Wilkins : A Zurn Company:

Aggregate Production Planning

Group 1
Aditya Narayan Bathwal (2111016)
Aalekh Jain (2111001)
Aravind S (2111051)
Ayushi Gupta (2011048)
Srishty Chauhan (2111287)
Sandip Samanta (2111249)
Yash Bhatt (2111324)
Utkarsh Bansal (2111309)
1. Nature of Wilkins Business

● Wilkins manufactured a full line of high-quality water control products

● They manufactured 12 different product lines consisting of 25 product families
● Specialises in backflow prevention (60% of revenue) and pressure reducing valves (25%
of revenue)
● The Pressure vacuum breakers (PVB) were backflow prevention products which were
made to stock, while Fire valves were a type of pressure reducing valves which were
made to order
● Distributes more than half of the product through 52 stocking locations
● No layoff policy with keen focus on customer satisfaction with great products and on
time delivery
1. Major Challenges

● Mandate to reduce inventory by 30% in the next quarter

● Product mix which has both seasonal and irregular demand cycles
● No formal planning and production strategy in place
● Two-tier finished goods inventory system does not allow delivery tracking
● Limited control over independent distributors
● Finished goods stored in open areas add up to cost and quality issues
● Excess inventory stored in plant
● Testing system bottleneck

Type Raw material Inv Finished Goods Inv

PVB 46% 54%

Fire Valve 85% 15%

To Reduce Inventory by 30% for PVB for year 2005

Given,
δq1 = 1877, δq2 = 3361, δq3 = 3851, δq4 = 8154

For Customer Service Level of 99% , z value = 2.33

Lead Time of 2 weeks

Safety Stock = Z.δt..√L

Q1 Q2 Q3 Q4

Standard Dev 1877 3361 3851 8154

Safety Stock 1713 3073 3514 7440

Labour Requirement and Rate Data For Typical Parts

Dept 104 101

Total Labour Hours/Unit 0.096 0.020

Labour Usage %/Unit 82.4% 17.6%

Labor Cost / Unit 0.847 0.234

Regular Worker Avg 8.85 11.47

Wage(4/Hr)

Std. Cost $/Unit 25.65

 Given,

Inventory Holding Cost 20%

Std. Cost($ /Unit) 25.65
Holding Cost ($/unit/quarter) 1.2825
Inventory Value 1,523,789
Inventory Value (units) 59407
Total Production (units/day) 600
Production Rate (Total Production / employee) per quarter 6500 (100*5*3)
Labour Usage (%/Unit) 82.40%
Production Rate (units/quarter) 5356
Hiring Cost for temporary employee ($) 580
Level Strategy Q1 Q2 Q3 Q4
Forcast(Units/week) 4120 7480 9341 5983
Forecast(Units/Quarter) 53560 97240 121433 77779
Safety Stock 1713 3073 3514 7440
Regular Production (/ Quarter) 74511 74511 74511 74511
Ending Inventory(units) 59407 80358 57630 10708 7440

Number of Employee 6 14 14 14 14
New Employee 8 - - -
Cost of Hiring 4588.81 - - -
Cost of Regular Production 1911215.43 1911215.43 1911215.43 1911215.43
Holding Cost 103059.52 73909.99 13732.94 9542.15
Total Cost 2014274.95 1985125.42 1924948.37 1920757.58
Total Annual Cost 7845106.32
Chase Strategy
Q1 Q2 Q3 Q4
Forcast(Units/week) 4120 7480 9341 5983
Forecast(Units/Quarter) 53560 97240 121433 77779
Safety Stock 1877 3368 3851 8154
Regular Production (/ Quarter) - 104293 112384 82082
Ending Inventory(units) 59407 5847 12900 3851 8154

Number of Employee 6 - 19 21 15
New Employee -6 19 2 -6
Cost of Hiring - 11293.87 876.17 -
Cost of Regular Production - 2675116 2882649.6 2105403.3
Holding Cost 7498.75 16544.25 4938.91 10457.51
Total Cost 7498.75 2691660.25 2887588.51 2115860.81
Total Annual Cost 7702608.31
 Level Strategy & Chase Strategy

● In level strategy changes in demand are met by inventory,

overtime subcontracting, etc.
● In chase demand workforce level or production rate is
changed in order to meet demand.