A B C D E F G H I

1 SureStep aggregate planning model

2
3 Input data Range names used:
4 Initial inventory of shoes 500 Forecasted_demand =Model!$B$36:$E$36
5 Initial number of workers 100 Inventory_after_production =Model!$B$34:$E$34
6 Regular hours/worker/month 160 Maximum_overtime_labor_hours_available =Model!$B$25:$E$25
7 Maximum overtime hours/worker/month 20 Overtime_labor_hours_used =Model!$B$23:$E$23
8 Hiring cost/worker $1,600 Production_capacity =Model!$B$32:$E$32
9 Firing cost/worker $2,000 Shoes_produced =Model!$B$30:$E$30
10 Regular wages/worker/month $1,500 Total_cost =Model!$F$46
11 Overtime wage rate/hour $13 Workers_fired =Model!$B$19:$E$19
12 Labor hours/pair of shoes 4 Workers_hired =Model!$B$18:$E$18
13 Raw material cost/pair of shoes $15
14 Holding cost/pair of shoes in inventory/month $3
15
16 Worker plan Month 1 Month 2 Month 3 Month 4 This is a model where spreadsheet layout is really important. We found it useful
to separate the model into four (related) groups: a group containing most of the
17 Workers from previous month 100 94 93 50 inputs, a group containing information about workers and their hours, a group
18 Workers hired 0 0 0 0 containing information about shoes, and a group containing monetary
information. Once you set it up this way and add appropriate labels in column A,
19 Workers fired 6 1 43 0 the "flow" of the logic is straightforward. Besides, it allows you to put the two
20 Workers available after hiring and firing 94 93 50 50 sides of constraints next to one another.
21
The decision variable cells might not be obvious. Just remember that the values of
22 Regular-time hours available 15040 14880 8000 8000 the decision variable cells should be enough to run the business. If you know the
23 Overtime labor hours used 0 80 0 0 numbers of workers hired and fired, the number of overtime hours used, and the
24 <= <= <= <= production quantities, everything else results. Try never to have decision variable
cells that are determined by the values of other decision variable cells.
25 Maximum overtime labor hours available 1880 1860 1000 1000
26 Probably the trickiest formula is the one in row 32 that involves the "production
27 Total hours for production 15040 14960 8000 8000 function," i.e., the conversion of labor hours into shoes. You have to make sure
the units are correct. The formulas in row 32 divide hours by (hours per pair of
28 shoes). The result is what we want: pairs of shoes.
29 Production plan Month 1 Month 2 Month 3 Month 4
30 Shoes produced 3760 3740 2000 1000
31 <= <= <= <=
32 Production capacity 3760 3740 2000 2000
33
34 Inventory after production 4260 5000 2000 1000
35 >= >= >= >=
36 Forecasted demand 3000 5000 2000 1000
37 Ending inventory 1260 0 0 0
38
39 Monetary outputs Month 1 Month 2 Month 3 Month 4 Totals
40 Hiring cost $0 $0 $0 $0 $0
41 Firing cost $12,000 $2,000 $86,000 $0 $100,000
42 Regular-time wages $141,000 $139,500 $75,000 $75,000 $430,500
43 Overtime wages $0 $1,040 $0 $0 $1,040
44 Raw material cost $56,400 $56,100 $30,000 $15,000 $157,500
45 Holding cost $3,780 $0 $0 $0 $3,780
46 Totals $213,180 $198,640 $191,000 $90,000 $692,820 Objective to minimize
Oneway analysis for Solver model in Model worksheet

Overtime rate (cell $B$11) values along side, output cell(s) along top

Overtime_labor_hours_used_1

Overtime_labor_hours_used_2

Overtime_labor_hours_used_3

Overtime_labor_hours_used_4

Total_cost
5
$7 1620 1660 0 0 $684,755
$9 80 1760 0 0 $691,180
$11 0 80 0 0 $692,660
$13 0 80 0 0 $692,820
$15 0 80 0 0 $692,980
$17 0 80 0 0 $693,140
$19 0 0 0 0 $693,220
$21 0 0 0 0 $693,220

As expected, as the overtime rate

increases, fewer overtime hours are used, 694000
and the total cost increases (or remains
692000
constant), as shown in the chart.
690000
688000
686000
684000
682000
680000
$7
Sensitivity of Total_cost to Overtime rate

Data for chart

When you select an output from the
dropdown list in cell $K$4, the chart
will adapt to that output.
Total_cost

684755
691180
692660
692820
692980
693140
693220
693220

Sensitivity of Total_cost to Overtime rate

694000
692000
690000
688000
686000
684000
682000
680000
$7 $9 $11 $13 $15 $17 $19 $21
Overtime rate ($B$11)