Wilkins, a Zurn Company :

Aggregate Production
Planning
Ali Jibin K
PGPLSM/005
About the Company

● General Manager- Chris Connors

● 1971- Wilkins acquired by Zurn Industries
● 1998- Merged with U.S Industries Bath & Plumbing products company
● 2003- Named Jacuzzi Brands
● 60% of sales-Backflow prevention valves
● 25% of sales- Pressure reducing valves
● PVB demand- seasonal
● PVBs- Made-to-stock (MTS) items
● Fire valves demand- Any time during building season
● Increasing demand for Fixed setting fire valves
Major Challenges
• Seasonal demand of PVB causing production capacity
constraints in peak season and excess capacity
otherwise
• Irregular demand of Fire Valves
• Excess inventory at plant
• No inter supplier transfer
 Given Data

Holding Cost 20%

Std. Cost($) 25.65

Holding Cost($/unit/quarter) 1.2825

Inventory Value($) 1523789

Inventory Value(units) 59407

Production Rate(unit/day/employee) 100

Labour Usage 82.40%

Production Rate(units/quarter) 5356

Hiring Cost per employee ($) 580

 Calculating Safety Stock

Assumptions for the year 2005

Q1 = 1877, Q2 = 3361, Q3 = 3851, Q4 = 8154
Customer Service Level of 99% and Lead Time of 2 weeks

6 Employees of PVB cell manage both Dept 101 which supplies

Machine Castings to the PVB cell and Dept 104 which produce PVB
cell

CSL 99% z value 2.32    

    Q1 Q2 Q3 Q4
Std Dev.   1877 3368 3851 8154
Safety Stock   1712.70 3073.19 3513.91 7440.26
 Level Strategy
  Q1 Q2 Q3 Q4
Forecast(Units/week)   4,120 7,480 9,341 5,983
Forecast(Units/Quarter)   53,560 97,240 1,21,433 77,779
Safety Stock   1,713 3,073 3,514 7,440

Regular Production (/ Quarter)   74,511 74,511 74,511 74,511

Ending Inventory(units) 59,407 80,358 57,630 10,708 7,440
           
Number of Employee 6 14 14 14 14

New Employee   8

Cost of Hiring   4,588.81

Cost of Regular Production   19,11,215.4 19,11,215.4 19,11,215.4 19,11,215.43

Holding Cost   1,03,059.5 73,909.9 13,732.9 9,542.15
Total Cost   20,14,275 19,85,125.4 19,24,948.37 19,20,757.58
Total Annual Cost 78,45,106.32
 Chase Strategy
Q1 Q2 Q3 Q4

Forecast(Units/week)   4,120 7,480 9,341 5,983

Forecast(Units/Quarter)   53,560 97,240 1,21,433 77,779

Safety Stock   1,877 3,368 3,851 8,154
Regular Production (/
Quarter)   1,04,293 1,12,384 82,082
Ending Inventory(units) 59,407 5,847 12,900 3,851 8,154
Number of Employee 6 19 21 15
New Employee   -6 19 2 -6
Cost of Hiring   11,293.87 876.17
Cost of Regular Production   26,75,116.00 28,82,649.60 21,05,403.30
Holding Cost   7,498.75 16,544.25 4,938.91 10,457.51
Total Cost   7,498.75 26,91,660.25 28,87,588.51 21,15,860.81
Total Annual Cost 77,02,608.31
 Result

Level Strategy
Average Inventory 39,034

Average Inventory reduction 34.29%

Chase Strategy
Average Inventory reduction 7688
Average Inventory reduction 87%
 Result
Changes in demand in the level strategy are handled by inventory, outsourcing overtime, etc.
In order to satisfy demand, the level of labor force or rate of production is adjusted in
order to chase demand. The preparing for the selection of the strategy relies on the greater
expense of recruiting and termination costs or outsourcing costs.

We can accommodate 2 shifts as the upper limit of 7 employees in the level strategy to be
employed in a single shift at the PVB cell. We would have to prepare for both recruiting
and firing with the 3 changes in the chase strategy as well.
Thank You