Max overtime/month 20hr/month

Inventory carrying cost 3/month

Material cost/unit 20/unit
Cost of subcontract 26/unit
Hiring cost 800/person
Layoff cost 1200/person
Labour hours reqd 10/60per unit
 opening workers 1200
opening stock 50000

Jan Feb Mar Apr May Jun

1000000 1100000 1000000 1200000 1500000 1600000
Regular prod qty 950119.8 1099880 1099162 1100838 1243593 1243593
Overtime prod qty 0 0 0 0 0 0
Sub contract qty 0 0 0 0 256407.2 356407.2
Total qty 950120 1099880 1099162 1100838 1500000 1600000
Hired workers 0 0 0 1 149 0
Layed off workers 52 0 0 0 0 0
Workers in place 1148 1148 1148 1149 1298 1298
Inventory 119.7605 0 99161.68 0 0 0
Inventory carry forward 119.7605 0 99161.68 0 0 0
Backlog 0 0 0 0 0 0
Regular prod capacity 1099880 1099880 1099880 1100838 1243593 1243593
Overtime prod capacity 137485 137485 137485 137604.8 155449.1 155449.1
Inventory based on dummy 119.7605 0 99161.68 0 0 0
150 150 150 150 150 150
150 150 150 150 150 150

0.166667
 Jul Aug Sep Oct Nov Dec
1600000 900000 1100000 800000 1400000 1700000 14900000
1243593 900119.8 1099880 1099880 1099880 1099880 13280419.162 265608383.23
0 0 0 0 0 0 0 0
356407.2 0 0 0 239.521 650119.8 1619580.8383 42109101.796
1600000 900119.8 1099880 1099880 1100120 1750000 14900000
0 0 0 0 0 0 150 120000
0 150 0 0 0 0 202 242400
1298 1148 1148 1148 1148 1148 14227 45526400
0 119.7605 0 299880.2 0 50000
0 119.7605 0 299880.2 0 50000 449281.43713 1347844.3114
0 0 0 0 0 0 0 0
1243593 1099880 1099880 1099880 1099880 1099880 13630658.683
155449.1 137485 137485 137485 137485 137485 1703832.3353
0 119.7605 0 299880.2 0 50000 449281.43713
150 150 150 150 150 150
150 150 150 150 150 150 TOTAL COST 354954129.34
Opening inventory 50000
Closing inventory 50000
Opening workers 1200
Working days/month 20days/month
No. of hours/working day 8hrs/day
Regular time wage/hr 20/hr
Overtime wage/hr 30/hr
Max overtime/month 20hr/month

Inventory carrying cost 3/month

Material cost/unit 20/unit
Cost of subcontract 26/unit
Hiring cost 800/person
Layoff cost 1200/person
Labour hours reqd 10/60per unit
 opening workers 1200
opening stock 50000

Jan Feb Mar Apr May Jun

1000000 1100000 1000000 1200000 1500000 1600000
Regular prod qty 950119.8 1099880 1099162 1100838 1243593 1243593
Overtime prod qty 0 0 0 0 0 0
Sub contract qty 0 0 0 0 256407.2 356407.2
Total qty 950120 1099880 1099162 1100838 1500000 1600000
Hired workers 0 0 0 1 149 0
Layed off workers 52 0 0 0 0 0
Workers in place 1148 1148 1148 1149 1298 1298
Inventory 119.7605 0 99161.68 0 0 0
Inventory carry forward 119.7605 0 99161.68 0 0 0
Backlog 0 0 0 0 0 0
Regular prod capacity 1099880 1099880 1099880 1100838 1243593 1243593
Overtime prod capacity 171856.3 171856.3 171856.3 172006 194311.4 194311.4
Inventory based on dummy 119.7605 0 99161.68 0 0 0
150 150 150 150 150 150
150 150 150 150 150 150

0.166667
 Jul Aug Sep Oct Nov Dec
1600000 900000 1100000 800000 1400000 1700000 14900000
1243593 900119.8 1099880 1099880 1099880 1099880 13280419.162 265608383.23
0 0 0 0 0 0 0 0
356407.2 0 0 0 239.521 650119.8 1619580.8383 42109101.796
1600000 900119.8 1099880 1099880 1100120 1750000 14900000
0 0 0 0 0 0 150 120000
0 150 0 0 0 0 202 242400
1298 1148 1148 1148 1148 1148 14227 45526400
0 119.7605 0 299880.2 0 50000
0 119.7605 0 299880.2 0 50000 449281.43713 1347844.3114
0 0 0 0 0 0 0 0
1243593 1099880 1099880 1099880 1099880 1099880 13630658.683
194311.4 171856.3 171856.3 171856.3 171856.3 171856.3 2129790.4192
0 119.7605 0 299880.2 0 50000 449281.43713
150 150 150 150 150 150
150 150 150 150 150 150 TOTAL COST 354954129.34
Opening inventory 50000
Closing inventory 50000
Opening workers 1200
Working days/month 20days/month
No. of hours/working day 8hrs/day
Regular time wage/hr 20/hr
Overtime wage/hr 30/hr
Max overtime/month 20hr/month

Inventory carrying cost 3/month

Material cost/unit 20/unit
Cost of subcontract 26/unit
Hiring cost 800/person
Layoff cost 1200/person
Labour hours reqd 10/60per unit